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American ShipperIntermodal

PLAs helping ports, governments ensure construction projects run smoothly

Proponents of project labor agreements (PLAs) say they help keep infrastructure development works on time and on budget, as well as benefiting the community through local hiring requirements, but detractors say they make projects more expensive.

   When the Los Angeles Board of Harbor Commissioners renewed a port-wide project labor agreement last month, it not only set the stage for what could become a decade of labor peace at America’s largest, busiest seaport, it also continued a trend in California, Illinois, New Jersey, New York, Washington state and elsewhere toward embracing the type of all-encompassing labor contracts that proponents say could ensure quality and timely construction of facilities and large-scale infrastructure projects.
   The Port of Los Angeles’ recently inked project labor agreement (PLA) is a contract between the port and the Los Angeles/Orange Counties Building and Construction Trades Council establishing wages, benefits and work rules for those hired to build designated projects throughout the port. It guarantees that all laborers—electricians, pipefitters, iron workers, cement masons, and others—earn prevailing wages set forth in the bargaining agreements of all participating union locals.
   The new 10-year agreement, which was approved by the harbor board in early September, follows a previous five-year contract that expired earlier this year. According to the port, 20 major construction projects were completed on time and within budget under the old agreement and another six projects are on schedule to do the same.
   The projects already launched under the previous PLA represent a total investment of nearly $848 million. Those includes the Berth 200 Rail Yard, a $138 million intermodal storage facility also known as the West Basin Railyard; the $500 million-plus TraPac Container Terminal Project, which consists in part of expanding the terminal from 176 to 243 acres, modernization of the facility, and construction of an on-dock railyard; the $84 million South Wilmington Grade Separation project, consisting of a 4,100-foot-long bridge that eliminates a prior conflict between vehicular traffic near the port and two railroad crossings.
   The port says the latest PLA covers an initial list of 38 planned and proposed infrastructure projects representing an investment of about $780 million in wharf improvements, rail enhancements, shore power upgrades, marine oil terminal modernization and waterfront projects.
   More projects are expected to be added over the life of the agreement, the port has said.

Local Labor. According to Ron Miller, executive secretary of the Los Angeles/Orange Counties Building and Construction Trades Council, which represents over 100,000 trade and craft workers, PLAs are like an insurance policy and a business model at the same time.
   “PLAs streamline the construction process on projects, they consolidate the work rules and they have a no strike/no lockout clause in them,” Miller said in an interview with American Shipper. “That means no matter what kind of labor strife happens in the port…one strike will not shut down the project. If employees from another union put up a picket line, our guys go to work; they’ll cross the picket line and go to work.”
   And those protections work both ways.
   “If a contractor gets pissed, they can’t lock out the employees on a project,” he said. “There’s procedures and processes in the agreement that facilitate the remedy offline, so the project continues and conversations and procedures happen offline—outside the project—to remedy the situation, and the project therefore continues. We keep the construction schedule, which is very important in the port for modernization [projects]. They’re always up against tight schedules to get projects done to facilitate increased cargo loads or bigger ships.”
   The port-union PLA also reinvests in the local economy, in part by requiring that 30 percent of the jobs and apprenticeships generated by most major port construction projects go to residents of the harbor area and high-unemployment communities in Los Angeles.
   Miller said that the local hiring component of project labor agreements is one reason why such agreements have become so popular in Southern California. The new contract with the Port of Los Angeles also requires that so-called “transitional” workers, defined as disadvantaged persons, such as those who have struggled with homelessness or extreme poverty, perform at least 10 percent of the work, and that apprentices perform at least 20 percent of the work.
   “The politicians love to invest in their local economy,” Miller said. “And that’s what it does. When you put local people to work, they turn around and spend their money right where they live. So it creates good middle class jobs right in the community.”

“The politicians love to invest
in their local economy.
And that’s what it does.
When you put local people
to work, they turn around
and spend their money right
where they live. So it creates
good middle class jobs right
in the community.”
Ron Miller,
executive secretary, Los Angeles/
Orange Counties Building and
Construction Trades Council

   “Skilled workers and apprentices from our own communities provided approximately one-third of labor to build these projects,” Port of Los Angeles Executive Director Gene Seroka added in a statement provided to American Shipper. “We’re eager to keep that momentum going.”

Nothing New. Project labor agreements are by no means a new idea in the United States. They have been implemented since the 1930s on the construction of some of the country’s most iconic structures, including the Shasta and Hoover dams. Such agreements also have been applied to the construction of the Cape Canaveral Space Center and Walt Disney World Resort.
   The use of PLAs have also been a politically charged issue over the years as conservative lawmakers and business owners have viewed such agreements as a handout to so-called “Big Labor” interests. Several states such as Louisiana and South Carolina have even banned project labor agreements.
   Eric Christen, executive director of the Coalition for Fair Employment in Construction based in Poway, Calif., noted that project labor agreements by nature make projects more expensive.
   He pointed to a study by the National University System Institute for Policy Research, which measured the cost of using PLAs on school construction projects in California and found that those costs rose between 13 percent and 15 percent.
   “Fewer bidders means increased costs,” said Christen. “My members, some of the largest construction companies in the world, will simply not bid their work anymore because to do so means they have to alter their business plans.”
   Christen also takes issue with PLAs that force contractors to use workers dispatched out of union halls and ban non-union-sanctioned apprenticeship programs.
   “A non-union company loses control of its workforce,” he said.
   Christen said his organization is working with U.S. President Donald Trump and his administration to reimplement a President George W. Bush 2001 executive order that banned PLAs on any federally-funded project, including port projects.
   Meanwhile, states such as California, New Jersey, New York, Washington and Illinois have gone in the opposite direction, fully embracing the use of project labor agreements.
   In 2013, a PLA was reached between contractors and labor officials in Coos Bay, Ore., for work on the Jordan Cove liquefied natural gas (LNG) export terminal at the Port of Coos Bay. The estimated $6 billion project is expected to take 53 months and will employ close to 2,000 workers at the peak of construction, according to the company.
   When completed, the terminal will feature about 320,000 cubic meters of storage capacity and deep-water marine facilities, and is expected to handle up to 7.8 million tons of export LNG annually.

Early Adopters. The Port of Oakland was one of the first to implement PLAs when a group of people came together to push for a Maritime and Aviation Project Labor Agreement in 1999. Supporters wanted to achieve three things with the agreement: promote local hiring on projects, ensure labor stability and encourage the involvement of local small businesses.
   “The port is a huge engine in this area economically,” said Amy Tharpe, director of the Social Responsibility Division at the Port of Oakland. “How can we make sure that they’re always supporting local folks that want to work? And then we have a rare blend here in Oakland with a huge tradition of labor support. Our labor community here are also equally committed to local hire. I think those things coming together created a really good foundation for creating a PLA.” The agreement covers any maritime and aviation project over $150,000 in the Port of Oakland, which has about $80 million to $120 million a year in construction activity. It also requires that 50 percent of project hours and 20 percent of apprenticeship hours be carried out by residents living either in the four cities that surround the port—Oakland, Alameda, San Leandro and Emeryville—or in the local business area of Alameda and Contra Costa counties.
   In addition, Oakland has a social justice trust fund that contractors pay into that is then regranted to nonprofits. So far, nearly $500,000 has been awarded to local community-based organizations to support workforce development.
   Port of Oakland officials say they have seen successes in the local hire component of its agreement. For example, a railyard project at the former Oakland Army Base had a workforce that was an estimated 60 percent local, most of them Oakland residents, as well as several local contractors.
   “[With PLAs,] you have a tool that gets them into these good paying, living wage jobs,” Tharpe said.
   Last year, the Port of Oakland updated the agreement to further enhance the local hiring component, especially in supporting local nonprofits that will prepare individuals for work on the projects.
   “What we have learned over the last 16 years is that it’s one thing to have a goal around how many come to the job, but you have to actually contribute to them getting there,” Tharpe said. “And so we focused on that, and we also just wanted to really make sure that that agreement was updated to the latest needs that were out there in the business community.”
   For the Port of Seattle, implementing a PLA is a proactive way of ensuring that there would be no labor disruption on a project.
   The port’s first foray into project labor agreements took place nine years ago, when it was negotiated for the construction of a third runway at Seattle-Tacoma International Airport (Sea-Tac).
   “It was a big project with tight timelines, and had a lot of political exposure in terms of the effect it would have on the community—positive or negative, real or perceived—and so it was in our interest to ensure that any disruptions to the timeline not be affected by labor problems,” Dave Freiboth, labor relations director for the Port of Seattle, said of that PLA.
   And one fringe benefit of a project labor agreement is having labor’s political support behind projects, he said.
   “It doesn’t hurt the project to have one of your major stakeholders enthusiastically in favor of moving forward,” Freiboth said, adding that the port was able to finish the Sea-Tac project without any work stoppages.
   Since then, project labor agreements have been implemented on other Seattle developments like the expansion of Pier 66, one of the port’s cruise ship terminals. The $30 million project, made possible via a public-private partnership with Norwegian Cruise Lines, was delivered on time, on budget and completed without labor disruption.
   The Port of Seattle is in the process of incorporating priority hire language into the next PLA template, and officials say they also want to partner with other public agencies such as the city of Seattle to standardize PLAs to incorporate goals for apprenticeship utilization, including updates that would be aimed at helping women and minority apprentices become journeymen.
   The port intends to apply PLAs on projects such as its new International Arrivals facility and the redevelopment of Terminal 5, a major container terminal in its North Harbor.
   “PLAs have been a real priority for commissioners, and those are the five commissioners who set policy for the Port of Seattle,” said port spokesman Peter McGraw. “This really comes at their discretion and has been the real priority of theirs as this port moves forward.”
   A project labor agreement provides a broad community benefit and cost savings, Freiboth said.
   “I’m sure you could kind of take issue with maybe some of the cost increases for using union represented workforces, but if you have a major project disruption, that could cost the public a lot of money,” he said. “What these [PLAs] do is prevent it. It’s one of those values that the public only notices if it goes wrong.”

California Dreamin’. Like the Port of Los Angeles, the adjoining but separately operated Port of Long Beach has a PLA contract with the Los Angeles/Orange Counties Building and Construction Trades Council that covers all port construction projects.
   In May 2016, Long Beach inked a five-year agreement that covers over $700 million in infrastructure projects, including rail improvements, terminal redevelopment and public safety buildings, according to the port.
   Under the deal, at least 40 percent of the work on Port of Long Beach construction projects must be performed by residents of Los Angeles and Orange counties, 15 percent by disadvantaged workers, and 10 percent by military veterans. The agreement also encourages apprenticeship and training programs, and established hiring programs such as job fairs near project sites.
   Among the ongoing infrastructure projects at the port are the Middle Harbor terminal modernization, a nine-year, $1.31 billion project to upgrade wharfs, water access and container yards, as well as add a significantly expanded on-dock railyard; and the Gerald Desmond Bridge replacement, a $1.2 billion project in which the aging, seismically deficient structure is being replaced by a taller, wider span that would allow the tallest containerships to pass under it.
   Former Federal Maritime Commission Chairman Mario Cordero, who was hired as executive director of the Port of Long Beach in May, said project labor agreements have been very positive for Long Beach.
   “Number one, they bring labor peace. Number two, they guarantee a well-trained labor force. In addition, part of the project labor agreement is to make sure we have a valid apprentice program, which is so important in terms of having a trained workforce for the future, and people who may have in the future the opportunity to seek employment in those various skillsets,” he told American Shipper.
   “I think that in today’s world, many people speak about the need for jobs, the need to provide jobs, and certainly this is one way to make sure we have good jobs and good paying jobs so that we have a sustainable workforce,” he continued.
   In just the last few years, many Southern California governments and agencies, like the city of Long Beach, Los Angeles World Airports and Los Angeles County Metropolitan Transportation Authority, have signed project labor agreements, while municipal and state governments elsewhere, including in Louisiana, North Carolina, Maine and Virginia – all of which also have seaports – have come out against PLAs for varying reasons, including their impacts on construction costs and competition.
   But Cordero said the fact that his home state embraces PLAs puts it ahead of the national curve.
   “I think overall, the state of California moves forward with this type of leadership in so many areas, be it environmental or be it workforce issues,” he said. “[PLAs] create good middle-class jobs right in the community,” added Miller. “We can’t help it if other states can’t see that model as being feasible.”

   Karen Robes Meeks is an independent maritime and logistics journalist. She can reached by email at karen.robes@gmail.com.

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