The Electrical Worker online
January 2016

New York City Local Reclaims Lost Ground
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For decades, New York City construction sites have been union construction sites. Period. Competition among contractors was fierce, but except on the margins, victory never went to those who skimped on safety, cut benefits or underpaid.

Until five years ago.

The recession ended in the United States and billions of investor dollars seeking safe haven were plowed into Big Apple real estate.

"The business changed more in the last half-decade than in my whole career," said New York City Local 3 Business Representative Elliot Hecht. "When I was an apprentice, anything that had a wire on it was being installed by us. Times changed."

Nonunion contractors established a beachhead in the construction business. The financial institutions that had dominated New York City development for decades were sidelined, along with the developers and contractors they worked with. Nonunion contractors started winning smaller residential and hotel jobs, especially the ones outside the Manhattan core.

And then real estate development in New York City went insane. Today, permit applications are at levels not seen in more than half a century and hotel developers are adding rooms faster than at any time since the Jazz Age almost 100 years ago.

And nearly 90 percent of the hotel and residential permits in the last 18 months have been pulled by nonunion contractors.

"This is the biggest change in this industry in my lifetime. It is surprising that it happened so fast, but no one is confused about what is behind it," said Nicholas Coletti, executive director of the New York Building Trades Employers' Association. "We're too expensive."

Many big city trade unions have seen this change over the last 40 years, and many of them sat on the sidelines and watched as their contractors lost ground.

Like all successful New Yorkers, Local 3 took action.

"The men and women who built Local 3 had to fight for the market share we inherited. There is no way we are going to pass on less than we inherited," Hecht said.

Once in a Lifetime Construction Frenzy

New York City is getting a facelift.

After a slowdown during the years immediately following the financial crisis, hotel and residential construction growth in New York is breaking all records.

Last fiscal year, the city's Department of Buildings agreed to the construction of 53,000 residential units, a 750-percent increase from the post-recession low of 2010. In June alone the city issued almost 18,000 permits, the Census Bureau reported, more than most years since the '60s.

"This is an astounding figure, so far ahead of anything the city has experienced in 50 years," Richard T. Anderson, president of the New York Building Congress, a construction industry group, told The Wall Street Journal. "We are heading into the stratosphere."

The result is that eight of the 10 most expensive construction projects in the city last year were residential projects, a significant change from years past when industrial and commercial projects topped the chart. Just three years ago, only four of the top 10 were residential. The enormous increase in construction costs was due to expectation inflation — real estate in New York City is dominated by luxury housing.

The residential building boom is echoed in the growth of hotel construction.

Nearly 20 percent of the city's 112,000 hotel rooms were built in the last five years and that total is expected to rise another 25 percent by the end of the decade. Projects range in size from the 14-room The Broome in SoHo to the 900-room Wyndham New Yorker across the street from Penn Station.

Tom McConnell, a hotel broker for real estate firm Cushman & Wakefield told the New York Post, "We haven't seen anything like today's construction since the 1920s and 1930s."

But in 2014, 90 percent of hotel and residential permits — 73 buildings — went to nonunion contractors. The only borough where union contractors built more square feet than the competition was in Manhattan. In the Bronx, union contractors built none.

Despite the bad news, the bread and butter of the union trades is doing well. Office construction is at its highest level in a quarter century. In 2015 and 2016, 10 million square feet of office space is being built in Manhattan alone. From 2016-2020, another 20 million is predicted.

"This is the worry. The fastest growing nonunion residential contractor just won two commercial buildings, 40-60 stories each," said Gary Labarbera, president of the Building and Construction Trades Council of Greater New York. "The nonunion contractor got better. By not winning jobs, we taught them."

Although there are no official statistics, the New York Times recently reported that between 25-40 percent of construction jobs in the city are now nonunion, a dramatic rise from the 15 percent that had been standard for decades.

"Overall, work is up for Local 3," said Business Manager Christopher Erikson, who is also the International Executive Council chairman. "It is just up a lot more for nonunion contractors. And that is not acceptable."

Don't Call It a Comeback

At the general membership meeting in May 2015, Erikson announced his plan.

If union contractors were priced out of the market, Local 3 needed a plan to compete. Erikson announced his plan for a new residential division, structured on the proven model of the alternative classification program.

The program won broad support at the meeting, Hecht was reassigned to the new division and Erikson immediately opened negotiations with signatory contractors.

"There have always been nonunion companies out there. Residential is a sector they seem to be thriving in," Hecht said. "We can't allow this to continue or they will work their way into the commercial market."

Previous efforts to recover lost market share, including reducing wage rates and maintaining benefits were failing to generate successful bids. On an average 10-40 story building with a budget around $60 million, union contractor bids were 25 percent higher than nonunion, Labarbera said.

"Estimating a job was going through the motions for some of our contractors," Hecht said. "Owners were just seeing how much they could save going nonunion. We had signatories that never even got a call back."

"Every trade's market share is suffering. We are not competitive. But if we got the differential to 12 percent we would win everything," said Louis Coletti, president and CEO of the New York Building Trades Employers Association. "There used to be seven or eight developers and owners in the city and they got financing from NYC banks. There was a loyalty. The recession destroyed all that."

Getting Competitive

Local 3 discovered that the best route to competitiveness was not cutting wages, but changing the overall mix of classifications on the job and increasing the variety of classifications the union offered.

Taking a page from the alternative classification program, Erikson proposed a massive organizing drive to bring in nonunion workers, assess their skills, get them paying dues and out to work with journeyman wiremen and apprentices.

They put out the word that they would host an open house in July, advertised in local papers and through social media. The only requirement was two years of work in the industry.

On July 22, 1,375 people came to the open house and were met by nearly 100 Local 3 members. On July 25, more than 1,400 came.

"These people knew they were being exploited — no benefits, lousy wages, no pension, no annuities. They wanted an opportunity to get something better," Hecht said.

Over 1,000 had five or more years of experience and several hundred had 10 years or more.

"My dad was an organized electrician, and he used to always say people would give their right arm to be Local 3, and we are still seeing it at these open houses," Hecht said.

Since July, hundreds of applicants have been brought in for interviews and boot camps. Depending on how they rate in the interview, some are presented with different apartment setups stripped down to the studs. Applicants get a wiring diagram and three and a half hours to put in boxes, pull cables and mount fixtures.

"Just like it was a regular job," Hecht said.

Successful applicants are rated a residential mechanic up through four grades of residential wireman and sent to Local 3-run boot camps that were running every Tuesday and Thursday over the summer, and more sporadically now.

Worksites still have a complement of residential electricians, journeymen and apprentices. The new members pay the initiation fee and their dues and will have access to ongoing training, health care and pension, even the apprenticeship if they want.

Just as important, contractors will have a chance at winning the work.

"Ultimately this nonunion workforce must be organized, and it will be," said Erikson. "The future is strong. We have great electricians, great training and a great apprenticeship."

Building Momentum

With Brooklyn projects leading the way, New York City has issued more residential building permits so far this year than in any full year since 1963.



Manhattan's skyline as it will look in 2030, transformed by a record number of residential and hotel tower starts. Local 3 is determined to make them union jobs. (Image courtesy VISUALHOUSE)


"Ultimately this nonunion workforce must be organized,
and it will be."

– Local 3 Business Manager Christopher Erikson

"This is the biggest change in this industry in my lifetime."

Nicholas Coletti, executive director of the New York Building Trades Employer Association


Since July, hundreds of applicants have been brought in for interviews and boot camps.