A highlight of the educational programming at every MCAA Convention is the Executive Roundtable sessions. Broken into groups by company size, these programs give participants the opportunity to brainstorm and troubleshoot a variety of topics pertinent to mechanical contractors.

PM staff attended three of these sessions in San Francisco, indicated by volume size. Here are some capsule summaries of the issues that are on the minds of these mechanical contractors today.

$50 Million and up

  • Mergers of UA locals led off the discussion, and captured much of the hour-and-a-half discussion. Most viewed the mergers positively since it obviously meant a bigger pool of labor — that’s a major benefit considering the labor shortage debate that capped off the meeting. (Ironically, the same contractor who began by extolling the virtues of the local mergers also added that he had a 79–year–old contractor show up on a recent project!) It’s also no small relief considering some parts of country where you can’t cross a county line without first stepping through three different union jurisdictions. In some instances, the mergers aren’t just geographical, but also across trade lines.

    In other cases, such as Kansas City, which has separate unions for plumbers and pipefitters, mergers are still in the debate stage. However, there is the small matter of a $5 per hour difference in wages that must be ironed out first. There were plenty of reasons given for the cause of the merger activity, but the primary cause presented was the competition from nonunion labor.

  • Most expected utility competition to increase with more and more deregulated utilities expected to buy contractors “since they don’t have the skilled labor.” But many considered the utilities naive to blindly enter an industry with single-digit margins. One Kansas City firm had even met with a utility for a possible joint venture, “but when I told the guy what our margins were, he turned white!” Many bravely predicted the ultimate pullout of utilities from the contractor market. “Culturally, they come from a monopoly, and I don’t think they can make it in a non-monopoly world.” One contractor joked that he planned to “sell high and buy back low.”
  • One firm had just expanded their prefab operations, but had encountered some expected reluctance from the troops. “A lot of guys don’t like to think that they’re just ‘installers’ now,” he explained. “They’ll even debate whether it’s cost-effective.”

$15–25 Million

  • Too much of a good thing? There was a concern by one contractor that he was losing supervisory personnel to early retirement. The union has a great pension program. He has a 52–year–old supervisor who will be retiring at $4,600/month. Full benefits are available at age 55. “We need to think about training younger supervisors,” he said, “but obviously, they’ve got to want it.”
  • Supply-demand principles seem to be rearing up once again in today’s tight labor market, after many years of moderate union demands. One contractor said his area recently settled on $6 an hour over four years; it brought cringes from several other contractors in the group. Another said $5 over five years.
  • UA General President Marty Maddaloni is viewed by almost everyone as a sensible partner rather than an adversary. Contractors generally praise his merger of numerous UA locals.
  • Project labor agreements are not necessarily bringing projects in on budget or on-time. Some unions have to vote for no-stop/no-strike language; jobs have been lost to the nonunion side because of it.
  • Keeping up with computerization has become an ordeal for some. “I’m paying more money for PCs than I am for pipe wrenches,” complained one. “I guess I have faith that it will work in the end, but it isn’t paying for itself now.”

    Another, complaining about how promised savings aren’t necessary there, said, “No one has laid anybody off because of computers. But we may not have had to hire someone else because of what the computer can do.”

    “Sometimes it takes the focus away from what we do really well — build things. However, we are working a lot smarter now,” commented another contractor.

  • Regarding utilities buying up some contracting firms — “You don’t want the utility on the negotiating committee, because they may not care what rate you give the union.” Another contractor commented that when a mechanical contractor sells out, “the juice that made that company work has left.”
  • Results are spotty at best for union market recovery programs. Some union locals want to send guys from the hall rather than let the contractors use their own union men. “What are we supposed to tell the union workers who have been with us for a long time? You’ve got to go back to the hall? No way.” Another said market recovery programs are “a short-term fix that lasts two or three years in an area when successful.”
  • Booming in Seattle. When Microsoft first started out in Redmond, WA, they wanted to keep all buildings at three-stories or under. Now they’re running out of land, so they’re tearing down buildings that are less than 10 years old to put up higher buildings. “You’re not going to tell anyone are you?” quipped one contractor wanting to keep prosperity to himself!
  • Double-breasted shops for the most part have gone away. “You’d better be awfully sure there’s a distinct separation, or you’re going to have troubles with the union.”

$2–$5 Million

  • “Plenty of work, need manpower.” That was the mantra voiced by most participants in this session of smaller mechanical contracting firms. Many markets reported full employment, and therefore travelers are hard to come by.
  • Mergers are a mixed blessing. This group generally echoed their larger counterparts’ praise for Maddaloni’s union consolidation movement. However, this smaller group was composed of many plumbing contractors, who said it also presents problems. “Let’s face it, the UA is a fitter-driver union,” said one contractor. Numbers cited for various locals found pipefitters generally outnumbering UA plumbers by 2–1 or 3–1 in merged unions. Inevitably, many fear, their interests will come to dominate those of plumbers in local negotiations.

    “I see plumbing in my town going nonunion when the fitters come in,” said one participant. Others spoke of threats of plumbing unions resigning their UA charters to affiliate with other unions such as the Teamsters, or going it alone as independent entities. One contractor said it has already happened, but nobody knew of a specific example.

  • Prefabrication. While everyone talks about it, the contractor who raised this topic wanted to know to what extent it was really used. This sparked a wide-ranging discussion in which quite a few contractors said they did prefab, but with dubious efficiency gains. One plumbing contractor said that by the time he factored in transportation and paperwork, it was easier for him to prefab assemblies in the field than at his shop.
  • Prefabrication was commonly used for waste and vent assemblies and water pipe headers for back-to-back installations in prisons, hotels and other commercial buildings. Nobody reported any resistance from the labor side, as long as UA journeymen are used to do the prefab work.
  • Salting has unintended consequences. One of the weirdest tales came from a contractor who, in a tight labor market, lost four good journeymen who went to work as “salts” for a nonunion competitor. The intent of salting is to undermine the nonunion competition, but this contractor claimed that the UA salts were obligated to put in respectable job performance while collecting their nonunion paychecks. The net effect was to provide a nonunion contractor with productive skilled workers at a lower pay scale — the difference being made up out of union fund. Meantime, the union contractor ended up short of manpower!