Blog #6: Bargaining to create a larger pie

Reaching agreement in contract negotiations isn’t always easy, particularly when both parties are under pressure from their constituencies to secure the maximum benefit for their side. It’s similar to trying to divide a pie and making sure that one side gets the largest share.

But what if both sides worked to make a bigger pie, or create more pies? It may not fill everyone’s belly in the short term, but it sure would ensure that there is plenty of pie to divide in the future.

That’s where the concept of “Integrative Bargaining” comes in.

Integrative bargaining (also called “interest-based bargaining” or “win-win bargaining”) is a negotiation strategy in which parties collaborate to find a “win-win” solution to their dispute.

Brad Spangler’s article, “Integrative or Interest-Based Bargaining,”[1] defines its benefit:

Integrative bargaining is important because it usually produces more satisfactory outcomes for the parties involved than does positional bargaining. Positional bargaining is based on fixed, opposing viewpoints (positions) and tends to result in compromise or no agreement at all. Oftentimes, compromises do not efficiently satisfy the true interests of the disputants. Instead, compromises simply split the difference between the two positions, giving each side half of what they want. Creative, integrative solutions, on the other hand, can potentially give everyone all of what they want.

Positional bargaining basically is the process of trying to drag the other party over to your side, or at least as far as one can get.

According to Spangler, solutions achieved through Integrative Bargaining are generally more gratifying for all involved in negotiation, as the true needs and concerns of both sides will be met to some degree. The collaborative process of this type of negotiation results in the parties actually helping each other.

The current negotiations between UA 290 and PMCA have a real potential for developing mutually beneficial solutions.

“We need to build an agreement that helps us create or keep jobs, and to build or maintain market share” explained Mason Evans, president of JH Kelly. “This really is the heart of “interest-based bargaining” because it benefits both parties. We need to find a way to create joint value or enlarge the pie.”

Identifying interests

The first step in integrative bargaining is identifying each side’s interests. Each side needs to understand the other’s feelings and the motivation behind their demands. Each side works to get to the bottom of the other side’s needs, hopes, fears, or desires.

The most powerful interests are basic human needs: Security, economic well being, a sense of belonging, recognition, and control over one’s life. If you can take care of the basic needs of both sides, then agreement will be easier

Next, each side has to analyze how the other side perceives the other’s demands.

Spangler states:

You must also analyze the potential consequences of an agreement you are advocating, as the other side would see them, Spangler writes. This is essentially the process of weighing pros and cons, but you attempt to do it from the perspective of the other side. Carrying out an empathetic analysis will help you understand your adversary’s interests. Then you will be better equipped to negotiate an agreement that will be acceptable to both of you.

“If we just negotiate based on trying to get one side to come over to the other’s proposal, it’s just not going to help any of us prosper for near or long term,” said Evans. “It doesn’t do any good to ‘win’ if you’re going to end up burning down the house in the process.”

Distributing the pie

Integrative bargaining is a good way to make the pie (joint value) as large as it possibly can be, but ultimately the parties distribute the value that was created through negotiation.

The idea behind integrative bargaining is that dividing the pie will not be difficult once the parties reach that stage. This is because the interest-based approach helps create a cooperative working relationship.

But long before that pie is divided, UA 290 and PMCA are going to have to strip away the tendency toward using positional bargaining and work toward mutually beneficial solutions.

“We have real, serious issues about being competitive in the marketplace, and we’re going to have to work together to address them,” Evans said. “Otherwise, as we continue to price ourselves out of the market, our opportunities for employment will further disappear, pure and simple.”

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[1] Spangler, Brad. “Integrative or Interest-Based Bargaining.” Beyond Intractability. Eds. Guy Burgess and Heidi Burgess. Conflict Research Consortium, University of Colorado, Boulder. Posted: June 2003 .

 

Blog #5: Working Together to Emerge Stronger for All

If a union town such as New York City can find itself using more non-union construction workers, then it should be a real bell-ringer to the whole country that it’s no longer business as usual.

In a March 19 article in the New York Times, “Trade Unions in City Confront a Rise in Nonunion Projects,”  reporter Charles V. Bagli chronicles the increasing use of non-union labor by the Big Apple’s real estate industry in its effort to claw its way out of the recession.

The article states:

“For most of the last century, the city’s construction unions were a symbol of labor strength in a pro-labor town, and their involvement in large projects was almost never in doubt.

“While (unions) are still a major presence, their share of the city’s $20 billion to $30 billion in annual construction work has dropped significantly in recent years. There are no official statistics; according to unionized construction companies, two out of five construction jobs in the city are now nonunion, though unions put the number at one in four. All agree that for many years, at least 85 percent of building jobs were union ones.”

As Oregon and Southwest Washington finds itself emerging from one of the worst recessions in memory, UA 290 also is facing a changed landscape, both in the marketplace and within its ranks.  Oregon is a long way from New York City, but the challenges facing union contractors and the industry trends are strikingly similar.

Over the past two years, a record amount of large projects –several in excess of $10 million – have been awarded to non-union contractors by top-tier general contractors. These large jobs have included Oregon State Hospital, University of Oregon Matthew Knight Arena, and Sandy High School.

Historically, 40 percent of plumbing and pipefitter work has been performed by union construction workers, according to the Construction Labor Research Council (CLRC).

But last year, UA 290 performed 3,416,275 hours, which is equivalent to 1,642 people. This was the 2nd lowest total in the last 15 years. Another sobering statistic is that no major contractors have been converted or organized in the last 5 years, and that the number of employers has dropped.

With fewer contractors bidding work, the nonunion sector goes unchecked and is allowed to grow and increase its market share.

The trend is the same in New York City’s construction industry. “A combination of market erosion and the recession has permanently changed the financial structure of real estate in New York City,” said Louis J. Coletti, president of the Building Employers’ Association in the New York Times article. “This is not about a race to the bottom. It’s about our common enemy: nonunion contractors.”

Employers who hire union labor are examining ways to boost efficiencies while still retaining the quality of a union workforce.

On some union sites, employers are seeking benefit reductions and changes in work rules, including overtime. According to Bagli’s article, “On most jobs, the workday starts when workers arrive at ground level, but on large jobs with many men sharing a hoist, it can take another half-hour to reach the actual work site on a high floor, and another half-hour to descend at the end of the day. Employers are proposing that workers be paid only from the time they reach their station to the time they leave it, and some unions have already agreed to this change.”

PMCA Executive Director Frank Wall said it’s important to make sure we do not add nonproductive costs that make it more difficult to secure work for our employees.

“We keep working and negotiating to come up with fair solutions to ensure that we remain competitive,” said Wall.  “We need as many eligible members to vote on the contract so their wishes can be heard. Last election, just 1,000 voted out of 3,500 eligible members, which is under 30 percent.”

According to the New York Times article, the employers too are wary of pressing too hard, because a strike by just one union could be enough to shut down many of the city’s major construction projects, which would benefit no one.

Ruth Milkman, a sociology professor at the CUNY Graduate Center who studies unions, said that there’s an important common ground. “Once you allow non-union, lower-cost bidders to undercut the unions, it threatens everybody,” Professor Milkman said in the article. “So there is a mutual interest at work here.”

With a tenuous economy, just emerging from the worst quarters of employment in memory, now is not the time to be raising the threat of striking.

“The most important thing is our customer/clients need to know is that they can count on us to show up every day, and give them eight hours of safe and productive work for eight hours of pay.” Wall said.

 

Blog #4: UA 290/PMCA′s Drug and Alcohol Policy Needs a New Look

UA 290/PMCA’s drug and alcohol policy has been unchanged since 1997. While the policy has pre-employment screening and “for cause” testing, there is no random testing.

Whatever one feels about random testing, the fact remains that UA Local 290 is the only local construction trade union that currently does not have a drug policy that meets minimum standards for major customers and general contractors.

In contrast, IBEW Local 48 has random testing, and Sheet Metal Local 16 has its own random testing policy.

The question arises: How does UA 290 want to be perceived?

“We need to convey that our plumbers and pipefitters are safe and ready for work,” said Frank Wall Executive Director PMCA. “People who are impaired can make mistakes. It’s not only a matter of worker safety, it’s about making sure that workers come home to their loved ones at the end of the day.”

An industry-wide issue

According to the most recent statistics published by the U.S. Department of Labor, 6.7 million full-time and 1.6 million part-time workers employed in the United States are drug users.

The National Institute on Drug Abuse indicates that employees who use drugs have a higher rate of incidences. Employees who use drugs are:

▪          2.2 times more likely to request an early dismissal or time off;

▪          2.5 times more likely to have absences of eight days or more;

▪          3 times more likely to be late for work;

▪          3.6 times more likely to be involved in a workplace accident; and are

▪          5 times more likely to file a worker’s compensation claim.

Ensuring a drug and alcohol-free workplace is a matter of safety, wellness and competitiveness. There are many areas in our lives where we comply for the best interests of the whole: Seat belts, speed limits, safety regulations, or wearing a helmet.

It’s one of the reasons that the Standard of Excellence calls for members to “meet their responsibility to be fit for duty, ensuring a zero tolerance policy for substance abuse is strictly met.”

“When a crew is missing a key member who is regularly absent, or when one or two guys show up late and hung over, or someone takes unnecessary safety risks, does sloppy work or cops an attitude, the whole project is affected,” said Bill Hite, UA International general president. “Then the problem comes to the clients’ attention, who then complains to the contractor — and everyone gets upset.

“The client will remember that the next time he or she has a major construction project,” Hite added. “Our job is to make sure that the client has a positive experience – not one that make him say, ‘Never again.’”

Implementing a new program

A joint labor and management team was selected to develop a program at the conclusion of the last contract negotiations. UA 290 members, PMCA representatives and industry professionals developed the Drug Program jointly. The Drug Testing Subcommittee drafted a program and recommended it to their respective negotiating committees for adoption by labor and management.

The new proposal incorporates random drug testing.

Under the proposal, the program administrator, using a scientifically valid method, such as a computer-based random number generator, shall make the selection of employees for random testing. Individuals only may be randomly tested up to two times per calendar year.

“Random testing certainly is a deterrent,” said Jana Wolfgang, president of Wolfgang Associates, which provides selection services for employers’ drug-free workplace programs. “It’s a reminder that when that joint passes at a party that you had better pass it up. Given that marijuana can stay in the system for as long as 30 days, that’s a long time to get back to work.”

Wolfgang added that amphetamine use has dipped since cold medications have moved behind the pharmacists’ counter, but there has been an increase in cocaine use and prescription pain medications are abused widely in the Northwest. Pills such as oxycontin have a definite effect on the workplace, she said.

Tony Barsotti, corporate safety professional at Temp Control Mechanical, implemented Sheet Metal Local 16’s random testing program in 2006, and worked with Janna Wolfgang and Frank Wall on the UA 290’s proposed testing program.

“A key benefit to a random testing program is that workers in the field can be assured that coworkers around and above them aren’t impaired — putting their safety at risk,” Barsotti said.

“Another benefit is that it compassionately addresses the needs of those who are self medicating, so that there can be early intervention, and help them work through their issues to benefit their physical, emotional and financial health,” he said.

The U.S. Department of Labor’s statistics indicate construction workers report the highest rates of illicit drug use at 15.6 percent.  A recent study conducted by Cornell’s School of Labor Relations also reported that construction companies that screen for drugs reduced injury rates by 51 percent within two years of implementing the program. Compare that to a 14 percent decline in injury rates for the average construction company over the same two-year period.

Program cost

Under the proposal, the cost of the program won’t be borne out of worker’s paychecks. The program will fund a contractor funded accrual of 5 to 10 cents per man-hour that will be used to pay a 3rd party to administer the program. There will be no out of pocket money for the UA 290 member.

Contractors will no longer have to pay to administer their own programs, and customers will get the assurance of a workforce that is committed to a meaningful drug-testing program that is collectively funded.

“It’s incumbent that we ensure that we have the best workforce possible, and that we convey that in the marketplace,” Wall said. “Plus, by this investment in employee training and treatment, we can provide support to those who do have problems and get them some help.”

Blog #3: Benefit Costs Will Require Collaborative Solutions

There’s a big elephant in the room. That elephant is the rising cost of benefits.

It’s not a matter of willingness, fairness or positioning. Rapidly increasing medical and retirement benefits threaten to further hamstring our collective ability to compete for contracts.

The current package is $56.08 per hour, which means that it costs $116,438 annually for an employer to hire a UA 290 member. Of that amount, a whopping $42,411 is dedicated to benefits.

To get a handle on these costs, it is imperative that all sides come to the table, and negotiate creative ideas and solutions for managing these costs in ways that do not hurt the membership.

Some hot-button issues for discussion include:

• The retiring baby boomers. According to UA International President Bill Hite, more than half the members are baby boomers. In 10 years, 24 percent of membership will be eligible for retirement. In 20 years, the number more than doubles to 55 percent.
• How do both sides continue to assume the cost of all the growing retiree population, while honoring these individual’s contribution to the industry?
• Pension plans continue to be attacked by federal government regulations. Their decisions in the past to not allow trusts to create rainy day funds to weather downturns in the markets has hurt both bargaining sides.
• The definition of family has changed over the years yet the cost of covering dependents is rocketing as the definition of family evolves. As new families form and new spouses and stepchildren are added, the costs increase as well.

Benefits impact take-home pay

As the bargaining parties add benefits, it impacts the union’s competitiveness and its members’ take-home pay.

Understandably, a UA 290 member experiences the perception that they are “falling behind” in terms of purchasing power, because so much of each increase has been directed toward benefit costs instead of the taxable base.

Union contractors pay the total package and feel like they are “falling behind” relative to non-union companies.

Non-union employees often receive more money on the check because their employers are able to purchase benefits at reduced costs (compared to $42,411 for a UA 290 member annually). This allows them to present a lower price per hour to the customer.

Bottoming out of the recession

According to a report published last December by Oregon’s Office of Economic Analysis (OEA), Oregon will have lost 149,000 jobs over seven quarters during the Great Recession; a decline of 8.6 percent. OEA forecasts that it won’t be until the first quarter of 2015, when employment returns to the pre-recession peak reached in the first quarter of 2008. Construction suffered the sharpest decline in jobs last year (-10.8%) as residential and commercial markets continue to suffer.

There are signs for optimism on the horizon, as OEA anticipates that Oregon’s economy will expand by 0.9 percent (15,000 jobs) in 2011, with Construction netting a mild gain.

The point is, will the union be competitive to get those new jobs once they become available? With only 1-in-10 workers having union membership, it could find itself undercut by nonunion plumbers and pipefitters if its expenses are too high. Hite has said that the union needs to expand its ranks by organizing and recruiting new members. Plus, its apprenticeship program eventually will help bring younger members into the ranks.

But none of that will shoo that elephant out of the room.

Both parties need to talk about the rising cost of fringe benefits. Many workplaces have had these discussions years ago to stay viable in today’s economy.

All sides need to come up with solutions on how costs can be reigned in, without sacrificing the principal of workers benefits.

 

Blog #2: The Case for the Standard of Excellence

Putting ourselves a cut above the rest

UA General President Bill Hite makes a compelling case for the need to distinguish UA members from lower-cost, nonunion contractors. This is one of the PMCA proposals that we will help set us apart and is a key ingredient to helping us recapture market share.

“We need to differentiate ourselves from nonunion workers who charge less and demand fewer benefits,” Hite said. “When the customer thinks about quality, efficiency and value, we want the UA to be the first thing that pops into their minds.”

Owners use union contractors because they give them the best “bang for their buck.” It’s the union’s job to ensure its customers’ complete satisfaction, and to stand behind the job performance of its members.

Hite stated that while employers gave the union high markets for its training programs, manpower and its workers’ craftsmanship, he also has heard from customers on several major jobs that there are a few who are contributing to a bad reputation for everyone.

Some of work performance issues raised include:

• Low productivity,
• Absenteeism,
• Worker appearance on the jobsite,
• Poor attitudes and inadequate safety practices,
• Lack of training and certification,
• Unqualified foremen, and
• Concerns about illicit drug and alcohol use.

While these issues are all serious, UA members can address them easily by setting and enforcing professional standards for its members’ conduct. That’s where the Standard of Excellence comes in.

“We are putting down in writing our pledge to maintain the highest standards of excellence in all that we do — in training, maintaining our skills, working safely, being more productive, improving workplace attitudes, and all the other elements that will set us apart from the rest of the pack,” Hite said.

“We need to the it official and we need to sell it.”

To ensure that the UA Standard for Excellence platform meets and maintains its goals, the Local Union Business Manager, in partnership with his implementation team, including shop stewards and the local membership, shall ensure that all members:

• Meet their responsibilities to the employer and their fellow workers by arriving on the job ready to work, every day on time (absenteeism and tardiness will not be tolerated);
• Adhere to the contractual starting and quitting times, including lunch and break periods (personal cell phones will not be used during the workday with the exception of lunch and break periods);
• Meet their responsibility as highly skilled craftsworkers by providing the required tools as stipulated under the local Collective Bargaining Agreement, while respecting those tools and equipment supplied by the employer;
• Use and promote the local union and international training and certification systems to the membership so they may continue on the road of lifelong learning, thus ensuring UA craftsworkers are the most highly trained and sought after workers;
• Meet their responsibility to be fit for duty, ensuring a zero tolerance policy for substance abuse is strictly met;
• Be productive and keep inactive time to a minimum;
• Meet their contractual responsibility to eliminate disruptions on the job and safely work towards the on-time completion of the project in an auspicious manner;
• Respect the customers’ property (waste and property destruction, such as graffiti, will not be tolerated);
• Respect the UA, the customer, client and contractor by dressing in a manner appropriate for our highly skilled and professional craft (offensive words and symbols on clothing and buttons are not acceptable);
• Respect and obey employer and customer rules and policies; and
• Follow safe, reasonable and legitimate management directives.

The Standard of Excellence isn’t a one-way street. Employers and management will:

• Provide worker recognition for a job well done;
• Ensure that all necessary tools and equipment are readily available to employees;
• Minimize workers’ downtime by ensuring blueprints, specifications, job layout instructions and material are readily available in a timely manner;
• Provide proper storage for contractor and employee tools;
• Provide the necessary leadership and problem-solving skills to jobsite supervision;
• Ensure that jobsite leadership takes the necessary ownership of mistakes created by management decisions; and
• Encourage employees, but if necessary, be fair and consistent with discipline.

“This standard should be adopted at every level of our organization,” Hite said. “In the end, this is about us putting in a fair day’s work for a fair day’s pay.”

“Make no mistake about it — the owner, no one else — decides if a job goes union or not, and we need to be the go-to guys.”

Increased market share equates to better wages and benefits, which goes a long way to securing the UA’s position well into the future.

Bill Hite video link:
http://pmcaoregon.wordpress.com/standard-of-excellence/

Blog #1 – Contract Spotlight: CONTRACT LENGTH

Welcome to the PMCA blog page

In the coming days and weeks, we will be posting short essays about some of the opportunities and issues in the new UA 290 contract, which will be voted upon by members March 31, 2011.

The most important thing you can do is to encourage your employees to vote.

The PMCA Negotiating Committee and Local 290′s Negotiating Committee are putting forth a joint proposal for a general vote. They have been meeting over a 1-2 month period prior to the contract’s expiration to provide an agreement that is in the best interest of the contractors and the local 290 members – one that will help secure work going forward.

CONTRACT LENGTH

This year, the PMCA is asking UA 290 members to approve a three-year contract. While the last contract was for two years, the standard, historical practice has been to have a three-year agreement.

This last contract was changed to two years to ensure that bargaining would take place on a different year than when the elections are held.

One of the beneficial aspects of ratifying a new, longer agreement is the degree of certainty provided to union members, contractors and clients. This certainty helps secure work going forward.

“To put it bluntly, our customers get nervous when we are bargaining, and they need to know that they can count on us, and that they don’t have to worry about a work stoppage,” explained Frank Wall, PMCA Executive Director.

Certainty also is good for UA 290 members. In 2010, the U.S. unemployment rate was 9.6 percent, but for workers in the construction industry it was more than double that – 20.6 percent. The rate was almost five times greater for the construction industry than for the government sector.

The economic climate

To get a better handle on the near-term economic climate, PMCA commissioned ECONorthwest to evaluate economic data affecting the local construction market and to comment on the prospects of UA 290’s market sector.

According to ECONorthwest’s findings, it won’t be until the first quarter of 2015 when employment returns to the pre-recession peak reached in the first quarter of 2008.

However, there are plenty of signs for near-term optimism: The latest report from the Oregon State Office of Economic Analysis forecasted a rise in job growth during the first quarter of 2011, and that employment rates will gather steam as the year progresses. But OEA doesn’t expect the recovery to shift into higher gear until the latter part of 2012.

Ratifying the new, three-year agreement not only is fair, it’s good business. As critical clients such as Intel and other owners hire substantial numbers of UA 290 plumbers and pipefitters to expand their facilities, it’s critical that they can rely upon the stability of our membership for the years to come.

In addition, there are a lot of disenfranchised contractors outside of the Portland area. We are a blended union of different crafts in different markets. Work from Intel in the Portland area isn’t going to boost everyone’s employment outlook.

Keep in mind that when plans are made to begin a new, large-scale project, it can be two-to-three years before actual work ever starts. Companies need a high degree of certainty in knowing what the wages will be. Our competition, the open shop, doesn’t have to go through this process. The longer the contract, the greater our advantage in competing against the open shop.

About PMCA

The Plumbing and Mechanical Contractors Association (PMCA) represents plumbing and mechanical contractors throughout Oregon, Southwest Washington, and the northernmost counties in California. PMCA’s focus is the betterment of plumbing and mechanical contractors and the plumbing industry.