Sheet Metal Pension Fund Sets Example for Innovation
Even though the nation’s pension funds lost a bundle in the market on Oct. 19, Black Monday, nearly $2 trillion is still left in reserves for money managers to handle, and they come up daily with ideas for investing those vast sums.
The primary goal must be to manipulate the money so it will increase and thereby help ensure pensions for retirees. But little attention is paid to what should be an important secondary goal: using the money in ways that will better serve workers who are covered by the pension plans but who are still on their jobs.
However, a few of the nearly 800,000 private and public pension programs are run by people with imaginative suggestions for safe ways to do more for workers than simply increase the huge reserves.
Among the most innovative ideas in the country have been devised for the $1.3-billion Sheet Metal Workers National Pension Fund, which is jointly controlled by union and management trustees.
Most of the ideas come from Edward Carlough, president of the relatively small, 147,000-member Sheet Metal Workers Union. Not a self-effacing man, Carlough nevertheless has reason to be pleased with the success of his proposals so far.
They’ve done so well, in fact, that, unlike most construction industry unions, the Sheet Metal Workers Union is increasing its membership, which is expected to top its 1978 record of 152,000 by the end of the year.
The membership increase is partly due to cooperative efforts by the union and industry to keep labor costs down in the face of rising non-union competition. But another significant factor is the clever use of some of the pension fund money.
About $75 million has been invested in companies that are bringing a nice return to the pension fund and are creating jobs for sheet metal workers by developing ways to, among other things, increase the use of solar energy and find safe methods to remove life-threatening asbestos from homes, schools and office buildings.
For example, pension reserves have been used to buy about 30% of Chronar Corp., based near Princeton, N.J. Chronar is building what Carlough says will be the world’s largest “amorphous silicon photovoltaic” manufacturing plant.
The fund will own the plant that Chronar will manage and also market the photovoltaic cells that turn sunlight into electricity. And sheet metal workers will fabricate and install the product.
“Labor & Investments,” a newsletter published by the AFL-CIO industrial union department to keep track of unions’ financial investments, says the sheet metal workers’ pension fund is the only one making major equity investments in corporations that manufacture products used in jobs held by pension plan participants.
The sheet metal fund also bought 30% of Acmat Corp. based in East Hartford, Conn., a heating, ventilating and air-conditioning company that recently entered the rapidly growing asbestos-removal business, which is providing jobs for sheet metal workers.
But Acmat, like other asbestos-removal firms, is facing increasing trouble buying liability insurance for its asbestos jobs. To help solve that problem, pension funds were used to buy a 30% stake in United Coastal Insurance, which offers the mandated asbestos insurance policies.
Another innovative idea was to devise a way to help contractors get performance bonds that small firms often have trouble obtaining. To achieve that goal, the pension fund-financed Acmat last week announced plans to buy a subsidiary of John Hancock Holding that will offer bonding to qualified asbestos abatement contractors.
Randy Barber, a financial consultant to unions, complains that far too little has been done by unions to make sure that pension fund administrators invest fund reserves not only to protect retirees but also to help active union members.
But he said Carlough and other trustees of the sheet metal pension fund “are doing some exciting, pioneering things that can serve as examples for other unions around the country.”
Usually, almost all of the enormous amounts of money in the nation’s pension funds are put into “safe” investments such as stocks, bonds and government securities by money managers, who often make small fortunes for themselves in the process.
But relatively small amounts of those vast sums trickle into job-creating construction loans that directly benefit active workers covered by pension plans.
Jobs are opened for construction workers when a construction industry pension fund simply makes a loan to a developer. The developer then hires a building contractor, who hires construction workers. The contractor, in turn, makes pension fund contributions for his workers, thus putting additional money into the fund.
Much more use should be made of money set aside for workers for their retirement to create jobs for them as long as the fund trustees don’t violate their fiduciary responsibilities by careless, high-risk, low-return investments.
But much more can be done, as the sheet metal fund trustees are showing, to find other equally intelligent methods for using the huge pension fund reserves for the benefit of workers other than simply investing them in the traditional fashion.
Harbrant Is Honored for Service to Scouts
Unions have fallen on hard times in recent years, and they will not suddenly begin to flourish after May 20, when Robert Harbrant, a dedicated labor leader, is presented with the Silver Buffalo award for “distinguished service to youth” by national officers of the Boy Scouts of America.
But the award does symbolize the first chance unions have ever had in the 78-year history of Scouting in the United States to teach millions of Scouts the positive story of organized labor’s role in the economic, social and political life of this country.
And to stop the erosion of their strength, unions need to get their story across to America’s youth, the source of their future membership. Sadly, the public schools teach almost nothing about labor unions.
Harbrant, head of the AFL-CIO food and allied services trade department, spearheaded a lengthy campaign to persuade Boy Scout leaders to create a labor merit badge, and the success of the campaign will be marked in ceremonies in San Diego where Harbrant will receive the award. (Other 1988 recipients of the Silver Buffalo include First Lady Nancy Reagan, who received it in January.)
More than 20 years ago, America’s business community won the chance to present its most favorable side to Boy Scouts when a business merit badge was created. But when Harbrant and others sought equal treatment for labor, there was strong, often strident opposition.
One draft of the badge requirements designed to help Scouts learn about the American labor movement was completed in 1985. But that was derailed because critics said it didn’t ask Scouts to learn about the non-union sector of the work force.
The final battle in what has been tagged “the great badge war” came at a meeting of 19 corporate executives who make up Scouting’s special merit badge committee.
The executives indicated that they would approve the labor merit badge only if Scouts were required to learn about allegations of corruption of unions as well as their achievements, according to professor Arthur Shostak, a Drexel University sociologist who has followed the badge war closely.
Harbrant agreed to the idea if, in turn, the corporate executives would add a requirement to the business merit badge spelling out the corporate corruption and white-collar crime “directly linked to the companies of the very businessmen trying to decide the fate of the labor badge,” according to Shostak.
That ended the argument: The corruption that exists in both labor and management was not included in the merit badge program.
A 47-page “American Labor” pamphlet has just been issued so that any of this country’s 5 million Scouts who want a labor merit badge to help them advance in the ranks of Scouting can get it by learning the story of unionism in the United States.
The Silver Buffalo award to Harbrant is quite appropriate for such an achievement.
