Developers’ ability to hire nonunion workers forces unions to make concessions

TRD New York /
Apr.April 01, 2013 10:00 AM

Developers of major projects can increasingly opt to hire nonunion contractors, a trend that is helping them to cut labor costs and force construction unions to somewhat toe the line, Crain’s reported. 

The Zeckendorfs’ recently-announced 44-story, 87-unit luxury condominium project at 50 United Nations Plaza will be built using a package of work-rule and wage concessions from unions that is expected to cut labor costs by up to 20 percent. Other big projects that have secured similar concessions, known as project labor agreements or PLAs, include 56 Leonard Street  in Tribeca, 150 Charles Street in the West Village and Harry Macklowe’s 432 Park Avenue.

“A [developer] today has options,” Louis Coletti, president of the Building Trades Employers Association, a group that represents union contractors, told Crain’s.

Indeed, unions — such as the electrician’s union Local 3 or the ironworkers union Local 580 — are being pressured to make the discounts set out in the PLAs a permanent fixture of their work contracts. “We’re about to enter another round of bargaining, and while the market has improved, it’s still choppy for the unions,” Paul Salvatore, a labor attorney who last year negotiated a PLA for the Related Companies $15 billion, Hudson Yards project, told Crain’s. “There are definitely those who would like to see the work-rule changes in the PLAs rolled into their contracts.”

As the construction market continues to become more robust, however, the continued use of PLAs is starting to be examined closely.
“There have been murmurings by some of the trades questioning the continued use of PLAs,” Michael Zetlin, a construction attorney, told Crain’s. “The PLAs help stimulate construction, but there are those who believe they should be nixed.”

Other developers are often opting to hire nonunion workers to garner savings of up to 30 percent on megaprojects, including Acadia Realty Trust’s City Point in Downtown Brooklyn and a 550,000-square-foot project by Toll Brothers and Starwood Capital right next to Brooklyn Bridge Park. [Crain’s]  – Hiten Samtani

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