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Industry cool to Sweeney bill revising labor agreements

Legislation would allow PLAs to govern Sandy rebuilding projects, but contracting association argues the idea's premise is flawed

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Stephen M. Sweeney, Senate president. – AARON HOUSTON
Stephen M. Sweeney, Senate president. – AARON HOUSTON

With federal Hurricane Sandy aid finally on its way, the state Legislature is poised to send Gov. Chris Christie a bill that could significantly shape how some rebuilding projects are awarded.

Senate President Stephen M. Sweeney (D-West Deptford) is pushing a bill to allow project labor agreements, or PLAs, for road and public works construction jobs worth more than $5 million — projects that currently are excluded from the state's 11-year-old PLA law.

PLAs are single-project collective bargaining agreements that set terms and conditions for workers, and typically give local union organizations project exclusivity. In exchange, unions generally agree to resolve disputes through arbitration, giving up the right to strike or conduct slowdowns.

Sweeney sees the expansion of PLAs as a means to attack the state's persistent unemployment rate. The deals require contractors to hire through local union halls, so Sweeney said PLAs will help ensure New Jerseyans — not out-of-state workers — benefit from reconstruction jobs.

"While a lot of money's going to come into the state and into the construction industry, there's an enormous amount of unemployment," Sweeney said during a Jan. 24 Assembly Budget Committee hearing on the matter. "What we're hoping to do is try to ensure as many of these jobs as possible stay in New Jersey."

The bill has already passed the full Senate and is expected to clear the Assembly this month, at which point it would head to Christie's desk. Sweeney notes his PLA bill would only create the option, not a requirement, to use PLAs.

But the bill hasn't been warmly received in the industry. Robert Briant Jr., CEO of the Utility and Transportation Contractors Association of New Jersey, said the bill's premise is flawed, because his contractors almost always hire in-state workers. He said the majority of his members are union contractors who oppose the PLA bill, as it undermines agreements contractors already have in place with the trades that do their work. He said the bill also violates a deal made back in 2002 to exclude highway and utility jobs from the state's PLA law.

"Our industry does not like PLAs," he said. "We came up with the agreement with other building trades that if they want it, they can have it for buildings."

But Sweeney denies any such deal was made, and said the reason highway and utility projects were left out of the 2002 law was that President George W. Bush had signed an executive order banning PLAs on federally funded construction projects. Barack Obama removed that ban upon becoming president, he said.

Aside from the debate about PLAs' impact on state workers, business groups fear PLAs could result in more expensive projects.

"We're taxpayers as well, and we see this as potentially increasing costs to taxpayers," said Michael Egenton, senior vice president of the New Jersey State Chamber of Commerce. "It discourages competition from nonunion contractors and reduces the number of potential bidders for work, and has the potential for increasing costs."

Harry J. Harchetts, business manager and secretary treasurer for Painters District Council 711, which represents some 4,700 workers in nine trades, told the committee there's no reason nonunion contractors can't bid on PLA jobs.

"This does not restrict, nor has it ever restricted, nonunion contractors," he said.

Sweeney said a job in Monmouth County was recently awarded to a nonunion firm under a PLA. He also said up to 25 percent of workers on a job can be nonunion personnel under a PLA.

Harchetts also said project costs shouldn't differ under a PLA, because supply costs will be the same regardless of whether it's a union or nonunion firm, and state law requires contractors on public works jobs to pay employees a prevailing wage regardless of whether they're unionized.

"So the wage is the wage," he said. "The material cost is the material cost."

But Egenton said studies suggest otherwise. A 2010 New Jersey Department of Labor and Workforce Development study looked at PLA projects from fiscal 2008, finding costs ran about 30.5 percent higher on a per-square-foot basis, with jobs taking longer under PLAs.

That finding runs contrary to a major selling point for PLAs: that they head off potential delays and inefficiencies.

And Briant said there's nothing in the PLA bill to stop work from going to out-of-state firms.

"Somebody from out of state can come in and sign a PLA," he said. "They'll use New Jersey trades, that is true — but again, on our type of work, we don't have that problem with out-of-state people coming in here and bringing their labor forces to do their work."

Sweeney said PLAs may not make sense in every case. He just wants local governments to be able to decide for themselves if PLAs would make a job more efficient or add value.

"All we're saying here is we think we should give the governments an option, a choice," he said.

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

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