Building on the momentum of this spring’s spirited Zetlin & De Chiara LLP forum on The Future of Labor in Construction, founding partner Michael De Chiara reconvened development, construction and labor experts at the Union League’s Lincoln Hall on November 2nd to continue the conversation.  This time, the emphasis was on the critical role subcontractors play in the construction paradigm, so that union labor can compete in a market where open shop construction is gaining ground.

In his introduction, President & CEO of the Building Congress Carlo Scissura framed the discussion for the nearly 200 attendees, leaders from throughout the building industry, by declaring that “Business is booming, building is booming and we're doing great,” while urging everyone to think in the long term so that the industry continues to thrive well into the future.

De Chiara reminded the audience of the unions’ efforts to make concessions in order to compete with their open shop competitors.  But, he explained, there seems to be a problem in that the concessions too often are vacant because the savings they bring are not being shared with the owners. 

The panelists, Michael Apuzzo, Business Manager, Plumbers Local Union #1; Jay Badame, President & COO, AECOM Tishman; Louis Coletti, President & CEO, Building Trades Employers’ Association; Sabrina L. Kanner, Executive Vice President, Design & Construction, Brookfield Properties; Gary LaBarbera, President, Building and Construction Trades Council of Greater New York; Charles F. Murphy, Senior Vice President, Turner Construction Company; Larry Roman, Chief Executive Officer, WDF Inc.; and Robert Sanna, Executive Vice President & Head of Construction, Forest City Ratner, spoke about the state of construction labor costs, the strategies behind controlling them and how New York City’s owners and developers are seeking more cost-effective labor solutions.

The experts agreed that the globalization of real estate development has changed the landscape for union labor and for New York itself. Non-local firms have less interest in maintaining and growing the unionized construction trades, which sustain the metro region’s middle class.
Following the Money: The Chain of Cost Savings in Construction.
Panelists participated in an engaging conversation, in which they were divided on the issue as to whether subcontractors are passing on cost savings to owners. It was noted that much of the bidding is done as a lump sum, making it hard to calculate and compare precise costs for a development’s labor components. In conclusion, there was a sense that greater transparency is needed within the bid process itself, and that this would help identify the true value and savings of a union’s adjustments and flexibility.

The Plumbers Union was singled out as a leader in labor innovation. For example, creating different classes of skilled workers is helping their trade members compete as open shops forge ahead in the interiors and residential construction markets. Panelists also pointed to the superior safety record of union projects. 

As Insurance Costs Rise, so Does the Price of Building in New York City.
Among the issues that brought consensus to the panelists was the impact of rising insurance costs on the overall pricing of building projects throughout New York City. Panelists examined the factors and trends throughout the industry contributing to escalating costs of construction, and the rising cost of insurance. From the scaffold law, to the comparatively higher insurance rates and liabilities for specialized trades, panelists noted the need to examine how rising insurance costs can be controlled, resulting in more projects, economic development and job creation throughout New York City.
Closing the panel, De Chiara asked participants to look ahead and to consider long-term solutions. To continue the conversation on rising insurance costs, Zetlin & De Chiara LLP will be hosting a breakfast forum entitled, “Insurance – The Developer’s Partner in Real Estate Construction,” on Thursday, February 8, 2018 from 8:00 a.m. – 10:00 a.m. at the Union League Club.

For more about Future of Labor in Construction…The Conversation Continues, watch here. 

About Zetlin & De Chiara LLP
Zetlin & De Chiara LLP, a leading construction law firm, provides sophisticated legal counsel and business advice to real estate owners and developers as well as architecture and engineering firms in the New York Metropolitan area and around the country.  Many of its attorneys have direct experience with construction and design issues through their work as in-house construction counsel, education and training as architects and engineers, and by earning LEED accreditation. The firm provides counsel throughout the planning, design, and construction process — from drafting and negotiating contracts to advising on risk management strategies.  Zetlin & De Chiara represents clients in litigation and alternative dispute resolution, and also advises on business formation, licensing and corporate issues.