Labor repercussions

When you withdraw from several unions, a number of things happen, some positive and some not. Construction companies operate differently from most unionized businesses.

In many industries, employees vote to form a union, and the company then negotiates wages, benefits, and other terms with the union. In construction, however, the company typically signs agreements with unions, and those unions supply the skilled labor needed to staff projects.

This can make operations more efficient, as you simply request the necessary skills and the union provides qualified workers. Construction unions also operate within defined geographic jurisdictions. If you work outside those areas, you must either hire non-union labor or sign agreements with other unions.

As mentioned earlier, we had expanded our operations beyond the Buffalo–Erie County area, resulting in a mix of union and non-union work, primarily non-union.

When other unions learned that we had withdrawn from two local Buffalo unions, there was initial concern we were going to withdraw from them.

However, this led to productive conversations, and in many cases, our relationships with those unions actually improved. For example, one of the more challenging unions we had dealt with in the past was the Niagara Falls Laborers union and they became noticeably more cooperative.

Because most of our work was outside Erie County, the overall impact on our operations across the state and beyond was minimal. Once we resolved our NLRB issues, we were still able to perform work for union contractors in the Buffalo area by signing project-specific agreements that applied only to individual jobs.

At the same time, many of the plants we worked with began dropping their union labor requirements, which opened the door to additional opportunities we would have been priced out of. However, not all outcomes were positive. Several months later, we were notified that we owed unfunded pension liabilities.

Having previously served on the laborers’ pension board, I knew the plan was fully funded, which made the calculation unclear. We were not permitted to challenge the assessment, but we were “allowed” to pay the six-figure amount over five years, at an interest rate of 16%, compared to bank rates at the time of around 3.5%.

It was a difficult reminder of the complexities involved in operating in an environment where the balance between business interests and union structures can be challenging.

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