Delaware jobs: UD, unions not seeing eye to eye on projects

By WADE MALCOLM– The News Journal

Moments before a budget hearing in Dover last week, state Rep. J.J. Johnson warned Patrick T. Harker that he planned to confront him over complaints he had heard about the University of Delaware.

“We have received a lot of concerns from construction workers,” Johnson, D-New Castle, said at the hearing moments later. “It seems we go out of our way to employ out-of-state construction companies at the University of Delaware.”

UD President Harker stood firm. “We’re committed to helping Delaware workers within the policy and budget constraints we have. We have a fiduciary responsibility to our board and our students.”

The exchange — at a Joint Financial Committee hearing — represented the first public acknowledgement of a debate that has been brewing for several months, one that could foreshadow a heated political fight.

UD wants to save on building costs to enhance its ambitious efforts to expand. As a result, it has awarded contracts to out-of-state, nonunion companies.

Trade union leaders said they plan to mount an effort this session in Dover to force UD to change how it awards contracts, either through budget provisions or legislatively. Harry Gravell, president of the Delaware Building & Construction Trades Council, said he will push to require the university to hire a certain percentage of Delawareans on every project or pay the prevailing wage rate, a system that increases labor costs and generally favors unions.

“I want to get something like that done this session, including not just union workers,” Gravell said. “Those ideas will resonate with many lawmakers in Dover.”

Such a scenario would pit two of the more powerful players in Dover — UD and the trade unions — against one another, said Rhett Ruggerio, a Legislative Hall lobbyist and former Democratic National Committee member. Several leaders on both sides of the aisle attended the university. And many powerful Democrats have strong ties to labor.

“They’re both big players politically,” Ruggerio said “You might say they’re equal, as political players go. They’re both very respected and valued as constituents by legislators in both parties.”

Officials at UD, which receives more than $110 million in state support each year, say they have only used privately raised money on recent building projects. But during one of the toughest construction climates in decades, local contractors — union ones in particular — have pressured the school to award more of its sizable contracts to in-state firms.

In the fall, union carpenters picketed for weeks at UD home football games and at South College and East Delaware avenues with a banner reading “Shame on University of Delaware.”

Business agent Bob Carl of the Asbestos and Insulators Workers union approached Harker after the JFC hearing to voice his concerns.

“Why bring people in from out of the state when you have plenty of Delaware workers out of work?” Carl said.

UD officials say they have a long-standing policy, enacted by the board of trustees, to accept the lowest bidder who meets their standards for quality. If it overpays for construction, it would have less to spend on students or faculty, potentially taking money out of other Delawareans’ pockets, UD’s Executive Vice President Scott Douglass told JFC members.

School officials said about half of the $114 million in construction work awarded this fiscal year did go to Delaware firms, and union labor has contributed to several recent projects. For about $34 million worth of those contracts this year, no Delaware firm bid or none met UD’s qualifications for the job, spokeswoman Meredith Chapman said. In cases when qualified Delaware companies bid, they won 75 percent of the time, she said.

Still, many in the local construction industry say they aren’t satisfied.

Growing campus

The recession stopped most major building efforts in Delaware. But construction has accelerated at UD, with four multimillion-dollar projects under way and dozens more planned.

Two of the four — a life sciences facility on Academy Street and an expansion of the Bob Carpenter Center — went to Whiting-Turner, headquartered in Baltimore. California-based URS Corp. has managed the demolition and decommissioning of the former Chrysler plant. Buccini/Pollin Group, of Wilmington, is overseeing the new Barnes & Noble bookstore on Main Street.

“If you look at the next five to 10 years, [UD is] going to be doing the majority of the construction in our state,” said Ed Capodanno, president of the Delaware Association of Builders and Contractors, which represents mostly nonunion firms but shares some of the unions’ concerns about out-of-state contractors. “They are the major private construction employer. That’s why they have everyone’s attention.”

UD administrators who typically speak on behalf of the university were not available for interviews, and they did not take a position on the legislative efforts the unions plan to pursue. UD will likely approach the issue cautiously, walking a tightrope between a desire to stretch financial resources and appease lawmakers loyal to unions, Ruggerio said. Some of those legislators also have a large role in shaping UD’s state funding.

Union labor has become a political flashpoint across the country. Wisconsin Gov. Scott Walker has pushed to diminish the bargaining power of state workers. Unions have rallied to resist the changes, igniting a debate that has spread to other states weighing similar measures. But not yet in Delaware, where unions still hold significant sway.

“We’re very active; our members vote,” Gravell said. “A lot of them help with legislators’ campaigns. We do get a return on our investment from our friends in Dover. But that’s not to say we get whatever we want. We have to be reasonable.”

No public money in projects

Gov. Jack Markell’s proposed budget calls for UD to receive $111.6 million, a nearly 10 percent cut due mostly to the loss of $10 million in federal stimulus funding. State dollars total less than 15 percent of the university’s budget.

UD officials said they have not used public funds on any of the current projects. Last year’s Bond Bill awarded the university $2 million for work at the Chrysler site, but UD has not accessed any of that money, Chapman said.

“I’m not going to support building projects that don’t favor Delaware labor, and I don’t mean just union labor,” said state Rep. John Kowalko, D-Newark South, a former union machinist whose district includes the Chrysler site and much of UD’s campus. “I don’t want to see my taxpayer dollars go to subsidize a university that does not do enough to hire Delaware workers.”

State Rep. Ed Osienski, D-Scottfield, a business agent for the Sprinkler Fitters Union, said he wants to see the general contractors on UD’s projects release the names of their subcontractors. Some of the builders have resisted and, contractually, UD leaves that decision up to individual builders.

“I think my constituents would just like to know where they can apply for a job,” said Osienski, whose district borders Kowalko’s and covers many of Newark’s eastern suburbs. “People drive by every day and see the work and wonder if they’re hiring. And it’s frustrating because they don’t know who the subcontractors are.”

UD has reached a hand out to local construction workers, holding a special briefing for local labor and builders in December to help them submit more competitive bids, Chapman said.

Prevailing wage costs

Prevailing wage — a requirement for any federal- or state-funded project — adds substantial up-front costs. The average carpenter, for example, made $21.50 per hour in 2009, with average benefits adding another $10 to $11 per hour, according to Delaware’s most recent Occupational Employment Statistics survey. But a carpenter earning prevailing wage in New Castle County gets $47.56 per hour, which includes benefits, according to the state Department of Labor. The disparity varies depending on the trade, but conservative economist John Stapleford said prevailing wage can add 30 percent or more to labor costs.

Union leaders argue their wages allow members to raise middle-class families who will be less of a burden to society in the long run. Trade union workers also receive intensive training and do higher-quality work, Gravell said.

Delaware State University, which has a similar funding arrangement with the state, pays prevailing wage for all projects, even when it uses private money, spokesman Carlos Holmes said. Delaware Technical & Community College, as a state agency, also does. UD only does if state funds are involved, as it will for the renovation of Alison Hall, Chapman said.

Given the competing interests, any drastic policy change or demands targeted at UD would be surprising, Ruggerio said, limiting the chances of a full-scale political feud. Johnson’s warning shot to Harker also demonstrated a willingness to negotiate a dialogue, he said

“At the end of the day, there will be concessions made on both sides,” Ruggerio predicted. “It’s Delaware. If it were New Jersey, Philly, New York, they would go for the jugular right away.”