Stirring up the industry as it was searching for change was Associated Builders and Contractors (ABC), the national association of open shop contractors. Established in 1950, by 1970 ABC had 3,400 member firms across 23 states: 25% were general contractors, 50% were subcontractors, and the rest were suppliers or in allied fields such as bonding, insurance or accounting. Only six of its member firms were among the ENR Top 400 Contractors ranking. ABC states its mission as representing rights of workers to work where and for whom they wished, and the right of management to recruit and train and assign its workforce and manage its jobs, according to its best judgment.

The nation was in an economic bind at the time. An 11-month recession in 1970 saw construction unemployment spike at 16.7% and persist at nearly that level for the next seven years. The Nixon administration introduced wage and price controls to help combat inflation. As part of that effort, in 1971 it established the Construction Industry Stabilization Committee. The CISC reviewed wage increases in collective bargaining agreements and determined whether they were compatible with productivity improvement and cost of living trends, and also had the power to reduce them. CISC’s labor and management representatives “worked together well and responsibly,” according to an ENR editorial. “The leaders of the building trades unions have, as a whole, been temperate, realistic and reasonable. First-year increases dropped from a fourth quarter 1970 level of 21.2% to 10 to 11%.”

ENR Goes Undercover

In 1971 ENR assigned veteran staff member Edward M. Young to get the facts on management and labor attitudes and practices as they related to productivity. Before joining ENR in 1957, Young had spent 17 years working for unionized heavy construction firms up and down the East Coast. As part of the assignment, he worked for two months as a supervisor for a testing laboratory to gain quiet access to construction jobs. Over the course of almost a year he travelled over 30,000 miles and interviewed 500 representatives of construction companies. Everyone he visited insisted on anonymity, but they spoke fully and freely.

His resulting 1972 cover story detailed many examples of “featherbedding” and jurisdictional problems. Cement finishers in Chicago and Philadelphia earned excessive pay by spending many straight time hours doing nothing while waiting for pours and then finishing the concrete during premium rate hours. Master mechanics on an East Coast job who never touched a wrench earned many times their base salaries because they were compensated for any hours that their mechanics or nonworking assistants were on the clock. A contractor on a power plant job using small gasoline-powered generators had to pay an operating engineer a full day’s wage to watch each gas engine, along with an electrician to watch the generator on each machine. A $1-billion Albany, N.Y., mall project suffered hundreds of work stoppages because the Teamsters and operating engineers unions fought over which of their members would hold the fuel truck nozzle during the fueling operation.

As part of the article, a survey by ENR among union and nonunion contractors found that “low productivity wastes from 15% to 40% of every construction payroll dollar.” Since labor was about 40% of the average project cost, “Americans this year are spending from $12 billion to $16 billion for something they aren’t getting.” This was a considerable amount, given total U.S. construction volume that year was $115 billion.

The article also spelled out how deep the problem went. “Featherbedding, like many other problems of the industry, has long been recognized but just as long been tolerated. Politicians, fearful of the clout of unions, have, for the most part, avoided any direct confrontation with them. Union officers on a national level, though relatively secure in their positions, have apparently been powerless to control the acquisitive ways of their local unions even while paying lip service to the desirability of doing so.” It concluded that contractors were reluctant to fight these inequities, “since the cost of these inequities largely could be passed on to owners and taxpayers who even now are only vaguely aware of the extent to which they are being victimized.”

One avenue of reform was opening up apprenticeship programs, which until then had been exclusively run by unions. In 1971 the Labor Dept.’s Bureau of Apprenticeship and Training broke that stranglehold, allowing open shop contractors to run apprenticeship programs for nine trades. That action eliminated restrictions unions had placed on the number of apprentices who could enter the trades each year, which caused artificial labor shortages and fed wage inflation.

An editorial accompanying the argued that such reform could not come from organized labor, but only by management—"aroused management, united in political action and in bargaining.”

Another indicator of change was the growth in the number of contractors going “double-breasted” by operating both union and nonunion shops. The Associated General Contractors of America, with 35% of its members operating open shop by 1969, was holding open shop conferences around the country by 1972, reflecting a strong interest in nonunion operations among its members. A 1971 decision by the National Labor Relations Board in the Gerace-Helger case found that two firms, one union and the other nonunion, were separate employers even though they had common stockholders, further establishing a position for nonunion firms to operate.

Impacts of the Open Shop

The incoming president of the AGC, Nello L. Teer Jr., stated in 1972 that successful open-shop projects “had a far more depressing effect on the highly inflationary wage demands of organized labor than CISC or any other governmental wage policy.” Although precise statistics did not exist, in 1972 both AGC and ABC agreed that about 40% of U.S. construction was carried out by nonunion firms. A 1975 study by the University of Pennsylvania’s Wharton School estimated open shop work accounted for 50% to 60% of all U.S. construction.

Throughout the 1970s the gut reaction of unions in some regions to counter the open shop movement was violence. In 1970 a mob of 1,500 union men rioted and wrecked $200,000 of private property at an open-shop project in West Palm Beach, Fla. Using fence posts as battering rams, they tore down a car dealership building and damaged or destroyed 61 new cars. At least 27 men were arrested, and the dealership owner sued the unions and reached a $1 million settlement. In 1972 a mob 400 to 500 strong destroyed property owned by a non-AFL-CIO subcontractor at the Walter Reuther Jr. High School project in Rochester, Mich. In 1973, a painters union official died of gunshot wounds received at a Huntington, W.Va., jobsite being picketed over the use of nonunion labor.

ABC filed a wide-ranging suit with the NLRB in 1973, charging the building trade unions at the national, state and local levels of conducting a conspiracy of violence and coercion against open shop firms. It sought a nationwide court injunction and other sanctions. A 3,000-page supporting document detailed 170 acts of violence, including 34 fires, nine dynamitings, 64 acts of vandalism, 42 assaults and 29 incidents of mass picketing. After a year-long investigation, the NLRB dismissed the conspiracy charges but issued complaints against four national and 11 local unions.

One of the most persistent targets of union violence was the Altemose Construction Co., an open-shop contractor in the Philadelphia area. In June 1972, a group of 1,000 unidentified men entered an Altemose jobsite in Valley Forge, Pa., where they fire-bombed construction equipment and stoned policemen. Later that day, 1,000 union members picketed the site. The company got an injunction prohibiting picketing within a mile of their properties. Days later, 25,000 hardhatted workers marched to the county courthouse where the injunction was issued, chanting “Altemose has got to go!” Two months later, company head J. Leon Altemose was beaten on a sidewalk in Philadelphia by 18 men who were picketing a bank that financed an Altemose hotel project. The picketers prevented mounted police from reaching Altemose. Three roofers union members were arrested but acquitted in court for lack of evidence. Altemose was named ENR’s Man of the Year in 1973 for fighting for his right to operate his firm as union or nonunion. In 1975 a judge sentenced 11 roofers union members to prison terms for their participation in the June 1972 incident.

One sign of change was a national construction labor agreement negotiated by the NCA and the plumbers union in 1977. It created a new semi-skilled class of journeyman who would receive 60% of the journeyman rate, limits on the amount of overtime pay, and a clause allowing NCA members to negotiate new wage rates and conditions.

An ENR cover story in 1977 found the open shop had spread across the country, making major inroads into market sectors and geographic areas that had once been union strongholds.

A Dept. of Housing and Urban Development survey found that virtually all homebuilding and most small multifamily and light commercial and industrial work was open shop. At the other end of the spectrum, open shop contractors were snaring very large projects, including a number of major industrial projects and 43 power plants in the South and Midwest.

By this time ABC’s membership had grown to 11,500 firms across all 50 states.

An accompanying editorial argued that, contrary to assertions by the AFL-CIO, the open shop was not a creature of the Business Roundtable (an owners group focused on controlling construction costs) or of antiunion forces. “Its growth is, instead, a direct response to the dispassionate forces of the marketplace.”