Bechtel-Becon Deal Allows Mixed Crews Of Union-Open Shop Workers in Same Craft

February 13 2007

Labor Relations

The labor agreement between Bechtel Construction and the Laborers was signed Jan. 9 by Reginald Phelps, vice president for Bechtel Construction, and Larry Taylor, business manager for the Kentucky Laborers District Council. The agreement is limited to members of the Laborers who are directly hired by Bechtel Construction on the Trimble County project.

The new 750 megawatt, coal-fired generating facility will be the second power plant at the LG&E site in Trimble County, about 40 miles northeast of Louisville. The Trimble County 2 (TC2) plant is expected to go on line in the first quarter of 2010.

Bechtel Power Corp. last year won the engineering, procurement, and construction responsibility for the project from Louisville Gas & Electric, Kentucky Utilities Co., Indiana Municipal Power Agency, and the Illinois Municipal Electric Agency, according to a copy of the agreement obtained by BNA. Bechtel Power designated Becon as construction manager.

Effort to Maximize Labor Pool
This is the first time that Bechtel Construction has worked in any capacity on a Becon job site, Phelps said. At TC2, “the intent is not to replace Becon nonunion workers with union workers but to mix the crews,” he said. “The objective is to maximize the labor pool” by using both union and nonunion trades workers not just on the same project but for the same craft tasks, according to Phelps.

Considered the first agreement of its kind, the deal stipulates that the parties “specifically contemplate unionized [Bechtel Construction] employees working together with nonunionized workers,” including workers employed by Becon on this “unique” project.

Similar agreements are being considered by the Carpenters and Joiners of America and the International Union of Operating Engineers, but sources familiar with the negotiations said the unions have reservations about the extent to which union workers would be commingled with nonunion workers in the same craft.

The Laborers’s approval of the TC2 agreement may “break the logjam” for the other two crafts who were hesitant to be first, one negotiator said.

Meanwhile, other crafts including the Bridge, Structural and Ornamental Iron Workers and the United Association of Plumbers and Pipe Fitters, have expressed interest in similar agreements, he said. This official lamented that progress in reaching an agreement with the Laborers had been somewhat slower than expected. He added, however: “Construction is a business of relationships.”

Bechtel Has Authority to Assign Work
Bechtel Construction has sole responsibility for assigning work to bargaining unit members for “any work they are deemed qualified to perform.” The agreement states that “traditional craft jurisdictional lines shall not apply.”

Union and nonunion workers will share such facilities as parking lots, changing rooms, and tool rooms “while maintaining harmony among all employees.”

The wage-and-benefit package for union and nonunion laborers is “pennies apart,” according to one contract negotiator. An addendum to the agreement states that Group 1 laborers will receive $15.18 per hour in wages and benefits totaling $6.30, for a total of $21.48 an hour.

While Becon rates for nonunion laborers were not available, this contract negotiator said the total package was comparable but structured differently. For example, he said, the Becon pay package does not include a contribution to a training fund but did include per diem.

“This would not have worked if there was a pay disparity,” one negotiator explained.

An annual increase of 3 percent of the total package is due annually on the agreement’s anniversary date.

Any disputes arising under the no-strike, no-lockout agreement would be addressed in a three-step procedure that would culminate in final and binding arbitration.

The parties have designated Thomas Pagan as the arbitrator. Kentucky is among a group of states that allows alternate dispute resolution of workers’ compensation insurance disputes. Bechtel Construction may elect to use these procedures under the labor agreement.

Final approval of the agreement was delayed while negotiators drafted language to protect Becon from liability for contributions to union benefit funds that could have arisen under parent Bechtel Inc.’s corporate structure.

Union Official Sees “Fat-Free Agreement”
“This is a different kind of agreement, a fat-free agreement,” said one union official familiar with the negotiations, who asked not to be identified. Giving employers open-ended preference in assignment of work without regard to traditional craft jurisdiction and agreeing to commingling of workers in composite crews was difficult, this official said. He added, however, that “right, wrong, or indifferent, this is what must be tried to get out foot in the door in low-union density areas.”

The union official also said it was unfortunate but necessary that the union, under a side letter to the agreement, gave up its right to organize Becon employees.

According to this official, “If we could have organized Becon, we would have, but we haven’t. If we can start a relationship with Becon on this project, [the agreement’s] worth it. Maybe over time Becon will be able to see past the union issue and recognize that the quality of the union workforce is pretty good.”

Meanwhile, he said, “our members are getting decent wages and benefits” along with an opportunity to increase nearly nonexistent market share in an area with little union presence. This official estimated market share for Laborers at 8 percent in the three adjacent counties. “When you are in a low union density area, you have to do things you don’t want to do,” he said. “It’s not a perfect opportunity but it’s an opportunity nonetheless.”

If the agreement works well, this official said, it could provide a template for Bechtel and Becon on the $10 billion of power plant construction planned by TXU Corp. that is targeted for completion 44 months after work begins. A high level of concern over how this massive amount of work would be manned was expressed when TXU Corp. announced the eight-plant expansion program last year. Construction employment for the TXU projects is expected to peak at 14,000.

Troublesome Aspects of Commingling Noted
Fred Blaylock, business manager for International Union of Operating Engineers Local 181 in Henderson, Ky., said he has had several discussions with Bechtel Construction about an agreement similar to the pact with the Laborers’. “We’re very interested in the work [at TC2], no doubt about it,” he said.

A primary obstacle for Local 181, he said, is the lack of “a clear definition of what work union members will do and what equipment they will operate exclusively” on the TC2 project. Lack of clarity on this issue “is a recipe for disaster,” he said.

One negotiator agreed, arguing that “a composite crew of laborers is not like a composite crew of pipe fitters.”

Blaylock had “no problem” with employer assignment of work,” but he added that “a company is fooling itself if it hopscotches people around” between multiple pieces of large and complex equipment.

Safety becomes a concern when composite crews of union and nonunion workers are used to operate heavy equipment, Blaylock said. Local 181 offers certified crane operator training and, because the union reimburses its members to take the certification exam, there is no expense to employers, he said.

A nonunion crane operator, who is not certified, assisting a steel-erection crew could expose workers to significant safety hazards in the event of an accident, he said. Blaylock had no problem with union crane operators assisting nonunion workers in other trades. “We do that all the time.”

A representative of the Indiana/Kentucky Regional Council of Carpenters could not be reached for comment.