by Sean McGarvey
Secretary-Treasure’s Blog
Time for a New Business Model in the Construction Industry
This week, the San Diego Unified School District voted in favor of a Project Stabilization Agreement (PSA)
for its $2.1 billion plan for school construction, modernization and retrofit projects. And in usual fashion, the
local San Diego chapter of the Associated Builders and Contractors (ABC) went apoplectic over the decision,
with their usual whining about how PSAs are discriminatory and an affront to American values and
meritocracy.
Well, I, for one, beg to differ on that score.
Because if you examine the debate over PSAs (or, Project Labor Agreements…as they are more commonly
known), what you will find is a dispute over the relevancy and value of the two competing business models
that currently exist in the North American construction industry.
The first model, which is favored and fiercely defended by the ABC, is centered upon the premise that the
construction industry should be defined by “fair and open bid competition” (those are the ABC’s words, not
mine). And by “fair and open” they mean unscrupulous, irresponsible and morally corrupt. Their view of
“fair and open” translates to contractors competing on the basis of who can assemble the cheapest, most easily
exploitable (and oftentimes, undocumented) labor force.
Let me offer you a typical example. I live and work in the greater Washington, DC area. In the DC
construction market, Miller and Long Concrete Construction, Inc. is an omnipresent force. They are the
largest concrete contractor in the United States. They are everywhere. And that is mostly due to the fact that
responsible contractors cannot compete against a business model that subscribes wholeheartedly to the ABC’s
mantra of “fair and open bid competition.” Miller and Long has a workforce that has been estimated by the
New York Times to be over 90% undocumented. Additionally, the Washington Post estimates that the
remaining 10% of the Miller and Long workforce are ex-convicts.
The sad truth is that the open-shop business model is predicated on an ability to compile and sustain a cheap
and subservient workforce that displays little or no regard for American workers or the communities in which
these contractors work. And what’s even more distressing is the fact that too many construction owners,
management firms, and developers turn a blind eye to these practices and the long-term harm that they do to
our economy and our communities.
Fortunately, there are an increasing number of owners and developers that seeing the light and are
enthusiastically endorsing an alternative business model. This model is “value-centered” and is focused not
on exploitation and the tearing down of community living standards (not to mention safety and quality
standards). No, this model is predicated upon developing opportunity for workers to obtain quality training
and career development as a skilled craft professional. It is designed to offer, through innovative agreements
like the PSA in San Diego, to uphold and enhance community standards and career training opportunities for
local residents.
The philosophical underpinning of our business model is that local communities, and the United States of
America as a whole, are better off in the long run when federal, state and local construction investments
encourage competition that is premised upon the protection of local standards…the qualified development of
the skilled workforce of the future…substantive and stable career opportunities for all Americans…and the
payment of wages and benefits that will enable families not to just survive, but to prosper.
That is our business model. And that, we sincerely believe, is the American ideal that voters approved on
Election Day last November.