UPDATE: Aug. 9, 2018: The Related Cos. announced Tuesday that it had reached an agreement with the New York City District Council of Carpenters and that the union will provide labor for the second phase of Hudson Yards, Crain's New York Business reported.
The real estate firm said the deal includes millions of work hours, in addition to skills and apprenticeship training. Related said the carpenters could walk away with hundreds of millions of dollars during the second phase of construction at Hudson Yards and will make between $75 million and $100 million on the last project of the first phase of the development, 50 Hudson Yards.
This is the first city trade union to break ranks with the union coalition of the Building and Construction Trades Council of Greater New York, which is still embroiled in a legal battle with Related. This could be one of the first signs that Related will be able to chip away at the council's influence and make deals with other unions as the start date for the second phase approaches.
The council responded to news of the deal with a statement that called the agreement "a publicity stunt" and accused Related of using the carpenters' union as a "pawn to engage in union busting." The council went on to say that the pension investment the carpenters have in Hudson Yards was the driving force behind their willingness to cut a deal.
Dive Brief:
- A division of Related Cos., the developer of Manhattan's $25 billion Hudson Yards complex, is suing the Building and Construction Trades Council of Greater New York alleging that it is trying to include in a labor agreement for the second phase of the development corrupt unions that swindled the company out of $100 million during phase one, according to Bloomberg.
- Hudson Yards Construction LLC (HYC) said most of the project's unions operate properly, but claim some have padded worker hours, let high-paid senior tradesmen waste expensive time performing menial tasks and have not provided a safe working environment. In the past year, 150 workers were cited for serious violations and 250 failed to pass drug and alcohol tests. The company wants to exclude those unions from the second phase but alleges the Council is trying to keep it from entering into any union agreements unless it does so.
- The Council said that HYC is trying to suppress the #CountMeIn movement against non-union construction. HYC disputes that claim and said it has been the largest employer of union workers in the city for the past six years.
Dive Insight:
According to a November report in The Real Deal, nonunion construction companies have been gaining traction in New York City's building industry for some time. In July, Lou Coletti, president of the Building Trade Employers' Association (BTEA), said that more non-union construction companies were making inroads because they do well in competitive pricing environments. Open-shop companies have more leeway in negotiating line items like wages, while union contractors have committed themselves to paying certain wage rates and benefits.
But the city's union contractors have been making concessions in certain cases in an attempt to maintain market share, particularly when it comes to the privately funded construction sector where collective bargaining is not mandated.
However, the cost of using union labor is not the only thing that keeps the cost of construction high in New York City. Fraud is also pushing that price tag up.
Last month, The New York Times reported that the Manhattan District Attorney's Office had launched an investigation into pay-to-play schemes in the city's $9 billion interior construction industry. Authorities said that former Bloomberg and Turner Construction executives allegedly awarded construction work to interior subcontractors in exchange for bribes and kickbacks, and also overbilled Bloomberg by $1 million for work at the company's New York City offices. In total, the DA's office said they're pursuing those who have perpetrated what could total a $100 million fraud on the city's interior construction industry.
