Monday, January 21, 2013

Massive City Point Development to Use Nonunion Workers

As developers plan to break ground this week on the second phase of the City Point development in downtown Brooklyn, the long-anticipated project has become a flashpoint in a simmering battle over the use of nonunion construction labor. Developers said construction work on City's Point's 670,000 square feet of retail space will be partially nonunion, and at least some of the 700 apartment units likely will be as well. The 1.8 million square-foot project is being built with affordable-housing subsidies on city-owned land and is among the largest developments in Brooklyn since the recession.

The three-part project's first phase was also nonunion and was the site of periodic protests, but the labor situation for the larger second phase underscores how the city's powerful construction unions are losing their grip on development projects.

The hard-hatted construction worker once symbolized the strength of the city's labor movement, but now only about half of the industry's jobs are unionized.

Just 15 years ago, 80% to 90% of construction work in the city was union. A 2011 report by the Regional Planning Association said union labor has declined to 60% from 85% in the 1970s.

Paul Travis, of Washington Square Partners, which is developing City Point's retail portion, said City Point's retail component would use a mix of union and nonunion labor to cut costs, get the project built faster and use more minority workers. The second phase will create about 3,780 construction jobs. "We're beginning to really have a good group of highly qualified competitive minority contractors," said Mr. Travis. "If you looked at a job like this 10 years ago, the world has really changed."

Construction of the second phase will begin with a huge retail space that will include Century 21 and a 'market hall,' which will include local food vendors. The second phase also includes about 565 units of market-rate housing and 125 units of affordable housing.

[see ElectricWeb | Blogger, Jan 16, 2013]

The developers will use nonunion labor in part because it allows them to hire more local, minority and female laborers, Mr. Travis said, noting that on the first phase, 41% of more than 180 construction workers were local and 82% were minorities. "We're pretty confident that in the next phase, we'll be able to continue the hiring record that we have so we will become one of the largest employers of local workers in the neighborhood."

However, union leaders have fired back that paying lower wages hurts local workers and could potentially lower the quality of construction. "I don't know why the city, the Economic Development Corporation and Washington Square Partners, think that this is fair, after all the taxpayer money that they have received," said one union leader.

Some large developers in the city regularly use nonunion labor, including Equity Residential and Toll Brothers.

[see ElectricWeb | Blogger, May 26, 2012]

Industry experts say developers are turning away from union labor because construction costs are rising more quickly than rents and condominium prices, and because nonunion workers are able to finish jobs more quickly than unionized workers. They said the successful completion of some jobs with nonunion labor has helped increase developers' confidence in building projects in the city. More importantly, nonunionized labor costs more than 30% less, and nonunion workers have become more and more skilled.

City labor leaders said most of the big projects in New York remain union jobs. "They're almost all being built union, like Hudson Yards, Hunters Point South in Queens, the B2 Brooklyn project that Forest City Ratner is building near Barclays Center," said Paul Fernandes of the Building & Construction Trades Council.

To help hold on to these large jobs, unions have become more willing to compromise in the form of "project labor agreements," which include concessions on wages and benefits. "The unions are making changes as they proceed, because they're seeing a tremendous erosion of their membership," Mr. Lambeck said.