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HomeMy WebLinkAbout7/10/2018 Item 13, Kreischer (2) Purrington, Teresa From:Pease, Andy Sent:Tuesday, July 10, 2018 1:03 PM To:Ken Kreischer; CityClerk Cc:Dietrick, Christine; Johnson, Derek Subject:Re: WRRF PLA? Thank you! I'll put this in council correspondence so the others can have this information. Andy Andy Pease Council Member City of San Luis Obispo 990 Palm Street, San Luis Obispo, CA 93401-3218 E apease@slocity.org slocity.org From: Ken Kreischer <ken.kreischer@westernwater.com> Sent: Tuesday, July 10, 2018 11:16:53 AM To: Pease, Andy Subject: RE: WRRF PLA? Andy, Would something like that be effective, no I don’t think so. Would it impact pricing, not as much as a PLA but yes I think it might. I understand local hire is not only a buzz word but is politically important, but it is not simple. First there are a couple of underlying factors for the City to figure out. 1. Define local; is that in the City, neighboring Cities, SLO County, neighboring Counties? 2. Define local business vs. local worker. 3. Define if a problem really exists in the use of out of town vs local workers. Part of the issue is construction, especially on larger projects, right or wrong is a migratory business. In this niche market we might build a plant for City X and then that City will not have another job at that plant for ten years, which is why we have to work all over the State. In theory it would be nice to say that a contractor comes into town and hires all or only local people, but that is not practical. We have our crews, that is how we bid the job, how can the contractor bid a job not knowing who the local workers are, if they can do the work or how many there are (Remember, the bidding process requires us to give our cheapest price). Deep down the unions realize this too as many of the collective bargaining agreements have “mobility” provisions which allow the contractor to take the worker wherever the job is (i.e. the Northern Ca Laborers have mobility across 46 counties) (a topic that doesn’t’ come up when the unions are pushing a PLA). More on the practical side is that for us we usually end up picking up a few local works when we are in City X, some of them stay with us and move on to City Y some don’t and wait for the next job to come up in City X; it’s just the way construction can be. In my opinion the Central Coast has more unique challenges for labor as it is hard to pull from other areas, and contractors have to keep that in mind when planning crews so any restriction on who can be used adds risk/cost. The 1 Alameda package focuses I think on local business vs. local workers which is why I suggest the difference of the two needs to be vetted before making any kind of policy. A local business does not always mean it will have local workers. We have worked in areas that have local goals or local requirements, goals are fine, and I think most contractors would put forth a good faith effort to meet them as long as they are not to onerous. Requirements are tough, I’ve seen situations where the contractor hires someone because they had to for the “requirement” and that person does nothing. Who is the winner there, I guess the person did get a pay check, but the Owner of the project ended up paying for it. Santa Cruz has some simple language that requires x% of workers to be local, with local being defined as “Resident of the Monterey Bay area” means an individual who is domiciled within the boundaries of the Monterey Bay area at the time immediately preceding the advertisement of the bid for a project, who can verify his or her domicile upon request of the contractor or County by producing documentation such as rent/lease agreement, telephone and utility bills or payment bills, a valid California driver’s license or identification card, and/or any other similar, reliable evidence that verifies that the individual is domiciled within the Monterey Bay area. A worker who is a building trade journeyman or building trade apprentice whose local hiring hall has jurisdiction over the Monterey Bay area is also deemed a resident of the Monterey Bay area” That sounds good and benign, but the catch is that last sentence and it is a get out of jail free card for union contractors. Remember “mobility” I mentioned above, I can bring my entire crew from Santa Rosa or Fresno and comply with “local hire” because of that last sentence. The unions pushed for the local hire requirement which really means local hire if you are not union, and if you are union you can bring into town anyone you want. This gives us and some contractors an advantage, but I don’t think that is right and it clearly is not the spirit of local hire. In specialized construction like that of plant construction the contractor needs to be able to use his best crew and experienced crew and that sometimes may mean some of those people come from out of the area, we try to hire some local people too like I said but when forced to work at the lowest bid price the contractor can’t always bring on someone who is not 100% experienced in the work. Public works projects already require the use of apprentices which are brining in less skilled workers for training and education and those people are often local to projects, adding more requirements in my experience does have diminishing returns to the cost of the project. Admittedly I don’t have the answer, because there is no easy answer. If local hire is critical to the project/area I would suggest a simple goal of x % maybe 10-15, with meetings between the City and Contractor(s) on the job throughout the job to see if anything can be done to improve on the current utilization of local hires. Lots of words with no solution, sorry, but those that know me will vouch that I will give you honesty answers. Ken Kreischer WESTERNWATER From: Pease, Andy <apease@slocity.org> Sent: Tuesday, July 10, 2018 9:35 AM To: Ken Kreischer <ken.kreischer@westernwater.com> Subject: RE: WRRF PLA? Ken – Thanks for this feedback – very helpful! How do you feel about non-PLA contract requirements for hiring goals, specifically local hires? The staff report includes an example from Alameda. https://www.acgov.org/gsa/purchasing/bidContent_ftp/rfpDocs/1856_0_002219ECOP.pdf Would something like that be effective, and do you think it would impact pricing? Andy 2 Andy Pease Council Member Office of the City Council 990 Palm, San Luis Obispo, CA 93401-3249 E apease@slocity.org slocity.org From: Ken Kreischer <ken.kreischer@westernwater.com> Sent: Tuesday, July 10, 2018 9:08 AM To: E-mail Council Website <emailcouncil@slocity.org> Subject: WRRF PLA? Importance: High Dear City Council: I’ve heard that the City is considering a project labor agreement (PLA) on the wastewater treatment plant. This is a critical issue and important that you here from the people who build the projects, you will hear from consultants and the unions about the value of a PLA and that it doesn’t affect cost, but the reality is those people don’t build the project, contractors do. The majority if not all the contractors, especially in the niche market of treatment plant construction, will tell you that a PLA does affect pricing and will increase costs. Western Water has been in business since 1959 and specialize in building water and wastewater plants all over California. We are familiar with the struggles of the Central Coast regarding water, our President and Vice President are Cal-Poly graduates and several of us have family and friends in the area. Your concern should be attracting more qualified bidders on your project rather than fewer, and all the contractors will tell you a PLA reduces the number of bidders. We have found this to be true when we bid projects with a PLA, there are fewer general contractors bidding and fewer subs bidding to those generals. We have both union and non-union employees and use union and non-union subs which allows us to put together the best team regardless of union affiliation. When a PLA is in place it eliminates many choices of whom we can use. I hope that you seriously consider the ramifications of a PLA on your plant work, even though we are a union contractor we don’t support the union’s agenda of pushing PLAs. You need to understand the truth about PLAs and I hope you read further about some of the truths and facts about PLAs, this is not rhetoric but based on experience as a contractor who builds these projects and understands the devil in the details of a PLA. 1. You will probably be told contractors do not need to sign a collective bargaining agreement to work on a PLA project. That is a half-truth, while contractors may not have to sign a collective bargaining agreement all PLAs bind the contractor to the terms and conditions of the collective barging agreements. An important distinction that makes any contractor working on the project defacto signatory to the collective bargaining agreement of ALL UNIONS. This matters because the majority of union contractors are not signatory to all unions, when you bind me to unions I’m not part of you bring their work rules into my work practices which affects my costs. 2. You will hear these catchy benefits: 3 a. PLAs make for a strong, healthy, happy community. Does that mean that both union and non-union employees or union and non-union contractors who have worked in the community for decades and the City without a PLA before are weak, unhealthy and don’t care about the community? b. PLAs bring pride of high-quality workmanship and highly skilled people. Does that mean that both union and non-union workers that are not on a PLA job have no pride of workmanship or are not skilled? c. PLAs bring quality contractors and subcontractors. Does that mean non-union contractors or contractors only signatory with one or two unions are not quality contractors? At what point are they then quality, just before signing a PLA, as they sign a PLA or does the ink need to dry before they are a quality contractor? Maybe PLAs use a magic pen that makes you and your workers quality and skilled overnight, how does that work? d. PLAs bring projects completed on-time and within budget. Must be more PLA magic. What does a PLA do on its own to accomplish that, how does it do it? If that is the cure, then all projects without a PLA would be late and over budget, is that what the City has experienced? Have you checked, or looked at all the vast non-PLA projects that represent most if not all construction in the area? 3. Double benefits forced on contractors by a PLA is not rhetoric, it’s a true cost impact to the contractor. PLAs require that the contractor pay into the various union health plans regardless of whether the worker will be able to use the union’s insurance or if the worker has insurance already with the contractor. Under a PLA the contractor either is going to pay twice for insurance (its own plan and into the union plan) or tell the worker he must change plans, possibly doctors, and be subject to a waiting period for coverage from the union to kick in. As you know health insurance is so critical today, so what happens to the worker when he is in-between plans? In most cases the contractor who wants to take care of his workers is forced then to pay for two insurance policies so there is no break in coverage or life changing problems for the worker. The cost of this double benefit payment is not cheap, the required payment to the union even if you already have insurance is $9 to $16 an hour; that’s upwards of $30,000 per worker per year in additional cost because the PLA forced the contractor to pay twice for health insurance. There no extra benefit given to the worker by a PLA the real benefactor is the union because they get to keep that money. This is just one part/example of the additional costs and problems created by a PLA. What would you do as an employer or what would you expect as an employee? If your goal is to make sure all workers have health insurance then put that in your contracts, there is no need for a PLA to insure health insurance, all a PLA does is increase the cost of that. Questions that should be asked of all the unions are: How much does your insurance cost the employer? What is the waiting period to go on benefit? What happens to funds paid to the union if the worker doesn’t need or use coverage? 4. You should have a survey taken asking contractors who regularly build treatment plants about PLAs. A few years ago, Central Marin Sanitary Agency in San Rafael considered a PLA on a $35,000,000 project they were putting out to bid. They decided to conduct a survey of the general contractors they expected to bid the project; these are the questions they asked: Are they a union or merit shop contractor? Have they worked under a PLA before? If they have worked under PLAs before, what was the overall experience? Did they think that PLAs tended to impact project costs and, if so, how? Did they think that PLAs tended to limit the pool of bidders? 4 Are there other issues surrounding PLAs? 25% of general contractors where merit shop, 70% was union and 5% both. 55% felt that PLAs increased costs, (note that this means nearly half of the union contractors felt PLA’s increased costs and this is very important because PLA proponents will say there is no cost increase, yet those who set the price/bid are saying a PLA increases costs). 45% felt that PLAs reduce the pool of bidders. 15% indicated they would not bid on a project that had a PLA. 30% felt that PLAs do not resolve jurisdictional issues between unions, (a purported benefit of PLAs from the unions). Lastly, I’ll add that CMSA did not move forward with a PLA on their project, and that the project was completed on time and on budget with union and non-union employees working side by side. 5. East Bay Municipal Utility District (the heart of “union country”) recently conducted a similar survey and this is what they found: 11 contractors surveyed; 3 were non-union contractors, 8 were union contractors; 7 contractors said a PLA was disincentive to bid (that’s 64% of the contractors surveyed); 11 contractors said a PLA increases costs (THAT’S 100% OF THE CONTRACTORS SURVEYED). This is information from the contractors that build treatment plant projects, not lobbyists, agents, or the unions themselves this is from the contractor who will estimate, bid (set the price) and build your projects. 6. You will here that the worker is not required to join the union. That too is a half-truth. While more recent PLAs do not require the worker to “join” the union, they do still require the worker to be represented by the union whether he wants to be or not. Further every worker is required to pay dues or a representation fee, which sounds a lot like joining the union to me. These “fees” are additional costs to the worker ranging from $.90 to $1.80 per hour worked depending on the union/trade (that’s $2,000 to $4,000 a year) plus an additional monthly payment in most cases. In addition to the hourly and monthly fees above each of the unions have initiation costs/fees (even though you are not “joining” the union). This fee must be paid to the union by any non-union or new worker to work on the PLA job before the worker is dispatched by the union, even if the worker is a core worker of the contractor and has worked for the contractor for years. These additional costs to the worker run from $100 to $1800 depending on the union/trade. Not talked about much is the impact to those non-union workers who work in multiple trades; it is not uncommon for non-union workers to be skilled and work under multiple trades this benefits the worker as they grow multiple skills and earn more money as he learns how to do more work under a higher paid skilled trade and can work more hours as they can do more things for the contractor. But under a PLA he would only be able to work under one trade or must pay initiation fees to multiple unions! How would you explain to the new worker you want to attract to your PLA job why it might cost him nearly $5,000 the first year to be represented by a union you told him he wouldn’t have to join? That doesn’t ring of inclusiveness, community beneficial or let alone a good deal; unless you are the union collecting those fees. 5 These are just some examples of the problems created by a PLA. Please vote down any effort to squash open and fair competition, keep your projects out to bid to all qualified contractors regardless of union affiliation. It’s the only way everyone wins. Feel free to reach out to me if you have questions. Ken Kreischer CFO 707.540.9640 6