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	Labor's big payday Crain's Chicago Business 10/09/2000 Frank O'Lone, business manager of Tile Layers Local 67, wishes all contract negotiations could go as smoothly as the latest round. The union started negotiating with tile contractors three months before the May 31 expiration of its previous contract, reached an agreement after only three meetings and walked away with a $6.25-an-hour wage increase over four years, to $40.02, plus a $12-a-day downtown parking reimbursement. The previous contract had boosted pay by $3.15 an hour over three years. "There's just so much work out there," says Mr. OLone, 49, a 28-year veteran of the 950-member union. "The climate was right for unions to receive their fair share." Amid an unprecedented building boom, construction trade unions are racking up big raises from contractors swamped with jobs and short on skilled workers. But if the contractors are rolling over, it's only because they can pass the costs along. Soaring demand for new buildings gives them more pricing power over developers accustomed to pitting contractors against one another in cutthroat bidding wars. "The contractors have been able to say what the jobs are going to cost," says developer Daniel McLean, president of MCL Cos. of Chicago. "A couple of years ago, we had more choice - before the last round of the building boom." But the higher costs don't stop with developers. "We pass it all on," says Mr. McLean. "That's why prices, particularly downtown, have risen from $225 a square foot to $400." Passing increases along The trend is expected to continue next year as large groups such as the Laborers Union and the United Brotherhood of Carpenters and Joiners of America go to the negotiating table. At the least, they'll aim to match the raises secured by other unions in 1999 and 2000 - an average of 4% per year, according to the Chicago and Cook County Building and Construction Trades Council. That's about one-third higher than the 3% average annual increases during the rest of the 1990's, according to the umbrella group for 25 local trade unions. By comparison the consumer price index has risen 3.4% this year, mainly because of skyrocketing fuel prices. The index rose 2.7% in 1999. "No one wants to kill the goose that lays the golden egg," he says. "If I were a computer programmer and I got a 4% raise, I'd be crying for a week." Patrick Donley, vice-president of business development for Walsh Group, a Chicago-based general contractor specializing in commercial buildings and larger residential projects, says costs are up 10% to 15% this year. He blames part of the increase on rising wages and the rest on subcontractors wielding their newfound leverage. "It's a seller's market," Mr. Donley says, acknowledging that Walsh passes the increases along to its customers. Still developers end up eating some of the higher costs, says condominium developer Thomas Roszak of Roszak ADC in Evanston. "You're still trying to make it affordable and compete with hundreds of developers out there," he explains, estimating that rising labor, land and material costs have nibbled away about 10% of his profit margin. Tile contractors may have given away more than they wanted to in negotiating with the Tile Layers, but the alternative was less palatable. "We felt that if we tried to push for less, they'd go on strike, and with the labor market as tight as it is, there'd be problems," says Brad Trostrud, vice president of Trostrud Mosaic & Tile Co. in Wood Dale and one of the negotiators. He estimates that the new contract will increase his costs 7% on downtown tile jobs - an increase he will pass on. Last year's negotiations between Sheet Metal Workers Local 73 and metal contractors were far more tense. The 5,400-member union rejected the contractors' final offer and voted to strike. Tough stands next year "Sheet metal workers are not afraid to go on strike, and they're not afraid to take strike votes," says John Lindemulder, chairman of the arbitration board for the Chicagoland Sheet Metal Contractors Assn. An agreement was reached before workers hit the picket lines. The union, whose members handle metal ductwork and some welding on construction projects secured a contract with a %.05 hourly raise over three years, 33% higher than the earlier contract which had boosted pay by $3.80 an hour over three years. "This is one of the best times for the building trades," says Stanley Karczynski, the union's business manager. "We weren't going to concede anything." Unions headed for negotiations next year are also taking tough stands. "The carpenters' total wage-and-benefit package has historically been one of the lowest in the industry," says carpenters union President Earl Oliver. "We expect to end up with one of the largest contracts in the trades. It's what we believe is our due." The hourly wage-and-benefit package for a commercial carpenter is $36.97. The group received a 4.2% raise this year. Operating Engineers Local 150, which represents crane operators, is seeking a big contract next year because the six-year deal it signed in 1995 contained annual raises of about 3.5%, says union Secretary Steven Cisco. The group wants to catch up. "The last time we did a six-year deal, we gambled and lost," Mr. Cisco says. "The industry has taken off." Roszak/ADC 1415 Sherman Avenue Suite 101 Evanston, IL 60201 Main  847-425-7555 Sales  847-328-8200 Fax  847-425-7540 email inquiries: info@roszakadc.com copyright© 2003 Roszak/ADC. All rights reserved.