End of Michigan road building contract puts season at risk

Christine Ferretti
The Detroit News
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A piece of Komatsu equipment is parked at the site of bridge construction over the I-94 expressway at Chene Street in Detroit on Wednesday.

A trade association's contract with 14,000 unionized road builders expires Friday with no talks scheduled, raising the prospect of a work stoppage at the peak of Michigan's busy summer construction season.

Representatives of both the Michigan Infrastructure and Transportation Association and Operating Engineers Local 324 say expiration of their deal won't trigger an immediate shutdown. But failure to reach a new deal eventually could bring all work to a "screeching halt," said MITA Executive Vice President Mike Nystrom.

"They've refused to meet. Period. We're baffled by the strategy. We have never encountered it."

MITA represents hundreds of companies who contract to build state roads and bridges, water and sewer systems and utilities. It proposed 3 percent raises across the board in a five-year contract they believe is "fair and equitable," Nystrom said. 

The union, which received the plan by mail, hasn't acknowledged the offer and the association is "baffled" as to why, he said.

The Michigan Department of Transportation has more than 140 construction projects in the works or planned this year around the state with more than $100 million earmarked for freeway construction projects in Macomb and Oakland counties alone. This work comes at a time when the quality of the state's roads dominates the conversation in Lansing and auto repair shops.

The union of more than 14,000 heavy equipment operators and technicians and stationary engineers said it has no interest in negotiating with MITA but declined to comment on the proposal or any other ongoing contract talks. 

"We are currently negotiating with a number of contractors. We will not be negotiating with MITA," said Dan McKernan, a spokesman for the engineers.

Nystrom noted the industry, through MITA, has negotiated 13 different contracts with five unions for more than 50 years. The existing agreement that's up for renegotiation began in 2013.

Operating Engineers Local 324 is based in Bloomfield Township and covers the entire state with training schools in Detroit, Gladstone and a Construction Career Center in Howell. 

Historically, bargaining has taken place in a multi-employer setting where, Nystrom said, they have come together with the union to reach an agreement that's "fair and equal." 

"The biggest risk at this point is having a variety of independent agreements out there that potentially make certain companies more competitive than others," he said. 

The union represents some workers who are employed fully by a single company at an assured rate of pay. Others are hired out for projects as needed, McKernan confirmed. 

MITA holds power of attorney for its member companies for labor agreements with the Operating Engineers, Laborers, Carpenters, Teamsters and Cement Masons. The member firms are responsible for thousands of construction jobs in Michigan each year. 

Contractors pay annual dues to MITA based on their volume of work.

“The operators more or less are the guys that run the equipment. If there’s a shutdown because of a labor stoppage, the rest of the project would come to a screeching halt pretty quickly,” Nystrom said. "The industry by no means wants any form of a labor stoppage. That would be a decision by the union to stop projects."

McKernan said a work stoppage is not the focus of the engineers at this time either. 

"The goal is to reach agreements with contractors that are mutually beneficial and keep our members working, fairly compensated and safe," he said. "As developments occur, we will be very open about what that means for our members and for the public at large."

Marick Masters, director of Labor@Wayne for Wayne State University, said the union might be taking a "whipsaw" approach to negotiations, going after a few employers in the multi-employer bargaining group.

"You would pick where you get the best deal, negotiate that first and use that as the model that you expect the other companies to live up to," he said. "That's what they might try and do in this particular case."

Masters said there's been a tendency in recent years to move away from broad-based deals in favor of individualized agreements among some groups, including in the automotive and airline industries.

A Deere wheel loader works at the bridge construction site over the  I-94 expressway at Chene Street in Detroit Wednesday. At left, the boom on a crane is lowered.

This approach, he added, could be subject to litigation over who has the right to bargain. Many larger groups wouldn't be willing to negotiate directly with the union since they have empowered MITA for those dealings. 

"I'm not certain that all of these companies would all of the sudden unilaterally take up these obligations themselves," he said.

One of the largest contractors, Dan's Excavating, posted the MITA contract proposal on its Facebook page, sparking some reaction from the business manager of the 324 Local.

Doug Stockwell, business manager for the Operating Engineers local, could not be reached by The News, but in the comment section of the social media post referred to the contract plan as "fake news," calling MITA a "rat association" that he contends is predominately made up of non-union contractors.

"Who do you think is controlling that association," he wrote. "That is the big question here."

MITA, which says it supports the prevailing wage on behalf of operators and laborers, has a membership of nearly 600 companies in the heavy construction industry from contractors to bond and insurance agents, pipe and equipment suppliers, attorneys and insurance agencies and consultants.

Nystrom noted that 11 out of 14 of the association's board presidents have been from union companies and all six of MITA's current executive committee members are with union companies.

Brian Schember, executive vice president of Dan's Excavating, said Friday that MITA has negotiated contracts between the union and contractors for a half-century. Many of the major contractors, he said, hope to have MITA negotiate the deal for the collective group. So far, the union has not reached out to Dan's directly. 

Dan's brings on workers from the operators union for projects seasonally, as needed. Currently, the company has about 40 different projects ongoing, most with workers from the 324 Local. Its larger projects include the I-75 inlay south of Detroit and I-75 work over the Rouge River.

He said the negotiation rift has him worried about the workers. 

"Our No. 1 priority is to keep the workforce working, not only for them and their families but for the State of Michigan and the motoring public," Schember said. "We certainly don't want to stop work and have any shutdowns due to any labor disputes."

In 1989, there was an operating engineers strike on underground construction work and then another in the late '90s, which resulted in about a one-day stoppage on roadwork. This time, Nystrom said, negotiations with MITA haven't even begun.

"We don’t know at this point (what the issues are). We’ve offered an economic settlement. The contractors are interested in coming to a fair and equitable settlement and having a new contract," he said.

MITA's economic offer to the union maintains the terms of its existing agreement apart from proposed wage increases in a deal that would run through May 31, 2023. Workers in all classes would get a $2 increase annually for the first three years of the contract, and $1 more annually for the final two years. 

The operating engineers primarily run all of the equipment for signatory contractors. There are some non-union contractors, but many companies represented by MITA have union agreements with the operators, and a number of union employees represented would be affected if the union won't come to the table, Nystrom said. 

Work impacted, Nystrom said, could be a major project on an expressway such as Interstate 696 or I-75 or a smaller neighborhood roadway.

The timing, which poses a risk to upcoming road projects, could also be a bargaining tactic, Masters said.

"The union may be using this to its advantage in saying that the construction season is opening up, there’s going to be lots of new work that has been funded by the Legislature and obviously, you are not going to want to take a strike, so you are going to want to strike a better deal with us," he said.

In an emailed statement, MDOT spokesman Jeff Cranson said the department is unable to comment on the ongoing negotiations, but "we are hopeful for a successful outcome."

Cranson also noted that MDOT has contractual specifications that address contractors' responsibilities in the event that there are labor disputes that impact active construction projects.

"The contractors are obligated to maintain a safe work zone for motorists at all times and are required to do so for the full duration of the project even during a delay caused by a labor dispute," he said.

Nystrom said he's hopeful work will continue and officials from the industry and union will engage in good faith talks to reach a new deal to begin on Friday.

If the two sides can't come together before the contract's expiration, MITA is prepared to offer an extension, he said, that would keep the contract open as long as conversations are taking place.

"We want the employees to be able to keep working and continue their benefits, like their health care," he said. 

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