Productivity Enhancement: Project Labor Agreements

5. Case Studies

Route I-15 in Utah
Toyota assembly plant in San Antonio
T.F. Green Airport terminal
East Side Union High School District

The following case studies demonstrate how PLAs can be used to address different essential needs. Here, four projects take focus: Route I-15 in Salt Lake City, the Toyota plant in San Antonio, an airport terminal in Rhode Island, and a series of high school projects in San Jose. As we will see, each project was distinctive, with the PLA used in a creative way to address a specific need.

• The Route I-15 project was a critical highway reconstruction needed to support the 2002 Winter Olympics in Salt Lake City. The challenges included getting the project done on time in an area with a very tight labor market. Political concerns over the use of a PLA also had to be addressed.
• Although nonunion at nearly all of its American parts’ and assembly plants, Toyota uses PLAs for its construction. This fact, however, proved controversial in San Antonio, where construction is so lightly unionized. Extremely unusual for a private sector PLA, the Toyota San Antonio PLA includes strong accommodations for nonunion contractors and workers.
• In the mid-1990s, the State of Rhode Island replaced the outdated terminal at T.F. Green Airport, which services Providence. A key challenge was completing the project while keeping the airport in full operation.With the help of creative scheduling options in the PLA, the terminal was completed ahead of schedule.
• The East Side Union High School District in San Jose features many specialized vocational academies and programs.With the approval of the $300 million school construction bond issue, the district saw an opportunity for experiential learning and, through a PLA, created the Construction Technology Academy.

Route I-15 in Utah

On Friday, June 16, 1995, Salt Lake City was selected to be the site of the 2002 Winter Olympics.²⁷ For the games to begin, much had to be done, not the least of which was the complete reconstruction of a seventeen mile freeway bisecting the Salt Lake Valley.²⁸ Olympic organizers and state officials agonized over the traffic tie-ups associated with a reconstruction project that would rebuild 130 freeway bridges, demolish and rebuild the main freeway interchange in the city connecting I-15 with I-80 and “chop up and replace every cubic inch of asphalt and concrete” for seventeen miles in the heart of the urban Salt Lake area.²⁹Worse than a traffic nightmare, many feared not being done in time. The Utah Department of Transportation (UDOT) estimated that the reconstruction of I-15 could not be completed until after the Olympics in 2002 and probably would not be done until 2004.³⁰ Then Utah Governor Mike Leavitt later said, “I told [Tom Warne, Executive Director of UDOT], ‘Tom, we’ve got to find a way to do this faster.We cannot have this community torn up for nine years.’”³¹

UDOT’s solution to this dilemma was to invoke an innovative form of construction—design build—which would hopefully allow the reconstruction project to be completed prior to the 2002 Olympics without completely shutting the I-15 corridor for years. Using design-build meant that construction could begin prior to a complete and detailed design and specification of the overall project. UDOT engineers would provide general guidance, but competing contractors would be free to develop their bids using innovative materials and procedures aimed at speeding construction and reducing costs.³² At the time, estimates of the cost of the I-15 reconstruction project were at one billion dollars indicating that UDOT thought the design-build approach would save about ten percent on total costs along with cutting construction time by about two years.³³

Under design-build, construction could be scheduled to begin in early 1997. Contractors would be expected to work around the clock, six or seven days per week. There would be limits on how many lanes could be closed at any given time as well as how many interchanges could be closed.³⁴ Designbuild was particularly cost-effective on large projects but some felt that inevitably out-of-state contractors would be awarded the project. Local contractors were not equipped to handle the scope of work proposed, particularly the engineering required of contractors on a design-build project. However,Warne said that contract language for the I-15 project would stipulate that Utah construction companies would be named as subcontractors.³⁵

In September 1996, UDOT prequalified three contractors from a field of ninety that responded to the announcements in March. By September, the project had expanded to include an additional interchange at the north end of the reconstruction project and the relocation of some railroad tracks near the project. The official cost estimate had risen to $1.36 billion due to these additions and other considerations. On March 26, 1997 UDOT announced that Wasatch Constructors (a consortium led by Kiewit Constructors of Omaha and which included several Utah companies) had won the bid.

With design-build, the lowest bidder does not always win the project. UDOT was using a “best value” approach that combined cost considerations with technical and quality considerations to receive the best bang for the Utah taxpayer’s buck.³⁶ Warne later said that the “I-15 design-build contract was given to the best overall proposal, not the lowest bid.”³⁷ However,Wasatch Constructors had coincidentally come in with the lowest bid.

Wasatch officials indicated they planned to begin immediately. “You have to remember this job isn’t even designed yet,” said Conway Narby, principal on site for the winning consortium.³⁸

With groundbreaking coming within a month of the bid opening and a project-completion deadline of August 2001, this 17 mile reconstruction was a fast-track project. If Wasatch could complete its work on-time and complete it to UDOT’s satisfaction, Wasatch stood to win up to $50 million in bonuses. If Wasatch exceeded UDOT’s deadline of November 2001, just before the 2002 Winter Olympics, the company risked paying UDOT up to $100 million in fines. Also,Wasatch had to guarantee its work. According to the contract, UDOT could take a default one-year warranty on the project or force Wasatch to cover all road maintenance for ten years for a fee of $27 million. UDOT reasoned that this potential warranty at UDOT’s option would focus Wasatch Constructors on quality as well as speed. In short,Wasatch had won because it had the experience to do what it said it would do including designing on the fly while building on time and within budget.

Ed Mayne, president of the Utah AFL-CIO, was very pleased that Wasatch had won the bid. He felt that Wasatch was the most union-friendly of the three pre-qualified bidders. Indeed, prior to bidding the project,Wasatch had secretly signed a PLA with six local unions agreeing to a uniform set of wages, benefits and work rules that largely corresponded to local union collective bargaining agreements. This agreement was not made public prior to the bid opening because the PLA was part of Wasatch’s bidding strategy. Building a fast-track project under design-build, in a tight labor market, with substantial performance awards and penalties in play, involved considerable risks for Wasatch. The PLA was one means of controlling some of those risks—the ones associated with the supply and quality of labor.

Mayne felt the PLA provided another advantage. Just as it was politically wise to require outside general contractors to partner with local subcontractors, it was also politically sensible to encourage local employment on the biggest public project ever financed by Utah tax dollars. Mayne anticipated that the consortium would hire seventy to eighty percent of its workforce locally despite Utah’s 3.1% state unemployment rate at the time of the bid award. Narby, the person who signed the PLA for Wasatch, agreed that eighty percent local hire was possible particularly if participating nonunion contractors hired locally.³⁹ The PLA did not prohibit nonunion contractors, and ten percent of the value of the work was exempt from the provisions of the PLA. But if nonunion contractors from out of state brought in their traveling labor force, the amount of local hiring would go down. Union contractors both in-state and out-of-state were required by the local collective bargaining agreement to give preference to local workers over travelers. However, local labor shortages loomed as a problem for all contractors.

By early 1997 when the project was to begin, the Utah construction industry had been booming for seven years (since 1990).While construction accounted for just under four percent of total Utah state employment in 1990, by 1996 construction accounted for 6.5% of all state civilian, nonagricultural employment. Furthermore, construction employment had been growing in absolute terms at over ten percent per year for each year from 1990 to 1996.While Utah’s construction’s growth rates peaked in 1994, its share of total state employment would not peak until 1999. I-15 was going to be rebuilt during a period of labor shortages and Wasatch Constructors saw that coming.

The Salt Lake Tribune reported at the beginning of the I-15 project that:

[Wasatch Constructors] has to find some 1,000 to 1,500 skilled highway construction workers in a state where the unemployment rate is so low that even unskilled jobs in hamburger joints go begging to be filled. “It is hard to say where they are going to find the workers,” says Ken Jensen, chief economist for Utah Job Service. “I am not aware of any bunch of workers out there standing in line waiting to climb up on earth movers.”⁴⁰

Estimates of the needed workforce varied. The Deseret Morning News estimated 600-1,000 hourly craft workers and 100-150 salaried employees. The Salt Lake Tribune estimated 1,000 to 1,500 workers.⁴¹ Several other road construction projects were underway at the time or scheduled to begin, including a light rail project running along the same corridor as I-15. Local highway contractor Richard Clyde, whose firm W.W. Clyde was part of the losing consortium, Salt Lake Constructors, noted that heavy construction workers were already in high demand and stated, “I still do not see where [Wasatch] are going to get all the workers they need without bringing in a lot from out of state.”⁴² Having won the contract,Wasatch Constructors announced its PLA with the six key trade unions that were going to complete the project. These unions were the operating engineers (heavy equipment operators), laborers, plasterers-cement finishers, carpenters, iron workers and teamsters (truck drivers). The contract these unions signed with Wasatch was a variant of the heavy-highway construction project agreement used around the country by various highway contractors in conjunction with (typically) these unions—namely the unions that do most of the heavy and highway work. The contract stated in part:

It is the intent of the parties to set out uniformly standard working conditions for the efficient prosecution of the new construction herein; to establish and maintain harmonious relations between all parties to the Agreement; to secure optimum productivity, and to eliminate strikes, lockouts or delays in the prosecution of the work undertaken by the employer…

The greatest advantage in working with the Unions is the ability of the Employer to acquire an immediate and continuous source of skilled applicants. Within the Unions there exists the capability to activate a recruiting network throughout the United States to ensure a steady flow of skilled applicants to meet project schedules.

The Employer may name hire any individual who has previously worked for the Employer (or any of the individual joint venturers thereof)…[ as long as] those hired from “other lists” shall not exceed forty percent of each craft’s work force.

This last provision meant that contractors (union or nonunion) could bring onto the project up to forty percent of their own workers (either union or nonunion). In practice, the percentage would likely be smaller because this forty percent limit was applied craft by craft and contractor by contractor. Thus, while one out-of-state nonunion contractor might bring in forty percent outside workers for each craft, an in-state union contractor might name hire few, if any, workers simply taking workers in order from the union hiring hall. Another out-of-state union or nonunion contractor might bring in his skilled crew but take lesser skilled workers from the hall. So the forty percent rule gave contractors flexibility to respond to particular cases but also made it likely that, on average, less than twenty percent of the workers would come from out of state. The unions, in turn, agreed not to discriminate against nonunion workers seeking to be sent out from the hiring hall in this right-to-work state.

The Unions represent that their local unions administer and control their referrals in a nondiscriminatory manner and in full compliance with Federal, state and local laws and regulations which require equal employment opportunities and non-discrimination. The Unions agree to engage in active recruitment of minority and female applicants…

The unions also agreed to cooperate jointly with management in enhancing productivity on the job and to forswear any work stoppage:

The Employer and the Unions recognize the need to continually explore ways and means to increase productivity to enhance the competitive position of the signatory contractors and thereby increase job opportunities for members of the Unions. To this end, signatory contractors and local unions are encouraged to establish Project Productivity Committees to deal with problems affecting job schedules, construction technology, recruitment and similar matters…There shall be a labor-management committee whose purposes are to foster labor relations communications and to explore ways and means to improve safety, quality and productivity at the jobsite.

The Parties agree that there is an absolute prohibition against any and all strikes, work stoppages, slowdowns, picketing, sympathy strikes, hand billing or any other forms or types of interference of any kind…There shall be no lockout by the contractor.

An expedited grievance procedure was established for any violation of the no-strike, no-lockout clause. The contract also established uniform work rules, hours, shifts, overtime pay and holidays, including time off for July 24th, a local Utah holiday. Pay scales, including wages and benefits, were set for all craft classifications and these were to be reviewed yearly in July. A section on apprentices stated:

Recognizing the need to maintain continuing support of programs designed to develop adequate numbers of competent workers in the construction industry, the Employer will employ registered apprentices in the respective Unions. The combined employment of apprentices shall not exceed thirty-three and one-third percent of the individual Union work force…

This meant that the local tax dollars financing the I-15 rebuild would also finance a rebuilding of the skills of the local construction labor force. Finally, subcontractors also were to be covered by this agreement except “the Employer may subcontract up to but not exceeding ten percent cumulative of the final Prime Contract amount to subcontractors…[ not] signatory to this agreement or local labor agreements…” Also women and minority subcontractors need not be signatory to the agreement. Thus, the PLA was designed to provide contractors with flexibility permitting contractors to bring in up to forty percent of their own worker while at the same time creating a structure that would likely generate around eighty percent local hiring. The contract required most subcontractors to adhere to its provisions but allowed ten percent of the work to go on outside the requirements of the PLA.

Wastach’s Greg Brooks explained part of the rationale for Wasatch signing this agreement: “What we are basically doing is taking Mayne at his word [that he can provide the qualified local labor].Mayne said, “There is no doubt that we are going to be scrambling, but the seventy to eighty percent [local hire] figure is certainly doable. Each of the major craft unions in the state probably have 100 to 200 apprentices in training as we speak. [Out-of-state skilled workers] are part of the equation. But we are committed that most of these Utah jobs will go to Utah workers.”⁴³ Brooks indicated that Wasatch’s policy was: “We’ll hire locally and buy our supplies locally. Any time we can’t, we’ll bring whatever we need in from other sources in the region. If that’s not enough, we’ll go further out.”⁴⁴

Ground broke on the I-15 project on April 15, 1997, but the political ground began to break out from under the PLA almost immediately thereafter. On May 2, under the headline “Does the I-15 Union Deal Violate Utah Law?” the Deseret Morning News reported that Republican Governor Mike Leavitt was asking his Democratic Attorney General Jan Graham for a legal opinion on whether the PLA violated Utah’s right-to-work law.⁴⁵ The Deseret Morning News reported:

Nonunion workers can apply and get Wasatch jobs, and they can do so without dealing with any union. But the reality is most applicants will go through union hall doors to get those jobs, and they will certainly be solicited to join the union in the process. And that is what worries some conservative lawmakers who don’t want any Utahns pressured to join a union in order to get an I-15 job.⁴⁶

In actuality, there were several avenues besides union hiring halls for obtaining work on I-15. Anyone who had worked for any contractor working on the project could work for that contractor again by applying to that contractor directly, assuming the forty percent threshold of workers not coming from hiring halls had not been breached. Nonunion contractors were exempt from the provisions of the contract for ten percent of the work while additional nonunion workers could come with their nonunion contractor under the provisions of the PLA. However, Utah legislators were deeply concerned.

State Transportation Commission chairman, Glen Brown, brother of Utah House speaker,Mel Brown, stated, “We’re hearing people saying ‘We can’t live with [the hiring aspects of the PLA].’” Speaker Brown, himself, stated that if the attorney general’s opinion found conflict between the PLA and Utah’s right-to-work law, “there is significant support to renegotiate the [labor hiring] part of the contract.” But the Deseret News reported that several Republicans worried that the attorney general would side with the unions rather than interpret the right-to-work law as prohibiting the agreement.⁴⁷ Senate Majority Leader Craig Peterson indicated that it might be necessary to call a special legislative session to revise state law to prohibit this type of contract. Legislative Attorney Gay Taylor said lawmakers could refine existing law to prohibit unions from having a monopoly in specified situations perhaps forcing Wasatch to renegotiate its contract. Governor Leavitt, stating that “Two heads are better than one,” sought legal opinion from lawyers not in the attorney general’s office.⁴⁸ Senate President Lane Beattie argued:

We may not be able to change [the current agreement]. But we can act to make sure this will never happen again. Unions may think they have manipulated the system and made a great step forward. But we are not a union state and won’t become one, and they may have just ended up taking a great step backward.⁴⁹

Wasatch defended itself by restating its belief that the agreement was the best way to ensure the project was completed on time and done well, while focusing hiring on local construction workers. Narby said:

We work in other right-to-work states like Arizona and Florida under these same kind [of agreements]. Perhaps it was naive of us, but we wanted to ensure enough quality, skilled craftsmen to build this job. And in (other states) working through the unions provided that. Also, we wanted Utahns on this job, and this is a way to do that.⁵⁰

In a clarification of the contract,Wasatch and the six unions agreed that workers could apply directly to Wasatch for employment or to Utah Job Services, the state labor market agency. The state directed UDOT to audit hiring practices specifically monitoring local hiring policies. Furthermore, UDOT would appoint ombudsmen to handle complaints associated with hiring on the I-15 reconstruction.

Senate President Beattie said he was satisfied with this arrangement and would not try to have the legislature called into special session:⁵¹ “You can go through the [union] halls to get a job, but you won’t have to. There will be another way,” Beattie declared.⁵²

At this point, the attorney general’s office bowed out of the dispute: “It looks like they’ve settled all disputes,” said Reed Richards, chief deputy attorney general. “If both sides are happy, and my understanding is that they are, then there’s no point for us to continue.”⁵³

With daunting logistical and engineering tasks in front of it and significant economic carrots and sticks at stake,Wasatch Constructors began the demanding task of operating and rebuilding I-15 at the same time, with the design of the project being a work in progress, and with the clock running. Almost immediately labor shortages loomed. “Utah is a tight labor market, no doubt about it,” Brooks said. He said, however, that the I-15 project was attractive because it had plenty of work, and it paid union wages to union and non-union workers alike.⁵⁴

Wasatch Project Manager, Bill Murphy, said, “The magnitude [of the project] does get to me sometimes, [but] I-15 will be built, on time and on budget. I have no doubt.” Narby, the top Wasatch executive on the I-15 site, said “I know people, and I know what they can do. I only worry about what I cannot control: the weather, for example. Please give me three mild winters.”⁵⁵ The fact that the PLA required both union and nonunion contractors to pay union wages gave Narby and Wasatch a degree of control over their labor challenges in a tight construction labor market. Scheduling might be pushed back by weather or other factors Wasatch could not control, but the PLA made labor a more reliable and controllable construction input.

Wasatch’s PLA labor strategy and UDOT’s design-build strategy began to pay off for the contractor and the state within six months of ground breaking. UDOT’s first project evaluation covering essentially the first six months of work, April 15 to October 31, 1997, led to the decision to grant Wasatch $2,490,133 of the possible $2,500,000 in bonuses for this stage of the project. The Deseret Morning News reported:

In announcing the award amount Friday morning, UDOT officials had nothing but good things to say about the contractor. And Wasatch officials were obviously pleased that they had earned the bulk of the money they were shooting for.⁵⁶

UDOT inspected the I-15 project on a daily basis, using dozens of UDOT employees and consultants as monitors. Each month, UDOT and Wasatch jointly reviewed the daily inspections and a score was assigned to each category of evaluation. UDOT’s Warne said:“ This is a lot of money, and because of that, there is a very rigorous process in place [for evaluating Wasatch’s work] that we’ve developed over the last six to eight months. The process was reviewed by a task force established by Governor Leavitt, [Senate President] Lane Beattie and [House Speaker] Mel Brown.”⁵⁷

As the reconstruction progressed,Wasatch continued to score well in UDOT’s semi-annual evaluations. At the end of the next six month review period,Wasatch received the full $5 million bonus possible for that period. Warne said: “The full award fee for Wasatch during this period is a reflection of what we’ve been saying all along—that they are ahead of schedule, they are on budget, the quality is good and they have the management system in place to deliver the project…I certainly think that the first couple of periods are the most challenging, while they’re getting up and running and putting their organization together. I think this is a good indication they might just win or earn all or most of the award fee [of $50 million for the entire project].”⁵⁸

UDOT, however, was careful to point out that these bonuses were actually Wasatch’s possible profit on the project. Essentially,Wasatch won the bid by not including any (or much) profit in their bid price anticipating that by doing the project right they would earn UDOT’s bonuses and that would be most, if not all, of their profit.⁵⁹

Wasatch continued to meet UDOT’s goals and continued to receive almost all of the potential bonuses available under the contract. In May 2000, the Salt Lake Tribune reported:

Wasatch Constructors continued breezing through its Interstate 15 construction schedule last year and lost only $14,000 of a possible $5 million profit for the six month period ending in October [1999]…The contractor lost money for overlooking incorrectly placed beams that needed to be replaced on a 400 South bridge abutment in Salt Lake City, and for an incident last August when a drainage grate on the road popped loose and caused a multi-car accident. The award means that in its first 2? years on the job, Wasatch took home roughly $22.4 million of a possible $22.5 million [in awards].”⁶⁰

With I-15 very close to completion in April of 2001, ahead of schedule and well ahead of the Winter 2002 Olympics, John Bourne, UDOT project director said, “We believe we’ve got very good quality.We’ll see some little dings and nicks that will be replaced,” but he expected these problems to be resolved by the completion of the project.With seven of the nine award-fee evaluations completed,Wasatch had received from UDOT 99.6% of the possible bonuses from the timely completion and successful inspection of its work.

According to the original contract Wasatch had to guarantee the quality of its work for up to ten years after completion with the state paying $27 million for this insurance.⁶¹ But UDOT had the option of declining the insurance if it thought the quality of the project was sufficiently solid that the anticipated ten-year maintenance costs would be less that $27 million. That was the dilemma UDOT managers faced in the Spring of 2001 as the project came to completion.⁶²

Warne concluded, “We’ve been out there day in and day out.We’ve inspected all their work and felt very good about the quality.” He predicted that some work would need to be redone, but there were none of the classic signs of poor quality. UDOT therefore decided to decline paying $27 million for 10 years of maintenance guarantees because Warne concluded, “We anticipate spending perhaps half that much on maintenance.”⁶³ Kay Lin Hermansen,Wasatch spokesperson, said, “It’s kind of a compliment to us because the [guarantee] provision was put into the contract to protect the state and the people, and we’ve obviously delivered a very quality project.”⁶⁴

In April of 2002, the I-15 reconstruction was declared the top civil engineering achievement of the year by the American Society of Civil Engineers (ASCE): “The I-15 project contributed greatly to Salt Lake City’s ability to stage a successful 2002 Winter Olympic Games and will continue to serve the area for years to come,” said ASCE President H. Gerald Schwartz, Jr. “The Interstate exemplifies the ideals of innovation, technical excellence and community benefit.”⁶⁵

The primary reason I-15 was completed on time was because the project was bid design-build. This allowed the reconstruction to begin prior to the completion of a full set of engineered specification for the work. The greatest threats to the timely completion of the project were factors that could not be brought under the contractor’s control. Weather, therefore, was a major concern. Labor supply in tight labor markets was also a concern. But Wasatch brought that factor under control through the implementation of a PLA. This meant that all work on the project whether by Wasatch on any of its many subcontractors would be relatively attractive to workers within a growing and tightening construction labor market. I-15 construction contractors and subcontractors would have their pick of the labor market. It was a labor market version of guaranteeing three mild winters.

Also, the PLA meant that the majority of workers would be local hires so that the benefit of the higher wages would primarily redound to Utah citizens. Given that Utah tax payers were paying for most of the bill for the project, this local hire component had a feeling of fairness about it. Also, there was a certain symmetry with the explicit requirement that the general contractor partner with local construction companies. Significantly, these benefits clearly did not come at additional costs to Utah taxpayers.

The fact remains that Wasatch Constructors was the low bidder on the project. The alternative two construction consortiums were not intending to use PLAs. They, therefore, may have been intending to pay their workers less than local union rates, and their bids may have reflected that. Wasatch calculated that even though they might have higher hourly wage rates than their competitors, the ability to lure the cream of the crop out of a competitive labor market would facilitate on-time scheduling at a lower (or at least equivalent) cost and with fewer construction defects. Salt Lake Constructors came in only one percent above Wasatch, so it is difficult to claim that the I-15 PLA substantially lowered the project’s cost. But the PLA clearly did not raise the cost.

Many studies attempting to assess the effects of PLAs on construction costs compare project costs on two or more different projects. While informative, these studies always must confront the problem of comparing apples to oranges. Very few construction projects are exactly alike. Cost differences might easily be due to something other than whether or not the project has a PLA. But in the case of I-15, we have a true apples-to-apple comparison. Wasatch was going to use a PLA. In fact, prior to bidding on the project,Wasatch had signed a preliminary agreement with the local unions. Salt Lake Constructors and Lake Bonneville Constructors bid on the project without having arranged for a PLA. All three companies were bidding on the same project, and the PLA contractor came in lowest. Wasatch’s lower bid may in part have been due to superior engineers, better previous experience or other factors. But implementing a PLA was part of their game plan—namely controlling the supply and quality of labor in order to enhance the contractor’s ability to deliver a quality product on time.

Toyota assembly plant in San Antonio

Much of the current controversy over PLAs concerns the public sector. PLA use in the private sector goes largely unnoticed because there are far fewer legal issues and usually less politics than with public projects. For the most part, private construction users can attached whatever stipulation they chose to their projects. However, the fact that so many large private firms, which exist in competitive business environments and are, therefore, very cost conscious, choose to build with PLAs perhaps says something about their benefits.

Toyota is among the leading worldwide automotive manufacturers. During the past forty years, it has moved from being a domestic Japanese firm to a global producer of automobiles and trucks with a substantial presence in North America. In 2004 it produced almost 2.3 million autos and trucks in North America and had a cumulative North American investment of $16.6 billion.

Much of its success has come from its development and implementation of the Toyota manufacturing system.⁶⁶ This method, the original lean production model, has become the standard for producing high quality products at low unit costs. Now nearly all successful manufacturers emulate the kanban (pulled production) and kaizen (continuous improvement) methods pioneered at Toyota. The success of the system is reflected in the high consumer satisfaction with Toyota products and a pattern of repeat purchases. The rising demand for Toyota products in North America has lead the company to build four assembly and six parts plants in the United States, Canada and Mexico since 1986. The assembly plants are located in Kentucky, Indiana, Ontario and Texas. The parts plants are in West Virginia, Alabama, British Columbia,Missouri, California and Baja California. There is a joint venture assembly operation between Toyota and General Motors in Fremont, California, the so-called NUMMI (New United Motor Manufacturing, Inc.) plant.With the exception of the NUMMI plant, Toyota production employees are not represented by unions.

Despite the lack of union presence within the firm, all of the Toyota manufacturing facilities in the United States have been built under PLAs between Toyota, the AFL-CIO’s Building and Construction Trades Department and the local unions within whose jurisdictions the projects have taken place. In all, 36 million work hours have been done under the Toyota PLAs. The success of the relationship between Toyota and the building trades unions, and the utility of the PLAs, is reflected in the completion of numerous green field projects and expansions of those projects on time, without interruption and without even a single arbitration decision in the nineteen years in which Toyota has used the agreements.

A closer look at the dynamics of the Toyota PLA illustrates how it has developed and been adapted to the needs of various projects. We focus on the most recent green field Toyota plant in San Antonio. This plant, which is scheduled to begin yearly production of 150,000 Tundra pickup trucks in 2006, has a projected cost of $800 million and has been the highest valued construction project in Texas for the past two years. The project will require 2,100 construction workers at its peak. The project has six prime contractors and as many as 300 subcontractors. Project management is being provided by a joint venture between Waldbridge- Aldinger, a Detroit firm with considerable experience in the construction of automotive facilities and Bartlett Cocke General Constructors, a San Antonio company.⁶⁷

The San Antonio project presented a number of issues in adapting the PLA to local conditions. First, Texas’s right-to-work law is particularly unfavorable to organized labor. The law prohibits both union membership and agency fee payment as a condition of employment, and it also disallows maintenance of membership clauses, which prohibit resignation from a union during the life of a contract. Texas law holds that union members may resign at any time.

A second issue was a requirement to employ a substantial number of individuals from the San Antonio metropolitan area, Bexar County and the surrounding ten counties. Although Toyota’s $133 million public subsidy was smaller than that provided for other recent automotive manufacturing plants in the South, a substantial share came from the City of San Antonio and regional bodies. The local subsidies included $15 million for a rail spur to the plant, $27 million for job training and $24 million for site purchase and preparation. In exchange for the subsidies, Toyota agreed to employ local residents on the construction project. As the San Antonio area has relatively low union density in construction—by some estimates 95 percent of construction workers are nonunion—the use of a PLA required balancing the need to use local workers with the use of union labor (not unlike the Utah project described above).⁶⁸

Finally, and also related to the modest union presence in San Antonio, the local construction industry actively lobbied against the PLA. For example, Doug McMurty, the executive vice president of the San Antonio chapter of the Associated General Contractors (AGC), said:

It's very early and there have been a lot of rumors circulating. But what we're most concerned about is that Toyota will discriminate against nonunion firms. Our concern comes from the fact that 95 percent of the workforce here has chosen to be nonunion. I don't know that Toyota fully understands that yet, and I can't believe it would be their intention to discriminate against 95 percent of the workforce in San Antonio.⁶⁹

The AGC and individual construction firms requested that city and county authorities broker meetings between Toyota and area general contractors to discuss the use of a project agreement. At various times it appeared that Toyota had decided against using a PLA for the project.⁷⁰ But despite such rumors, Toyota negotiated a PLA adapted to the conditions in San Antonio, and the agreement was signed on June 18, 2003. Jim Wiseman, vice president of external affairs for Toyota Motor Manufacturing North America stated:

Toyota has been using this type of agreement on all its U.S. construction projects since the late 1980s. Those projects have been very successful, been completed on time and within budget, and we wanted to do it in Texas.⁷¹

The Toyota PLA was adapted to the needs of the Texas project with modifications that favored the employment of San Antonio residents by making it easier for nonunion firms to bring their core workers onto the project and by altering the benefits payments language to eliminate the possibility of double obligations.

A major issue for the project was the promotion of local hiring. Under the Toyota PLA, local unions are given 48 hours to refer a qualified resident of the San Antonio area. If they are unsuccessful, a contractor may hire its own local resident, who would then register with the union hiring hall. If the contractor is unsuccessful in locating an area resident within 48 hours, the union could refer any qualified worker without regard to the residency requirements. If the union were unsuccessful in referring a worker within 48 hours, the contractor could hire from any source.

A second issue was providing conditions, which made the project attractive to nonunion contractors. A frequent complaint by nonunion contractors is that they must use the union referral system and cannot bring their own workers to a PLA-covered project. This disrupts their organization and reduces their efficiency. To address this concern, the Toyota PLA specifically allows nonunion employers to use core employees who are San Antonio area residents without referral by a union. Core employees must possess necessary state or federal licenses for their work, have been on the contractor’s payroll for sixty of the one hundred working days prior to the contract date for the Toyota project and have the ability to safely perform the basic functions of their trade. Employers are required to provide a Toyota representative satisfactory evidence of qualifications of core employees at the request of the union having jurisdiction over the work. Additional employees used by nonunion employers are hired in accordance with the referral process outlined above. This type of arrangement, sometimes referred to as a drag-along clause, allows nonunion employers to retain their core workforce while protecting the unions’ interests in seeing their own members hired.

A further complaint about PLAs by nonunion contractors is that they require double payments of benefits: The nonunion contractors must support their own healthcare and pension plans while, at the same time paying into the union sector’s joint funds for work on PLA-covered projects. The Toyota PLA allows nonunion contractors to divert the benefit payments required under the PLA into their own firms’ pension, retirement, annuity, health and welfare, vacation or apprenticeship programs. To qualify, the employee for whom deductions are being made must be a core employee and must elect this option. Also, the plan must be a bone fide benefits plan that has been in effect for the preceding twelve months. Finally, the employee contribution must be the actual cost of the benefit, and the employee must have been a participant in the plan at the time of initial employment on the project. To ensure that nonunion employers do not realize a competitive advantage from this arrangement, any difference between the costs of the nonunion employer’s plan and the benefit payments under the PLA go to a funds established by the parties to benefit directly covered workers on whose behalf the benefit is paid. Again, this arrangement addresses the double payment issue while maintaining equality in labor costs between union and nonunion contractors and assuring that the diverted payments benefit the nonunion employees.

Discussions with individuals involved in the Toyota project suggest that, although there was more nonunion participation in the San Antonio project than most Toyota PLAs, participation was generally limited to site and concrete work. This is not surprising as a central purpose of a PLA is to obtain ready access to a skilled union labor force.

Although not intended to address any issues specific to the San Antonio project, the Toyota PLA includes an unusual arrangement with regard to wage increases. The agreement adopts the applicable local wage rates (which is typical for PLAs), but it also allows for negotiated increases so long as rates do not exceed the average percentage increase in journeymen’s rates for in the South Central region. This limitation is referred to as the cap.

The cap acts to mitigate any effects of the Toyota project, which is an unusually large project drawing large numbers of workers, on regional wage increases, while allowing for the effects of labor market conditions in a region which is sufficiently large that the Toyota project will have only a modest effect on settlements.

The Toyota PLA is an example of how PLAs can be successfully adapted to specific conditions. As with the other Toyota projects, the San Antonio plant is headed for on-time completion and has gone forward without significant disputes or disruptions. Further, the working out of the alternative arrangements appears to have been accomplished without substantial difficulties, reflecting the long-standing good relationship between Toyota and the Building and Construction Trades Department (BCTD).

T.F. Green Airport terminal

T.F. Green Airport, which serves Providence, Rhode Island, was for many years a very small operation. It is the nation’s first state-owned airport, and it opened in 1931. It did not break the two million passengers per year mark until 1990, and it stayed approximately at that level until 1996. However, in 2004, the airport experienced the second busiest year in its history (2001 was the busiest), serving approximately 5.5 million travelers. ⁷² As the consulting firm of Landrum & Brown noted in a report on the airport, “Since [1996], the airport has become a low fare gateway to southern New England, and offers a congestion-free alternative to [Boston’s Logan Airport] for many travelers.” ⁷³

The recent success of T.F. Green is very good news for the State of Rhode Island, which invested $208 million in the construction of a new airport terminal in the early 1990s.

Prior to the construction of what is now called the Governor Bruce G. Sundlun Terminal, the last major renovation of T.F. Green’s facilities was in 1981. The small building, which opened in 1960, had only nine gates and one baggage carousel and resembled an old bus terminal more than a modern American airport. Understanding the need to improve the facilities, the state’s voters approved a $29 million transportation bond issue in 1988, which called for upgrading the existing terminal building.⁷⁴

However, in 1990, with the state mired in a deep recession, businessman Bruce Sundlun won the governor’s office, defeating a Republican incumbent. Sundlun was a WWII pilot who eluded capture after being shot down over Belgium; a businessman who made a fortune in broadcasting (among other ventures), a member of JFK’s administration; and socialite with connections to the rich and mighty (he once flew planes with Jordan’s King Hussein). He was not one for small projects. After becoming governor, Sundlun managed to circumvent both the legislature and the state’s voters, and by executive action convert his predecessor’s less ambitious renovation proposal into an approximately $200 million total reconstruction project. His plan was to use the earlier approved $29 million as seed money, get the airlines to agree to tripling their rents at the airport and receive most of the balance in federal funds.⁷⁵

The governor’s ambitious plan engendered immediate opposition. Residents of the City of Warwick (where the airport is located) and their elected officials opposed the terminal plan, as they do every project that might increase airport traffic. But so did many other legislators, politicians and ordinary citizens. Some of the sniping was purely political, but much of it was motivated by a genuine concern about the state’s ability to pay for such a project. After all, this plan was being discussed during one of the deepest economic recessions in recent memory. Consider that the governor’s first official act, on the day of his inauguration, was to order the state’s credit unions closed to head off a banking collapse; that public employees faced involuntary furloughs because state government could not meet its payroll; and that the transportation department was turning off street lights to save money. In addition, at least one consultant’s report found even the more modest plans proposed by Sundlun’s predecessor were probably not worth the money at such a small airport.⁷⁶ Needless to say, in this environment, an expensive new airport terminal was not an easy sell.

However, by the time the terminal officially opened on the first day of autumn 1996—after Sundlun had lost his bid for a third (two-year) term—all the arguing and acrimony seemed forgotten. As the Providence Journal reported:

During the [opening] ceremonies, speaker after speaker praised the terminal project and former Governor Bruce Sundlun for envisioning it. Warwick Mayor [later U.S. Senator] Lincoln Chafee said ‘What stands before us is a nearmiracle, a government project that came in on time and on budget. For that we congratulate all the many men and women who accomplished this while also maintaining the highest quality workmanship.’⁷⁷

Unlike the projects in Utah and Texas described above, the PLA at T.F. Green Airport was, in itself, not controversial and received no major press coverage at all. In fact, the only large controversy during the construction phase was a proposal to spend close to $800,000 on what derisively became known as a cloud machine, a terrarium like art installation that was to have emitted a vapor sending clouds around the terminal’s ceiling. The installation had been recommended by a committee in charge of spending the mandated set aside for public art but became fodder for many of the terminal’s critics. The idea was scrapped in favor of cheaper and more conventional sculptures and the like.⁷⁸

The lack of debate over the PLA no doubt reflects the reality of construction in Rhode Island, where nearly all large, transportation-related construction is done by union contractors. The agreement was, however, not a typical PLA but had a number of distinctive features.

No doubt, Gilbane Building Company, the construction manager, felt enormous pressure to contain costs. In 1991, Governor Sundlun complained about the price tag of the project, which, at the time, was $135 million. His concern arose from a comparison he made with a similarly styled and recently built terminal at the Rochester, New York airport. The governor noted that the Rochester project cost $41 million less than the projected costs for T.F. Green. In a memo to his transportation director, the governor wrote:

We need to get a very detailed cost breakdown on the T.F. Green project, and I can tell you ahead of time that I am not going to accept a $41 million difference between T.F. Green and the Rochester project. Would we not do much better to go forward on a strictly competitive bid basis? What does it take to review and terminate the construction management contract? ⁷⁹

The Gilbane Building Company is headquartered in Providence, but is one of the larger construction companies in the country. During the past ten years, it has carried out airport projects at O’Hare, Logan and the El Paso International Airport.⁸⁰ Over the years, Gilbane has done many jobs in Rhode Island and was awarded the construction management contract for T.F. Green on a no-bid basis by Sundlun’s predecessor. Despite the governor’s concern, Gilbane’s contract was not terminated. By July 1993, the projected cost of the facility had risen to $200 million, but most of the funding puzzle had been put together, including the airlines’ agreement—after the creation of an independent airport corporation—to pay increased rents and the Federal Aviation Administration’s pledge to cover about half of the project’s cost. Gilbane also agreed to take a substantial risk: for an additional $3.8 million fee, it guaranteed the bottom line cost of the project.⁸¹ That fact was, no doubt, on everyone’s mind when the PLA was negotiated in the fall of 1993.

The PLA covered construction of the new terminal, demolition of the old terminal, construction of a temporary terminal, improvements to the airfield (particularly taxiways and drainage), the construction of roadways and parking facilities, and the building of a system to capture and isolate ethylene glycol (used in deicing) before it enters the storm drains.

A very unusual aspect of the agreement was a wage and benefit schedule unique to the project. While most PLAs simply state that wages and benefits shall be paid in accordance with Schedule A (i.e. local) agreements, the T.F. Green PLA included its own wage and benefit rates for 21 different occupations from Asbestos Workers to Tile Finishers/Helpers. Where applicable, differentials were provided for building and road work. The length of the wage/benefit agreements varied across trades, from approximately one to four years, with an agreement to reopen negotiations for wages and benefits after dates specified in the PLA. An expedited interest arbitration clause was included to handle impasses that might occur over the negotiations of new wage and benefit rates.

But perhaps the most important provisions of the agreement concerned scheduling and premium pay. As a prominent Rhode Island labor official said:

We couldn’t get on the airport at certain times. We were able to get on at times that on other jobs...say after 4:30 pm or after normal quitting time…you would be looking at a time-and-ahalf situation or maybe a double time situation if it was a weekend. We took that into account knowing that if we were looking for that [premium pay] on that job it would blow the budget there, and you wouldn’t end up with any agreement.

The PLA contained several relatively standard sections on work time and premium pay. One section calls for an eight hour workday, with time and one-half paid for the first two hours of overtime, and double time paid for ten or more hours of work. Double time was also to be paid for Sundays or holidays.

The agreement also allowed Gilbane to schedule “all or part” of the workforce to work second or third shifts. Second shift workers would work seven hours for eight hours of pay, and third shift workers 6 ? hours for eight hours pay. The agreement also stated that “the parties…recognize that construction work covered by the terms of this Agreement shall be performed in a manner that will cause the least disruption of the continuing operation of the airport, and therefore to achieve that goal a second (2nd) and/or third (3rd) shift may be established without the scheduling of any previous shifts…”

However, the centerpiece of the scheduling provisions was a Flex Time clause, which the parties agreed to with the understanding that the airport needed to maintain “efficient operations…while complying with…noise mitigation requirements, all federal and state requirements, and…[attending to] the needs of the traveling public.” The Flex Time arrangements allowed for several possibilities: a staggered work week of seven days on and two days off; four ten hour days; and eight hour days with adjusted start and quit times. The PLA also allowed for “any other mutually agreed upon alternative work schedule.”

The project was completed several months ahead of schedule and, in 1997, received an award for construction management from the Associated General Contractors. Simultaneous with the new terminal’s opening, Southwest Airlines selected T.F. Green as its access point to the Southeastern New England/Boston market. Southwest is now the airport’s leading airline and the main reason for the airport’s current success. Certainly, factors other than the PLA—not least a mild winter in 1995— contributed to the early and within-budget delivery of the terminal. But the project remains a source of pride for all those involved in its construction and is frequently cited as an example of the ability of PLAs to accommodate the specific needs of a construction user and produce a favorable outcome on a public project.

East Side Union High School District

In March 2002, voters in San Jose’s East Side Union High School District approved a $300 million bond issue to be used for school construction and renovation. Virtually every high school in the district was to undergo comprehensive renovations, and several new facilities—such as adult learning centers, a gymnasium, and even a cable television and radio studio—were to be built at some of the schools. Although some work had already taken place, in 2004, the district entered into a PLA with the Santa Clara and San Benito Counties Building and Construction Trades Council. The district decided on the PLA, in large part, for a rather distinctive reason: it saw it as a mechanism to expand its vocational education programs into both the blue collar and white collar construction occupations. The district has a well-established vocational education program that is part of its overall career services approach to education.

East Side already had up and running several vocational academies and other programs, including the Oracle Internet Academy, an electronics academy, a teaching academy and specialized programs in biotechnology, computer-assisted design and health care. The district viewed a PLA as a means to establish a program in construction occupations.

Hence, the novelty of the East Side PLA and the sweetener that led to its signing was a provision connecting work under the PLA with establishment of a Construction Technology Academy. The Academy would offer pre-apprenticeship training, summer internships, and jobs in both the trades and white collar construction occupations.

An appendix of the PLA contains the essential elements of the plan:

The Parties have agreed to create a Construction Technology Academy (“Academy”), funded by the District, to carry out the training and employment objectives of Appendix B. The overall objectives are to (a) offer opportunities and skills necessary to enter post-secondary study [including construction apprenticeship programs as well as college education] and to pursue lifelong learning within the broader context of the building trades industry; and (b) develop and reinforce academic course content standards in order to maximize career opportunities and technical competency.

This point (b) recognized that schools would do a better job if the school curricula were tied more closely to industry needs and directions. In construction, unions as well as contractors, pay close attention to technological trends and customer demands. Thus, connecting the school’s curricula to the knowledge held by contractors, unions, and joint apprenticeship boards was seen as an effective method of tying industry directions to school curricula in the case of construction.

A sixteen member steering committee was created by the PLA that would oversee the Academy. Membership on the committee included representatives of the joint apprentice training councils, the building trades council and the school district.

One task of the steering committee was to oversee a summer internship program. described in the PLA.

In addition to the foregoing, which bound the school district, the unions and the joint apprenticeship training councils together, the PLA required contractors on East Side’s work to provide jobs for graduates of the district’s Construction Technology Academy. The PLA’s goal was for students to actually obtain jobs as interns, apprentices or in other unskilled positions.

This novel approach to project labor agreements remains experimental. Nonetheless, those involved with East Side’s vocational education program are, thus far, very happy with the PLA. One East Side official familiar with the PLA and its internship program stated:

The PLA says that contractors working on projects will provide thirty internships of five weeks duration every summer. In the first two weeks our students are introduced to construction and rotated through the trades. They also spend five hours a day at the various apprenticeship training facilities with exposure to classroom and benchwork training. Also our students can intern with the contractors with exposure to estimation, engineering and the legal aspects of construction.We have a four year construction and construction engineering program, and the PLA allows us to connect our vocational education to the world of work. It’s a perfect fit. We want our contractors working on our schools in the summer when we are out of session and that’s just when the students are available for summer internships. This way the district gets double use out of its construction dollars. We have fifteen vocational education programs from aerospace to office clerical. This construction program connected to the PLA is our most exciting effort because it’s not just a partnership with an individual or a company. It’s a partnership with a whole industry. Our program is considered a pre-apprenticeship program, and its graduates have priority entering into union apprenticeship programs. And it makes sense for the unions too because first of all, a lot of our students are minority students, and the unions are always trying to recruit minorities. And second of all, our students have exposure to construction. They know what they’re getting into. So the unions know these applicants to their apprenticeship programs are serious.

PLA language on the East Side district’s construction academy In order to facilitate the goals of the Academy, the [School] District and [Building Trades] Council agree to create a steering committee, which will conduct meetings at least once a month during the district academic year to develop the goals of the Academy; plan for the presentation and content of training lectures to facilitate employable skills in the construction trades; develop a summer schedule for training; organize and develop summer internship positions; assist in planning curriculum scope and sequencing; design co-curricular activities; identify sources for educational and financial support; and otherwise initiate steps to carry out the goals of the Academy. The committee shall consist of sixteen (16) members, of whom five members shall represent the trade JATC’s [Joint Apprenticeship Training Councils], three members of the Building Trades Council, six members from the district, including one member who shall be from district management and one member from a community college district. The district management representative shall be the presiding officer of the steering committee. The steering committee shall make recommendations to the district administration. The Academy Steering Committee, in coordination with the district’s career services representative, shall develop and implement a plan for annual assessment of the goals and objectives of Appendix B in order to maximize the employability of the summer interns described below. Annual Training Summer Sessions. Annual summer intern training sessions developed by the Academy Steering Committee shall be made available for qualified district students nominated by the district. Purpose of Summer Training Sessions. The purpose of the summer intern training sessions is to teach the interns employable skills in the construction trades. The skill sets to be taught by the District shall, in part, include materials taken from a curriculum known as “SCANS,” which identifies and teaches such general employability skills as dependability, responsibility, working with other people, active listening (i.e., receiving and responding to instruction), organizing work tasks and utilizing technology. The other skill sets shall include the proper use of tools of the construction trades in addition to practical application of skills in the construction trades. The sessions shall include classroom and job visit components. Number of Interns. The goal for the summer program of 2003 shall be twenty (20) internships available for students nominated by the district. For the second year of the contract, the goal for internships available shall not exceed thirty (30) per calendar year. Number and Scope of Training Sessions. For the first year, the number of summer training sessions shall not be less than eight (8) in number. The scope of the training sessions, and the presenters, shall be developed by the Academy Steering Committee. For subsequent years, the scope and presenters of the training sessions shall be as developed by the Academy Steering Committee. All training sessions shall be hosted by the Trade JATC’s according to the scope developed by the Academy Steering Committee. Employment of Interns. Beginning July, 2003, the Building Trades Council shall make arrangements for contractors working under the Project Labor Agreement to employ up to twenty (20) interns selected by the Academy Steering Committee. The interns shall be paid no less than $10.00 per hour for on-the-job training but not for periods of time attending the classroom training sessions. The sessions shall occur over a minimum of four and a maximum of five weeks for summer internship positions beginning in July 2004, the Program Manager agrees to endeavor to employ or make arrangements for the employment of up to thirty (30) paid intern positions of students selected by the district for the same time and rate of pay as for July, 2003. Each year thereafter, the goal shall be to employ up to thirty (30) interns at the same rate and for the same duration unless otherwise agreed to by the district and the council. The employment shall be practical and relevant to the apprenticeship requirements for the building trades, with emphasis on at least five major crafts selected by the Academy Steering Committee for each year of the contract. Due to safety, prevailing wage and related issues, the interns shall not be employed directly on the public works projects that are the subject of the Project Labor Agreement and this Appendix B. Intern Program and Priority on California Apprenticeship Council Approved Program Apprenticeship Lists. Establishment of an Intern Program through the Academy and Program Manager. An intern program for construction trades careers shall be developed by the Academy Steering Committee to help facilitate placement into a California approved apprenticeship program upon successful completion of the classroom coursework and the summer intern sessions. Priority on Apprenticeship List. The training and employment program of the interns shall be developed by the Academy Steering Committee such that graduating interns shall possess the skills, training, and educational background to help the graduate achieve priority on the lists of the Building Trades Apprenticeship Programs for those which maintain a list and direct entry for those programs where direct entry is possible. It is recognized that the Apprenticeship Programs operate according to existing Standards approved by the Division of Apprenticeship Standards of the State of California Department of Industrial Relations and the standards set forth in the collective bargaining agreements for each building trade. Therefore, in order to maximize the opportunity that graduates may achieve a priority standing on an apprenticeship list or direct entry to an apprenticeship program, the Academy Steering Committee shall develop a plan for an annual assessment of the goals and objectives set out in this appendix B and in so doing, shall coordinate with the District’s Career Services representative. The annual program assessment by the Academy Steering Committee shall follow the completion of each summer internship program.

Technology Academy program takes four years to complete, the success of this program in eventually landing these students in apprenticeships or in white collar occupations with contractors has yet to be tested. The unions cannot guarantee entry into apprenticeship programs. All they can do is help create a solid pre-apprenticeship program that will enhance the student’s ability to qualify for these post-high-school apprenticeships.

The language of the PLA also establishes a limit on the number of interns at thirty per summer. This reflects the unions’ concern that they not promise more downstream work than will be available. The PLA is silent on the number of interns after the second year of the contract. This reflects a reality of this innovative contract—the parties are feeling their way along a new path, and they are not sure whether the program can grow, will remain steady or will have to shrink over time.

Another possible issue is how evenly students get spread across the different trades involved on East Side projects. If all thirty students decided they were interested in only electrical work, the electricians’ apprenticeship program might feel unduly burdened. These sorts of potential problems underscore that using PLAs to create journeys from school to work in construction is a work in progress.

On the other hand, there is considerable evidence that the construction labor force is aging. The baby-boom generation is retiring, and the need to adequately train and replace the existing skilled construction labor force is unusually problematic in this period. A recent report by the Construction Labor Research Council concluded:

Labor shortages during the boom period of the late 1990’s and early 2000’s, as well as greater focus on the aging work force in the United States, have increased awareness in the construction industry of the importance of attracting new entrants…The years 2005 through 2015 will require large numbers of new entrants into the construction trades. Annual new entrants of craft workers into the construction industry are estimated to be 185,000 persons. Needs will be almost evenly divided between growth and replacement. Like other industries, construction will be significantly affected by an increasing number of older workers leaving the labor force. Available to replace them will be young workers whose numbers will be little changed throughout the period. As this, too, affects all industries, the construction industry will be challenged in attracting an adequate supply of qualified new entrants.⁸²

This view of the future is shared by the Santa Clara Building Trades. In a report prepared for the U.S. Department of Labor by the Silicon Valley Workforce Investment Network and the Santa Clara Building Trades, entitled Extending the Ladder, the unions and local construction users state:

We have seen the average age of an apprentice in the Trades rise to almost 30 years of age. At the same time, we have seen the average age of a journeyperson rise to almost 40 years of age, and last but most significant is the fact the average retirement age is now closer to 50 than 60. These statistics represent two very significant realities: (1) the construction industry is on the precipice of a crisis in the availability of skilled trades people, and (2) an enormous opportunity for youth wishing to pursue a skilled career currently exists.⁸³

This concept paper—pitched to the U.S. Department of Labor in the hope of receiving a federal grant—grew out of the experience of the Santa Clara Building Trades with the East Side PLA and proposed to extend this model to other school districts:

At the core of this proposal is a partnership led by employers, labor, high school and community college districts, and the Silicon Valley Workforce Investment Network (SVWIN) Board. These parties have come together to pursue a unique and creative way to address the needs of the construction industry and youth through a partnership that leverages State and local construction bond dollars to place graduating high school seniors and community college students into full-time, high-wage jobs in the Construction Trades.

A local union leader involved in the creation of the East Side PLA and the establishment of the East Side Construction Academy explained the key unique provision of the PLA was its requirement for internships combined with language that ensured graduating students would actually get jobs either as apprentices or as material handlers. He argued that the unions were motivated by the need to “get back into the high schools” in order to recruit a qualified pool of younger workers to replace an experienced but aging union work force. The key problem, in his view, was to facilitate effectively the movement of younger workers into the union workforce in the face of apprenticeship admissions regulations that require nondiscrimination and equal and fair access to these programs. He indicated the solution was in the PLA proviso that required participating contractors to provide graduating students with jobs either as apprentices or material handlers. This requirement meant that students would at least transition to non-craft material handling jobs from which their additional experience would give them a leg up on admissions to apprenticeship programs. He stated:

We all recognized the need to get back into the high schools and the current practice of begging the districts to allow us to talk to students for an hour or hold a career fair was not going to turn the tide.We needed to get back into the schools in an institutional manner.

We realized that previous programs that were providing training/assistance to youth and others in the community to gain them knowledge and experience that would hopefully get them into an apprenticeship were not always successful. In fact some were creating unrealistic expectations on behalf of both the applicants and the programs. Upon graduation/completion there was no job available and they became just another name on the out-of-work list.

We saw the opportunity that this PLA could serve in getting back into the schools in a meaningful way that could also solve the problem created by economic uncertainty we had previously experienced with other programs. By contractually binding, through the PLA, contractors to participate in the academy by requiring them to hire individuals that had graduated from the program, we could overcome the downfall of other programs.

However we knew that we faced some traditional hurdles if we were thinking of circumventing long-established and heavily-regulated apprenticeship placement policies/criteria. So we proceeded to sit down with all the [Joint Apprenticeship Training Councils] to find out what they believed would work to make this happen. With their help, we crafted language that met the needs of the program and yet did not ask JATCs to violate their own selection criteria or placement policies.We achieved this by understanding that most graduates of the academy would do well on the entrance exams and interviews, but some may not score at the very top, which would be needed if they were to seamlessly enter into the apprentice program of their choice. So we worded the agreement to accommodate this by requiring contractors to provide jobs that although not apprentice positions were jobs that the student could easily transition into an apprenticeship with that same employer. It is common, for example, for a material handler which is not an apprenticable occupation, to receive an apprenticeship by virtue of their experience and work history.

The important thing was that we were breaching the obstacle that all other programs could not. We were putting people into jobs and not onto lists. And by putting people directly to work in the industry of their choice upon graduation, we have achieved something that to the best of our knowledge has not yet been previously done.

Thus, the East Side PLA is innovative in several ways. First, it is an example of a new form of PLAs, which attempts to find new areas of win-win in construction collective bargaining by bringing a new player to the table—the construction user. Second, it is an effort to solve a union problem—getting back into the high schools in an established, institutionalized fashion in order to better compete with other industries for talented students in the context of the worker replacement difficulties posed by the retirement of the baby boom generation. Third, it is an effort to solve a school district’s problem of creating meaningful education for the non-college bound, an education that provides the student with an awareness of possibilities, prepares the student appropriately for the demands of the labor market, gives the student experiences that will qualify the student for advancement and allows the student in this case to test drive a full range of blue and white collar opportunities within an entire industry. This is what the East Side vocational education official meant when saying that the advantage of the Construction Technology Academy was that it created a relationship not with an individual or a company but “a partnership with a whole industry.” Finally, by requiring participating contractors to provide employment, through the auspices of the PLA, this particular institutionalization of a journey from school to job seeks to overcome the weakness of previous similar experiments by putting students to work rather than putting them simply on job lists. Certainly, this PLA, like other PLAs, was motivated by traditional concerns for work and the conditions of work on the part of unions and an effective supply of skilled and qualified labor on the part of owners. But in the case of this PLA, these traditional motivations were not paramount. The novel and experimental motivations listed above were the fundamental reasons for the signing of this PLA.

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