Labor at a Crossroads

Trade unions are busier than ever. So why are people worried?

July, 2005

When Lynn Kinney returned to Hawaii in 1971, after his third tour of duty in Vietnam with the U.S. Navy, the Islands must have looked like a land of milk and honey. The state was at the height of its economic big bang, with much of urban Honolulu’s sky-scraping skyline still taking shape. The jobs were good, the money even better.

The 21-year-old Kinney joined the crew of a painting contractor and got busy painting the walls of Honolulu’s wall-to-wall construction projects. Kinney worked seven days a week for three years straight, without a vacation. His only days off were Christmas Day and New Year’s Day, with half days off on both eves.

“When I started there were maybe 20 high-rises going on at the same time, with each needing about 20 or 30 painters. That’s not counting Mililani and all that west-side housing,” says Kinney. “We were so short of manpower that, when I was at the gas station, I’d tell the guys at the pumps that if they wanted to become painters, they could jump in the back of the pickup or follow me to the union hall.”

Today, Kinney is the business manager/secretary treasurer of District Council 50, a confederation of four trade unions: the Painters, the Carpet Linoleum and Soft Tile Layers; the Glaziers, Architectural Metal and Glass Workers and the Drywall Tapers and Finishers. After more than a decade of little work, the worst slump the local industry has ever seen, Kinney has been thinking about the good old days again. In the past two years, District Council 50 has doubled its membership, from about 1,000 to 2,000. All four of District Council 50’s unions have nearly 100 percent employment.

Boom Boom

It’s a good time to be working in the trades in Hawaii. With slow, steady growth, the construction industry has been the state economy’s most consistent performer over the past seven years. According to the University of Hawaii Economic Research Organization (UHERO), statewide private building permits increased from $1.3 billion in 1999 to $2.7 billion in 2004. Government contracts increased even more, exploding from $584.8 million to $1.38 billion during the same period. As a result, the number of construction jobs increased 23 percent, from 22,620 in 1999 to 29,310 in 2004.

The industry’s upturn isn’t going to be turning south any time soon. UHERO’s Construction Outlook, prepared by UH economic professor Carl Bonham and Bank of Hawaii economist Paul Brewbaker and released Oct. 4, 2004, predicted that, in 2005, overall construction activity would increase 13.8 percent, with total contracting receipts rising more than 20 percent, from $4.5 billion in 2003 to $5.5 billion in 2005. Construction payrolls will increase to nearly 31,000 jobs. UHERO’s Construction Forecast, released in April of this year, called this boom the “longest uninterrupted expansion since the 1960s.”

For the trade unions, today’s boom may have some things that previous ones didn’t – stability and predictability. While unforeseen global events could significantly affect the industry, long-term public-sector projects, most notably the privatization of military housing, promise to provide steady work for decades. This housing redevelopment is an extreme makeover of epic proportions: the construction of 17,000 new homes and the extensive renovation of 7,000 more over the next 10 years.

Cleveland-based Forest City, which is developing five neighborhoods for the U.S. Navy, estimates that its initial development costs will be $358 million. Napa Valley, Calif.-based Actus Lend Lease’s contract for its massive redevelopment for the Army is valued at $1.7 billion over its 10-year development. The company’s Hickam Air Force Base contract adds another $197 million and Fluor Hawaii’s development of Pearl Harbor’s historic Ford Island adds another $84 million. In addition, since the contractors will also own and operate these military communities for at least the next half a century, there will be billions more dollars spent on maintenance and renovation.

“With these military contracts, we will be doubling what we’re doing on the Ewa plain every year for the next 10 years,” says Ron Taketa, financial secretary and business representative of the Hawaii Carpenters Union. “These projects stabilize our industry. Construction will be on a much more even keel when the next downturn happens.”

Building Better Business Relationships

Not only are the projects dramatically increasing the amount of work Hawaii’s trade unions will be doing over the next several decades, they are also changing the way they work, or at least negotiate. All three of the military housing developers have signed project labor agreements (PLA) with a consortium of trade unions. The agreements, which will last for the duration of each project, establish standard work rules, hours, pay and benefits, as well as overtime pay and dispute resolution procedures. The PLAs also require that all contractors and subcontractors become signatories of the agreement. In addition, when a nonunion contractor or subcontractor gets work under the PLA, all its workers have to join the designated union that represents his or her craft. (In other words, they have to pay union dues.) In return, organized work stoppages (strikes) and lockouts are prohibited.

While they are new to the Islands, PLAs have been used on the Mainland for more than 60 years on major projects that have an extended duration and require the use of many different trades. Washington state’s Grand Coulee Dam and California’s Shasta Dam were built with the aid of PLAs, as well as the Kennedy Space Center and Los Angeles’ Light Rapid Transit system, among many others.

“The PLAs enable us to set pay and benefit rates for those massive projects so anyone going to work won’t have to take a cut in their standard of living, if, in fact, those projects become the only show in town,” says Taketa, who co-chaired the unions’ negotiating team. “Because of the massive size of these projects, we are in a much better position than at any other time.”

Taketa estimates that the Hawaii Carpenters Union’s membership, which numbers approximately 6,000, will increase some 40 percent in the next five to 10 years in part as a result of the military projects. Kinney estimates that his membership will grow 50 percent over the next five years, after which it will stabilize, assuming that the private market continues to be strong over the same period. However, membership increases aside, Taketa and Kinney are more optimistic about the new era of labor and management relations that the PLAs will usher in. They say they are a better way of doing business and see the potential for the use of PLAs in the forthcoming developments of Ko Olina, Kakaako and Kewalo Basin, all large, long-term projects that could benefit from industrial peace and continuity.

“We’ve worked very closely with management to form a partnership, as opposed to making harsh demands of each other,” says Kinney, who co-chaired the negotiating committee with Taketa. “I don’t think they (management) really knew how to react to that. We were very upfront and forward with them. The days of striking are over. This is a new era.”

But for all the peace and prosperity that the PLAs are supposed to bring, the agreements aren’t universally loved among the trade unions. According to critics, the one-size-fits-all agreements don’t take into account the vast differences in the nature of work, training and skills of the various tradespeople. In addition, large umbrella agreements will inevitably develop holes over time. Of the 17 Hawaii construction trade unions, 12 have signed the various PLAs.

“Side agreements or side contracts to the main contract are something that I could live with, but they weren’t allowed [with Forest City],” says Gerald Yuh, business manager/financial secretary of the International Brotherhood of Electrical Workers (IBEW), Local 1186. Yuh’s IBEW signed the Fluor Hawaii and Actus Lend Lease PLAs, but did not participate in the Forest City PLA. Yuh’s contract, considered the strongest in the trades, includes 14 days of vacation instead of 10 and double time for holidays and Sundays among other considerations. The PLA contracts pay time and a half for those days. He says, “It is very important to maintain the pay and benefits that our members have fought for. I’m not going to let them be diluted, especially during a time when construction is at its busiest in two decades. Why not use the best contract in the industry, instead of one of the weakest?”

“We’re not opposed to PLAs establishing general work rules such as starting time and quitting time], or basic pay issues, like when does someone gets paid time and a half or double time,” says Harold Dias, president of the Hawaii State AFL-CIO, a voluntary confederation of 60 local affiliates and councils. “But when it comes to other money issues, how do you equate a mason with a carpenter with a plumber? They have such vastly different skill sets.”

But more than the agreements themselves, the problem with the PLAs may be that they are signaling the beginning of some significant changes for the trade unions and eventually the Islands’ and nation’s labor movement as a whole.

The Ghost of Walter Kupau

Although Taketa diplomatically defers much of the credit for the negotiations of the PLAs to other members of the building trades, the 6,000-member Hawaii Carpenters Union, the largest single union in the trades, was integral to any agreement. Taketa as co-chair of the negotiating committee, was its public face. More importantly, in the end, it was the carpenters’ contract that became the template for the three PLAs.

It’s a development that rankles some in the industry. To those observers, the developments look like the opening stages of an effort to consolidate Hawaii’s trade unions under one roof. Taketa’s predecessor, the charismatic Walter Kupau, who was also known as “Wall-to-Wall Walter,” was a forceful, persuasive advocate for union consolidation.

Taketa is a strong advocate for such consolidation, but says that his wish to see Hawaii’s trades more closely allied has little to do with the past and everything to do with the future. In today’s business world, where mergers and acquisitions are a weekly occurrence and leverage is used (and overused) as a verb, size does matter. Large organizations have the political and marketing muscle to change minds and guide policy. According to Taketa, the best place to merge is from a position of strength (now) and not during a time of economic necessity (the next downturn).

“In the years to come, you are going to see a lot of unions realize what businesses have known all along,” says Taketa. “Without joining a larger organization, with more capital and experience in those areas [marketing and training], the smaller unions will have a difficult time competing. When WalMart moves in down the street, you either change the way you do business or you get out of business.”

“I’m an optimist. I believe we should support and help each other, not absorb each other,” says Yuh. “In the age of WalMart, it is even more important to have strong, independent unions working for their members and with the business community. Those kinds of unions understand the unique needs of the community.”

State of the Unions

Kinney believes that while the formation of one giant trade union might be an inevitability, it won’t be happening in his lifetime. There are just too many variables and people involved, including “17 different kings” [trade union heads] who would need convincing. However, according to William Puette, director of the University of Hawaii’s Center for Labor Education and Research, mergers and consolidations might be right around the corner for many labor unions. Hawaii’s trade unions’ family feud is being played out on a much larger stage on the Mainland. Later this month, the AFL-CIO holds its annual convention in Chicago and, by meeting’s end, the 50-year-old umbrella organization for the nation’s major unions may have a new leader and the country’s labor movement a new direction.

A dissident group led by the president of the Service Employees International Union, the largest and fastest-growing union in the federation, has called on the AFL-CIO to adopt a 10-point plan for reform. One of the points is to significantly increase the amount of money spent on organizing. Another calls for the acceleration of union mergers to “create meaningful economies of scale.”

While the obituary for labor has been written many times, currently, unions are in arguably their weakest position in the modern era. Since the end of World War II, labor nationwide has been on a long, steady decline. According to the Bureau of Labor Statistics, in 1945, 26.6 percent of America’s private-sector work force paid union dues. By 2001, that number had been cut by more than half, to 12.5 percent. However, as disappointing as that statistic is for union loyalists, what came as a shock to the system was the re-election of President George Bush last year, despite an all-out effort by labor to defeat him.

“The election was a bitter defeat for labor, and now we have an administration that basically has the attitude that labor unions should be banned off the face of the earth,” says Puette. “The unions are realizing that they can’t just sit back, hold hands and get slaughtered one by one. Depending on what happens at this meeting, labor could go through some really huge changes or just some huge changes. Mergers and consolidation will happen, whether it’s 55 percent or 99 percent. It won’t matter if you have a strong union locally, once you are absorbed nationally there is nothing you can do.”

But local union leaders Yuh and Dias remain resolute and decidedly old school, even though both are relatively young. (Yuh is 43 years old and Dias is 39.) According to the pair, with the economy booming and jobs plentiful in Hawaii, local, independent and active unions are needed now more than ever.

“Being a first-class resort destination has been good for the state. It’s provided us with a lot of jobs,” says Yuh. “But we’re starting to see the separation of the classes. We’re losing the middle class. Look at how high house prices are. We’re starting to look like Hong Kong. We [labor] are just trying to protect the middle class, something that unions helped create in the first place!”

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