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Detroit — The United Auto Workers is using nonunion labor to build a lakefront home for retired President Dennis Williams, a money-saving move prompted by bids showing the project would have cost more than $1.3 million.

Interviews with contractors and bid documents help pinpoint the original cost of a construction project being built amid an FBI investigation into whether union leaders' have spent membership dues and money from Detroit's automakers on personal luxuries.

Instead of using more expensive union laborers, the UAW has hired a nonunion electrician, a nonunion excavation company and is in talks to hire a nonunion plumber to work on the three-bedroom, three-and-a-half bath, 1,885-square-foot stone home at the UAW Walter and May Reuther Family Education Center in Onaway. The 1,000-acre retreat in northern Michigan is financed with interest from the union's $721 million strike fund, which is bankrolled by worker dues.

"This changes it from a story of suspected misuse of union funds, which some union members have a surprising tolerance of, to a story of hypocrisy," Erik Gordon, a University of Michigan business professor, said.  "A union that is in favor of union labor until it costs more is the same as any company that fights against union labor."

UAW spokesman Brian Rothenberg said the union is using members of the United Steelworkers, who work full time at the education center, as general contractor on the Williams home.

"The UAW always hires union members and contracts with union contractors when available," Rothenberg wrote in an email to The News.

The decision to hire nonunion workers was made after the UAW education center solicited bids last year to build the home on the edge of Black Lake, a half-hour drive south of Cheboygan.

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Despite posting a $2.8 million loss last year, a UAW subsidiary started building a 1,885-sq.ft. cottage for Dennis Williams earlier this year Robert Snell, The Detroit News

The bid solicitation included one demand: "This project requires union laborers."

Two companies bid on the project.

DeVere Construction Company in Alpena submitted an $851,307 bid. The second bidder, Spence Brothers, said the project would cost $1,335,000.

"None of those bids — all of which were from union contractors — were accepted as the UAW believed those bids were too high for the cabin construction," Rothenberg said.

DeVere was told the project came in over budget, company Vice President Brock Johnson said.

"We felt strongly about our number," Johnson said, "but we were using all union labor."

While the home is relatively small, the project in a remote, heavily wooded location required a significant amount of work, Johnson said.

"You're basically building something brand new on totally remote site," Johnson said. "You’re totally down there having to build a sanitary and well system. It's not a typical cabin build."

A Spence Brothers executive declined comment on the company's $1.3 million bid.

Construction on the home, which blueprints and building plans indicate will feature granite counters, stainless-steel appliances, a wood-burning fireplace, a wine cooler, a patio overlooking Black Lake and a room hidden behind a bookshelf, is well underway with a mixed crew.

Robiadek & Sons Excavating in Cheboygan was hired to dig the home's foundation and install septic tanks, company President Chuck Robiadek told The News. The company is being paid about $18,000, he said.

"We are nonunion," Robiadek said. "I know the union is out there and everything, but to find a union contractor around this area, there are no union excavators and the bigger ones wouldn’t tackle that size of a job."

One defining feature of the home is a stone veneer that will cover the home and match existing structures at the UAW retreat.

"I know the mason work is being done by an outside contractor, the UAW hired some guys," Robiadek said.

The Williams home is being built on land owned by the UAW's nonprofit real-estate arm, Union Building Corp., which was headed by Williams before he retired in June.

Williams was implicated in the scandal one month later when prosecutors said he directed subordinates to use funds from Detroit’s automakers, funneled through training centers, to pay for union travel, meals and entertainment.

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Tour golf courses and resorts frequented by UAW officials in Palm Springs, Calif., where the union has spent more than $1 million in recent years. Robert Snell, The Detroit News

Federal prosecutors have secured the convictions of seven people linked to a conspiracy in which the government says Fiat Chrysler executives funneled cash and things of value to UAW officials in an attempt to influence the collective-bargaining process. The money was funneled through the jointly operated UAW-Chrysler National Training Center, prosecutors said.

“This investigation and prosecution has revealed that there was a culture of corruption in the senior leadership of the United Auto Workers union,” Assistant U.S. Attorney David Gardey wrote in a court filing Wednesday. “Leaders of the UAW viewed the National Training Center as a mechanism to take apparently unlimited and illegal payments from Fiat Chrysler for their own personal benefit, for the benefit of the union itself, and for their own lavish entertainment.”

Williams retired to the Black Lake retreat in June — with $100,000 worth of brand new boats — and was succeeded by Gary Jones.

"(Jones) went up there and supposedly cut back on a lot of stuff," Robiadek said. "He’s cutting back lot of what (Williams) wanted. It must be overbudget or something."

Robiadek has a long history of working on projects at the Blake Lake retreat, including a home for former President Douglas Fraser, who retired in 1983 and died in 2008.

The Fraser home stands in contrast to the home being built for Williams, the excavation company owner said.

"Fraser's place is just a little old cabin," Robiadek said.

The UAW has provided homes at Black Lake for generations of retired presidents, but the Williams home is the first being built during a federal investigation into union spending.

"Importantly, the new cabin is, and always will be, the property of the UAW, and is not owned by Dennis Williams," Rothenberg wrote in an email to The News.  "It is a permanent asset of the UAW’s Black Lake Education Center.”

Union and open-shop construction companies are coping with a shortage of qualified workers, according to the Associated General Contractors of America. The shortage is increasing the cost of construction projects, which take longer to finish, according to the Virginia-based trade association's annual worker shortage survey.

Besides hiring the excavator, the UAW also hired the nonunion McLean Electric of Onaway to oversee work on the Williams home.

"They don't have anybody licensed with a master's electrician and a contractor's license to pull the permit on the house so they asked me if I could pull the permit and look at the work on occasion and make sure it's being done correctly," company President Erin McLean said. "There’s no union electrical contractors that are close. It sounds like they couldn’t get union trades to do it — it's not a big job."

McLean said he is overseeing work performed by the UAW's licensed journeyman electrician, a less-experienced, less-expensive and unusual option for the union.

"It is not common," McLean said. "It would be saving them money, definitely. If they are paying their guys $30 an hour, they'd be paying me $60 an hour, so they're definitely saving money."

McLean said he has spent about 15 minutes on the construction site, overseeing the journeyman electrician's work.

"I told them they have to have something for me to sign saying I didn’t do any of the work," McLean said. "I was just helping them out to get the permit."

McLean was on site about 10 days ago.

"They're still working on the inside," he said. "The electrical is close to done."

That's news to the Cheboygan County Department of Building Safety, which oversees permits.

There have been no permits issued to subcontractors, said Regina Redmond, an assistant in the county office.

"If work has been done," she said, "it is a violation."

David Fashbaugh, business manager of International Brotherhood of Electrical Workers Local 498 in Traverse City, is not surprised the UAW hired nonunion workers to build the home.

The profit margins are thin and Black Lake is isolated from cities with larger concentrations of union electricians, he said.

"It would be nice if they did hire union electricians," Fashbaugh said. "A lot of residents around here, as far as builders go, it's just two guys in a car with a four-foot step ladder in their car and small tools. We call them 'trunk slammers.'"

The UAW also has been in talks with nonunion mechanical contractor Randall Tibbits, a master plumber and mechanical contractor in Onaway.

"You need to be a master and a mechanical contractor to pull permits," Tibbits said. "It sounds like they're trying to reduce costs as much as possible because they want to do some work themselves."

The hiring of nonunion workers sends a clear message to rank-and-file UAW members, said Peter Henning, a Wayne State University law professor and former federal prosecutor.

"The message they have sent to their membership is we're willing to sell out union members whenever we need to cut down our costs."

rsnell@detroitnews.com 

(313) 222-2486

Twitter: @robertsnellnews

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