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June 2012, Week 1

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Tue, 5 Jun 2012 23:16:10 -0400
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Ironworkers Bend on Wages
Desperate for jobs, union gives back raises;
rare move could trim project costs by 25%.
By Daniel Massey
crainsnewyorkbusiness.com
May 27, 2012
http://www.crainsnewyork.com/article/20120527/LABOR_UNIONS/305279975#ixzz1wxn8oVRW

The ironworkers' union--desperate to regain market share
from surging nonunion construction, and afraid of
missing out on lucrative work at Hudson Yards and the
Tappan Zee Bridge--has agreed to an unprecedented wage
and benefit rollback. It's already shaking up
development in the city.

Members of Metallic Lathers and Reinforcing Ironworkers
Local 46 voted earlier this month to cut their overall
compensation by 15%, or by about $14 an hour, and to
work-rule changes that could slash total project costs
by up to 25%.

The 1,500-member union relinquished a 4% raise this
year and cut next year's scheduled 4% increase to 2%.
Wages and benefits will now total $79 an hour instead
of the $93 the union had previously won in
-negotiations.

In addition, the union members agreed to allow on job
sites a higher percentage of apprentices, who earn less
than half the standard pay, and to expand the workday
to eight hours from seven.

The unusual decision to amend their existing contracts
across the board comes as the ironworkers face the
possibility that the Tappan Zee Bridge could be rebuilt
without them--with steel fabricated offsite to save the
state money--and as the heavyweight real estate
developer Related Cos. aggressively seeks cost savings
to jump-start its massive Hudson Yards project on the
West Side.

Related officials want to build union, but are engaged
in complex talks with labor leaders to bring down costs
and have threatened to use a combination of union and
nonunion workers if the discussions don't produce
sufficient savings.

"It's whether we want to hang on to our business or
not," said Terrence Moore, who took over as business
manager of Local 46 in November. "Most of the guys who
have been doing this 20 or 30 years have helped put
their kids through school and done the things they want
to do. Now it's the next generation's turn. If we don't
do something, there's not going to be a next
generation."

Shortly after Local 46 members approved the rollback,
Related said it might build luxury-goods maker Coach's
new Hudson Yards headquarters with reinforced concrete
instead of steel, a rarity for a commercial building in
the city. That would create jobs for Local 46 members
who bend the steel rods that reinforce concrete. (Other
ironworkers locals handle traditional steel
construction.) Related declined to comment.

Residential buildings in the city are routinely built
with reinforced concrete, as are commercial ones across
the country and around the world. It's less expensive
than steel, and technology improvements mean quality
isn't sacrificed, though controls need to be greater.
In New York, where construction methods are entrenched,
steel has ruled in commercial buildings. The most
significant exception is 505 Fifth Ave., which the
Kipp-Stawski Group built using concrete.

Mr. Moore said that the union has lost about 80% of the
market in Brooklyn and Queens and 30% to 40% in
Manhattan to nonunion labor. The prospect of losing
some of the $15 billion Hudson Yards project and the
Tappan Zee job, which would be about $17 million worth
of work for his members, prompted passage of the
rollback with 86% of the vote. Some of his members
expressed concern that the industry would be emboldened
to ask for more and more cuts, but Mr. Moore's argument
that the union had to adapt or die won out.

CONTRACTORS SIGN ON

"This is a show of smart leadership by Terry Moore in
creating real reform to ensure that his members have
jobs now and long into the future," said a real estate
executive.

A handful of contractor associations have already
signed on to the agreement. The union has yet to take
it to the General Contractors Association of New York,
which would have jurisdiction over the Tappan Zee
project, because of a push in Albany to fabricate the
reinforcing steel, or rebar, away from the job site.
But Mr. Moore said he hopes the prospect of a rollback
will be a catalyst that moves the project along, using
his members.

"When labor and management really want to put their
heads together and solve problems, they can," said
Michael Locker, a construction industry expert who
consults for Local 46. "You have to find ways to
cooperate and not just confront. When you do that, you
get fruitful results."

Richard Lambeck, chair of the construction management
program at NYU Schack Institute of Real Estate, said
Local 46's move could lead to more like it.

"It may give an incentive to other unions to take a
look at this and say, 'Hey, if we want to maintain our
membership and make sure our people are working, we
should do something like this.' "

Correction: Ironworkers locals besides Metallic Lathers
and Reinforcing Ironworkers Local 46 handle traditional
steel construction. That fact was misstated in an
earlier version of this article, originally published
online May 27, 2012. A version of this article appeared
in the May. 28, 2012, print issue of Crain's New York
Business.

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