Mayor, City Council Force Labor Agreement For Airport Terminal Project

By Sean Belk
Staff Writer

After much heated debate, the Long Beach City Council voted 7-2 at its July 6 meeting to form a labor agreement for work on the airport’s $45 million terminal project on a new concourse and boarding lounge.

Supporters said the move would bring an organized structure to the project, requiring 30 percent local hiring of contractors as the city suffers from high unemployment.

The rather controversial contract, known as a Project Labor Agreement (PLA), would also set uniform labor policy with a no-strike rule, ensure a timely completion and provide cost savings, according to city staff.

Both union and non-union contractors are allowed to bid on the project. However, if non-union contractors receive a bid, they would be forced to use union employees.

But non-union contractors, private associations and some councilmembers strongly disapproved of the agreement, stating that PLAs in general favor unions by eliminating the ability of independent contractors to compete fairly in the bid process. They add that PLAs actually increase costs to projects in the long term.

Councilmembers Gary DeLong and Val Lerch cast dissenting votes against implementing the plan while Councilmember Rae Gabelich had originally stated opposing points but later changed her position after dozens of speakers presented differing statements.

The proposed PLA would be implemented for the construction of the airport’s new passenger concourse, which is expected to include a new security screening area, a boarding lounge with improved seating, concessions and restrooms, an atrium, a garden walkway and solar paneling on the roof.

Airport staff has stated the terminal construction is expected to create 340 jobs.

The project was approved by the planning commission earlier this year after several years of delay due to opposition from the surrounding community over its environmental impact report. The size of the project has also been scaled back considerably after concerns about whether or not the new modernization would impose heavy traffic on neighbors.

Funded by general airport revenue funds and passenger facility charges, the modernization project is expected to break ground late this year with construction to be completed by 2013.

The city council is expected to vote on approving the PLA once city staff formulates the agreement along with approving any awarded contractors after the project goes out for bid.

City councilmembers, with an agreeing Mayor Bob Foster, stood up for implementing a PLA, stating that the plan would make sure the development is completed efficiently. City staff also were steadfast in their assurances the arrangement would mean that 30 percent of hiring would be local.

While Mayor Foster conceded that there are truths to both sides of the issue, he said putting a PLA in place would provide for the best outcome, by hiring contractors locally and promising to pay workers “prevailing wage,” which he said is a standard practice.

“The truth is there’s some truth on both sides,” he said. “Nothing is perfect in this world . . . We don’t want companies cutting corners. . . . From everything I have seen, the public policy outweighs the benefits.”

Meanwhile, Councilmember Tonia Reyes Uranga circulated a study conducted from 2007 to 2008 from UCLA’s Center for Labor Research and Education that looked at local hiring goals of PLAs for projects with Los Angeles County, Los Angeles Unified School District (LAUSD) and the City of Los Angeles.

The study states that local hiring goals of 30 percent were met and exceeded in some cases with all three agencies, also indicating that 41 percent of apprentices, 39 percent of journeyworkers and 23 percent of foremen on the LAUSD projects were local hires.

“The unionized construction sector brings greater capacity and quality jobs to the workforce development agenda,” the report asserts. “One of the added values that unions offer is their sponsorship of training centers for the thousands of new entrants in this field.”

Further, the UCLA study states that union training programs account for 88 percent of all construction-related training in the state.

Union leaders during the meeting also took to the podium stating that PLAs have been the “backbone” of the construction industry.

However, there was no shortage of opposing views at the council meeting.

Dale Phelps, owner of Kelso & Phleps Plumbing, Inc., a 30-year-old private construction company in North Long Beach, said he turned away from a contract on a previous project once he found out it involved a PLA.

“I looked at it and I said I can’t bid this,” he stated. “I am going to have to give the job away to get the job.”

Those sentiments were echoed by Jim Kerr, president of Paramount-based KERCO, Inc. Kerr said there is no way he can bid on the airport project. “There are many Long Beach contractors that I know that would like to be able to bid on that job but won’t. If it has a PLA or some form of project agreement, and involves giving money back to the unions . . . typically it isn’t economical to taxpayers who have to foot the bill for cost overruns.”

The main argument against PLAs is that they make it harder for non-union contractors to bid on the project since the agreement would require the bidder to pay union dues and hire union workers instead of their own staff. The requirement may also include paying pension funds for workers on the three-year contract.

Jackie Nutting, director of government affairs for the Southern California branch of Associated Builders and Contractors (ABC), said the PLA would make it so non-union contractors would have to hire unknown workers from union hiring halls.

“It’s a major factor because you can’t ask a contractor to deliver on time and on budget with people you’ve never worked with before,” she said.

Ultimately, if an independent contractor were to be awarded the project, the company would have to pay fees into a pension fund without the benefit of union representation, Nutting said, adding that many of the funds are spent on union ballot measures. Most unions require five years on the job before being allowed any pension plans.

She also said the agreement would potentially hike up the price of the project by 20 percent due to administrative costs and pension trust fees, noting that Port of Long Beach subsequently paid $200,000 in administrative costs for implementing its PLA earlier this year for the Middle Harbor Project.

Randy Gordon, president of the Long Beach Area Chamber of Commerce, also expressed concerns over the issue, claiming that 85 percent of the private construction industry is non-union and a PLA “prohibits non-union apprentices from working at all,” which means that only 15 percent of local apprentice-level workers would be able to be employed on the project.

Mainly for that reason, he said a PLA potentially decreases the number of local bids as well as limits the number of local workers that construction companies may hire.

“Therefore, we believe it is clear that there is no guarantee that local hiring will actually happen despite what supporters of PLA will tell you,” he said in a statement.

Nutting added that non-union programs, such as provided by ABC, are essentially disqualified on the basis of lower enrollment numbers.