The Truth About Project Labor Agreements

Here is an update to a story we followed in 2011.

Ohio’s Lorain City Council voted March 7 to repeal a project labor agreement (PLA) mandate for all city construction projects. It was replaced by a measure requiring contractors to comply with a workforce participation plan that includes a local hire mandate of 25 percent.

Courtesy of Wikipedia

City leaders learned firsthand what the merit shop community already knows: PLA requirements reduce competition from qualified local contractors and harm their skilled local employees.

According to a Lorain Morning Journal editorial, this policy change was the right move (“EDITORIAL: Lorain makes another smart move toward a better future for itself,” 3/10/13):

Lorain is on a roll when it comes to acting like a smart city that is determined to improve its place in the world as a hometown and as a place to do business…

…The mayor’s plan helps Lorain by encouraging more companies — both union and non-union — to bid on city projects. That increases competition for the city’s work, and for using the local labor force. It will help Lorain to get the best price and to make the most of its tax dollars.

The Workforce Participation Plan replaced a 2011 Project Labor Agreement that one critic described as “forced unionism.” The PLA discouraged non-union companies from bidding on city projects by raising their costs. Restrictive PLA requirements included forcing non-union contractors pay a union for worker benefits that the workers wouldn’t be eligible to receive until after working 450 hours. Also, non-union workers would have to join a union after a week on a job. A PLA rule requiring 75 percent local labor on projects was tough for contractors to meet.

The mayor’s new Workforce Participation Plan sets the local labor share at 25 percent, and it removes other costly disincentives, making Lorain’s projects more attractive for bids from more companies…

…With approval of the mayor’s Workforce Participation Plan, Lorain presents a more-welcoming face toward all types of companies. Lorain also, once again, shows its new willingness to make smart choices that will help to bring residents a better future.

Here are the highlights from the Lorain Morning Journal‘s coverage of the new plan:

Mayor Chase Ritenauer has said the agreements have discouraged contractors from bidding on Lorain’s public jobs, which in turn drives up costs of those projects, such as road and waterline repairs.

Contractors including leading national builders of water tanks have told city officials they will not bid on a job to build a water tower on Lorain’s west side due to PLAs, said Safety-Service Director Robert Fowler.

Kokosing Construction Co. Inc. officials also have said the company will not bid on Lorain jobs, Fowler said. Westerville-based Kokosing Construction is Ohio’s largest contractor, according to its website.

So far three contractors have requested specifications to replace waterlines under West 21st Street and a major east-west thoroughfare in Lorain, Fowler said. Consultants working with the city claimed a similar project east of Cleveland drew 15 bidders, he said.

The loss of interest from potential bidders leaves Lorain at a competitive disadvantage because it is not in the best interest of the community to pay more tax dollars or utility fees for projects, Fowler said.

“Our construction is stymied,” he said.

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Despite the good intentions, Lorain’s PLAs have discouraged non-union contractors from bidding on public jobs, said John Falbo Jr., estimator for Terminal Ready-Mix Inc. of Lorain.

Non-union shops either skip the jobs or must inflate their prices to cover benefit costs paid to the union, Falbo said. The workers also must join the union or stop working on jobs after seven days, he said. The contractor also must pay the union to cover benefits such as health insurance for the workers, but the workers don’t qualify for benefits until after working with the union for 450 hours, he said.

“Straight up, that’s what this is all about,” Falbo said. “It’s forced unionism.”

When companies bid on municipal projects, the specifications and bid documents can run into hundreds of pages, Falbo said. Bidders, whether union or non-union shops, must offer supporting evidence and a bond ensuring they are qualified and can complete a job, he said.

“The PLA really is impactful to the companies by requiring them to be signatories to the union for the duration of that contract,” Falbo said.

This is a win for local taxpayers and the 73.8 percent of Ohio’s private construction workforce that chooses not to join a labor organization. The city already has accepted bids for upcoming projects from local contractors that were willing to comply with local hiring goals, but not Big Labor’s demands as included in the PLA.

Here at TheTruthAboutPLAs.com, we appreciate the willingness of city leaders to take a stand for open competition and taxpayer value on public construction projects.