There’s an auto plant in nearby Janesville, WI, that pumps out Chevy Suburban trucks. Their unskilled and semi-skilled union labor force makes far more money and better benefits than most of our industry’s highly trained nonunion service technicians. How can they afford it? The answer is that the people who buy their vehicles pay for it.
This is a concept I try to drill into the heads of all my students. Ultimately, the customer pays for everything. Whatever costs you incur in the course of doing business must be passed on.
Most contractors in our industry think it’s noble to hold their prices down for the sake of their customers. I ask, at whose expense? It’s a twisted sense of morality to worry about your customers’ well-being when your faithful employees have to make do with inferior wages and lousy benefits.
The W-2 forms we recently sent out show our top men making $75,000 to $80,000 in 1996. Plus they are vested in the Blau profit sharing plan and have first-rate medical insurance that includes family coverage. Additionally, we make our compulsory payments into the union pension fund. I have my men up to and beyond the compensation level of auto workers. I feel it’s the moral thing to do.
One of our service technicians retired a few years ago at age 56. He had $425,000 in the Blau profit sharing retirement plan, besides being 100 percent vested in his union pension plan and with other income from real estate and stock investments. He was still six and a half years away from drawing Social Security, but he didn’t need it. It makes me feel good seeing our employees prosper like that.
Win-Win: I’ve been a union contractor since 1960. I could have chosen to go nonunion when I made the transition from new construction to service work a few years later. I stayed with the union because ours was a strong union town and I didn’t want to make waves. Beyond that, I also saw the union as a source for trained people. Then as now, the union didn’t really fill the training needs of the service and repair contractors, but at least the union journeymen had some technical skills that were adaptable. I was willing to make further investments in their training relevant to the service business.
When I was a young contractor, I felt like most of you do, that I would go out of business because of the wage demands the union was making. As the years went by I began to see the picture clearer. Journeymen deserve to earn a decent living, and I have to pass on the costs. Over the years I’ve had plenty of disagreements with the union, but look what has happened during the ensuing years.
We have built strong corporate wealth and strong employee personal wealth. And everybody who’s worked for Blau Plumbing & Heating has enjoyed a decent standard of living. Under union domination? No, but working together. Truly a win-win situation.
Union Power Plays: Please don’t think I’m blind to the B.S. that takes place with unions. I served many years on my local negotiating committee and have had my share of confrontations with business agents.
For instance, I remember the time some 25 years ago when a business agent — now deceased, may God rest his soul — came to my place and said I had to do away with my profit sharing plan for union men. When I asked why, he didn’t respond. I answered for him. I told him he was afraid I would get more loyalty from my guys than he would. Then I kicked him out. Fortunately, he was not the top ranking business manager. Other leaders of our local had their heads screwed on straight and saw what we were doing as a wonderful thing for the men.
So, yes, I realize that not every local union is brimming with intelligent life. There are still plenty of small-minded people in their ranks. However, this is just as true of contractors.
Several years ago during the depths of bad times in California, I was called by a UA local in Redding, CA, to put on a seminar for them. I was puzzled why, explaining that my program is geared toward business owners rather than the workers. That’s why the union wanted me. They said there were too many contractors going broke, and when men came back to union hall, they had no place to place them. So the men would go into business for themselves and sever their relationship with the union. The union was looking out for its own self-preservation.
They recognized that a lack of business knowledge was the great weakness of contractors, along with their responsibility to help convert them from mechanics to businessmen. If only the contractor associations, wholesalers and manufacturers in this industry had that much sense.
The Void In Service Training: Please don’t misconstrue this article. I’m not telling all of my nonunion friends to rush headlong into union agreements. In some cases it wouldn’t pay off. I’m simply saying that it has paid off for me.
What inspired this article was a call from a union leader asking me if I would help him recruit contractors in his area. First thing I asked him was, what does he have to sell?
I told him I didn’t want to hear all about his top-notch training facility, because I knew it was not there for service and repair. Service contractors are looking for people well trained not only in mechanical skills but also customer relations and sales training. If they start offering what the service sector needs, I might take him up on his offer.
I read with interest Jim Olsztynski’s interview with the new head of the United Association, Martin Maddaloni, which appeared in the January 1997 issue of PM. He seems like a level-headed individual. When he ran his local in Philadelphia, they had a two-track apprentice system for service work and new construction, and he wants to expand the union’s service training. He also is working on a residential agreement in order to try to recapture some of that business.
I hope they succeed, because most nonunion contractors are not doing what’s morally right by their employees. I talk to more contractors at seminars and on the phone than maybe anyone in this industry. When I ask, do you have a good retirement plan, and a medical plan covering employees’ wives and kids, 90 percent of the time the answer is no.
Contractors need to develop the gonads to build these things into their selling prices, just as they need to accommodate union scale wages and benefits. We must be no different than the auto industry in passing on our costs.
One final thought: Sooner or later Uncle Sam is going to realize we don’t have enough people covered with medical and retirement insurance and will get around to mandating them.
Remember Hillary Clinton’s ridiculous health care plan? Would you rather deal with the federal government on these issues, or solve the problem through the private sector?
Personally, I don’t like the idea of Uncle Sam doing it. I would rather sit down as an educated contractor at a bargaining table and deal with union representatives who are after the same thing as I am — prosperity that everyone shares in.