Market recovery grants helping

Phoenix Local Union rise from ashes

This summer the construction market was as hot as the temperature in Phoenix, Ariz. Mark Butler, business manager for Local 469, said “The work is the best now it’s been in a long time. I can hardly fill all the manpower requests I get.” Nearly all 2,000 members of the combination pipe fitter, plumber and refrigeration Local Union — and several hundred travelers — were still working in mid-September.

However, construction booms here, like those of most cities, are cyclical and sandwiched between stretches of time when the big, bread-and-butter industrial jobs slow to a trickle.

In 2002, when business wasn’t as brisk as now and there wasn’t enough new work to go around, union leaders and employers got serious about regaining work lost to the non-union sector. Like everyone in the unionized world, Local 469 watched their market share steadily diminish for years. Before the 1970s, Butler explained, 80 percent of the growing city’s residential, commercial, and industrial work belonged to the union. During the next three decades, as the union sector largely catered to the big, lucrative power generation and technology plants, the smaller work steadily slipped away, fueling the emergence of many non-union contractors. Today the union’s share of the residential and commercial markets is 10 and 20 percent, Butler estimates. “We still do the larger work, the power generation, the electronics manufacturing plants and the like,” he said.

Local 469 created a Market Recovery Program that, for one, forced them to put their money where their mouths are. It shared certain attributes of other similar programs, but had one unusual feature: It would issue monetary grants to union contractors to help them bid more effectively with their non-union competitors. A new fund supported by 2 percent of gross wages of L.U. 469 workers was established to finance the grants. It also pays for lobbyists, marketing consultants and other specialists hired to help the union side formulate and present their message to general contractors and owners.

The Market Recovery Program went into action in 2003. Since then the union, which administers the program, has reviewed more than 250 grant applications from contractors. The grant requests are weighed against the type and scope of the project. The grant money can make up the difference between union and non-union wages and benefits in projects where the goal is within reach. While amounts have varied across the board, Butler said the program seems to work particularly well with smaller jobs.

The union conducts seminars to explain the program to contractors and help with applications. Both parties work out the estimated labor, training or other special needs of the project. As a condition of the grants, contractors agree to regularly report their time to the union, so its use can be monitored.

See for themselves

Buying back lost work isn’t the only way the program, which was patterned after similar ones in Seattle, Wash., and Portland, Ore., is benefiting the union sector, Butler believes. By helping their employers get a foot in the door, the program has also succeeded in giving some owners a taste, for the first time, of what a trained, productive union workforce can do for them. “This will pay dividends down the road,” Butler hopes, noting that it has already led to repeat work for more than one contractor.

In three years, the Market Recovery Program has already helped the union’s employers win 85 new construction projects where the grants have been applied. These are not only residential jobs but also work in hospitals, restaurants and hotels.

“We’ve recovered about $1.2 million of work previously lost to the non-union segment,” he said. Since 2002, Local 469 has seen its number of hours worked for the year more than double, from 2 million hours in 2002 to almost 5 million in 2005.

“So often and for so long in Arizona the sole focus has been who has the lowest bid. And that’s wrong,” Butler emphasized, “and full of false assumptions.” As long as the skill and increased productivity are there, the general contractor can look at the higher labor cost in a new perspective. The Market Recovery Program seems to be giving both sides another chance to connect.