On May 29, using words like “historic” and “groundbreaking,” New York City’s Construction Industry Partnership between union labor and contractors announced a project labor agreement both sides said would breathe life into an industry that had begun to circle the drain.
Since September 2008, the construction industry - already nursing a hangover from the city’s six-year development boom - had been bleeding jobs. After the collapse of the financial institutions that fall, stalled, half-finished projects and dormant, undeveloped lots began to pock the five boroughs and both project costs and unemployment were soaring.
Fearing the worst, the Building Trades Employers’ Association, which represents 28 contractor groups and more than 1,700 union firms, and the Building and Construction Trades Council of Greater New York, which represents 100,000 union workers, started negotiating an agreement that they hoped would bring project costs down to manageable levels and encourage banks to begin approving construction loans once again. The intense, often fractious, negotiations resulted in a project labor agreement that saw several unions taking one-year wage freezes and benefit cuts while also agreeing to no strikes or work stoppages on any project included under the pact. In return, contractors cut wages and benefits for management and reduced their own profit margins. In the end, an independent audit of the PLA estimated the pact would reduce project costs by an average of 16% to 21%.
With the agreement in place, BTEA President Lou Colletti and BCTC President Gary LaBarbera began selling the plan to project owners across the city. By the time the deal was announced on May 29, 10 projects had resumed work under the PLA agreement. As of this writing, both organizations say the pact has freed up more than $6 billion in construction work that accounts for nearly 20,000 jobs - possibly saving the industry from implosion - without a dime of public, bailout or stimulus money.
What follows is the story of how the agreement - now a template for union and contractor representatives across the country - was put together. The tale is recounted by those who were there. -Ed.
LOU COLLETTI: After the financial collapse back in September (2008) everything came to a halt. We called a Construction Industry Partnership labor management meeting and we had (Real Estate Board of New York President) Steve Spinola and representatives from a couple of banks join us and we asked them, “What does this mean for us?” No one understood at that point what was going on.
STEVEN SPINOLA (president, REBNY): I think I called Lou first asking him what we were going to do. Because something needed to be done. But he was the first person who told me that they were already having discussions about some kind of PLA. As they went along, they were always keeping us informed about those discussions.
GARY LABARBERA: The major lenders, in terms of construction loans, were very clear that they were pulling back their loans - their existing loans. Developers are not going to develop and banks are not going to lend money if it’s not a profitable project. Because of the collapse of the markets and then the rapid fall of real estate value, the cost now outweighed the value.
CHRISTOPHER ERIKSON (business manager, IBEW Local 3, BCTC Executive Committee): That was the slap in the face. When it was made clear to us that foundations in the ground that had our workers in them were going to be getting filled up with sand, that gets your attention.
BOBBY BONANZA (business manager, Mason Tenders District Council of New York, BCTC Executive Committee): It’s easy to forget, but everybody was still busy at the time. There were still a lot of ...