Healthy Construction Industry Sets Up Contract Face-Off

In the midst of a building boom and record construction-industry employment, contractors and building trades labor unions are girding for what may be one of the most crucial contract face-offs of the decade.

This year’s negotiations could determine whether San Diego County’s construction industry will remain committed to collective bargaining or accelerate the trend to non-union open shops that developed in force during the last round of contract talks in 1982 and 1983.

The contract between heavy equipment operators and large commercial builders expires June 15, as well as the agreement the carpenters, masons, laborers and Teamsters unions have with residential builders.

Preliminary negotiations are likely to begin within the next several weeks, but already some labor analysts are warning of the possibility of strikes.

“When you add all the ingredients together, you have a head of steam that’s ready to blow,” said Michael Merrill, a labor relations attorney who represents construction industry management.

Although the outcome of this year’s talks could be as far-reaching as those of the last rounds, they will have a distinctly different tone.

The condition of the construction industry is a world away from what it was in 1982 and 1983, when the last series of contracts was hammered out. In those years, record-high interest rates brought bulldozers to a standstill and drove scores of developers into bankruptcy.

With plenty of available labor, some of the county’s largest commercial construction firms broke ranks and successfully adopted open shops. Among those rejecting collective bargaining for the first time were Trepte Construction Co., Dunphy Construction Co., Riha Construction Co., Kvaas Construction Co. and R.E. Hazard Co.

This year employment is near its record high. Jack Nowell, a state labor analyst, said construction industry employment in San Diego County reached an all-time high of 45,000 in November and continued to run at a near-record of about 43,400 through January.

During 1982, employment in the field averaged just 29,000 and hit a low of 27,000 in December of that year. “This should give the unions some leverage, at least more than the last time,” Nowell said.

And the rate of employment should continue to run fairly high. The number of building permits issued in 1984 for all types of construction--from house additions to office buildings--was the highest since 1977.

More than 38,000 permits were sought by area developers, builders and homeowners, compared to just 22,516 in 1982. Permits to build residential units reached 33,399 last year, also the highest mark since 1977.

In 1982, by comparison, residential permits dropped to 7,697, the lowest year on record since the Greater San Diego Chamber of Commerce began tabulating the figures in 1966.

Analysts are forecasting another robust year in 1985.

“Interest rates have moderated, more people have jobs, and we are continuing to have strong population growth of more than 1,000 a week,” said Max Schetter, director of research for the chamber. “There will continue to be a strong demand for new housing.”

Schetter predicted there would be at least 30,000 building permits this year. Permits issued in January totaled 1,629, ahead of the expected pace, he said. In January, 1982, only 214 building permits were issued.

“The tide has changed,” said Donald Guthrie, business manager of the Building Trades Council of San Diego, a confederation of construction workers’ unions. “Things are turning our way again.”

Guthrie said few if any of the large residential builders are expected to pull out of the bargaining talks. “In fact, we’re signing up new shops,” Guthrie said. “We’ve got the work force. Workers are saying, ‘Why should we work for less than the union wage?’ ”

Indeed, with “a lot of work out there, it gives us a lot of leverage,” said Don Kidd, who represents 4,000 members of the International Union of Operating Engineers in San Diego’s Local 12.

While some in management intend to ask for concessions, Kidd said labor may be looking for some hefty increases. “The other crafts have 85 cents (an hour) coming this year” under an existing contract, he said. “That puts us in a situation of having to keep up.”

Still, he concedes, “negotiations can change hour by hour” and it’s too early to tell what the union’s position will be.

Despite the threat of a strike, “management is in a better position than ever, because we have been able to demonstrate that the open shop can succeed,” according to Bob Morris of the Building Industry Assn., a homebuilders trade group. “The unions are going to have to show what they can provide that an employer can’t find elsewhere.”

Bill Burke of the Associated General Contractors, a trade organization that acts as the bargainer for commercial builders, said management plans to stand firm on its demands for a “market recovery program.”

That plan includes wage freezes and changes in work rules, which Burke said are necessary to allow union shops to compete with non-union employers.

Burke said about 70% of the commercial construction work in the county employs union labor, but that could fall to 50% during this year’s negotiations.

“I’ve got 15 letters of withdrawal already” from employers saying they don’t want to be part of the master trade agreement this year, Burke said. He conceded that a flurry of letters of withdrawal for bargaining purposes is typical before the first round of talks, but insisted that this year many of the employers intend to stay out of the talks.

“If the operating engineers aren’t reasonable this year, they will lose the balance of the commercial builders,” said Gary Dennis of V.R. Dennis Construction Co., a union employer. Previously, full employment and busy work schedules were enough to persuade management to settle as quickly as possible and avoid a strike, said Dennis, adding, “it’s not the same ballgame anymore.”

Development of the open shop will be a greater force on this year’s contract negotiations than the employment rate, he said.

“The industry can’t afford a strike action,” Burke said. “So we’ll man those jobs any way we can. We’ll work no matter what.”