Wednesday, November 28, 2012

With bank and unions on board, Forest City ready to test modular constrution; Times scoop doesn't point out that number of jobs likely cut more than 50%

So much for those consistent claims that Forest City Ratner "hadn't decided" whether it would build the first Atlantic Yards tower using modular technology--claims that, as I reported last month, were highly questionable.

Now that a bank is on board, as are unions, so the news is ready to be released.

And the New York Times scoop, which describes a 25% wage cut, does not offer a comparison between the long-promised claims of Atlantic Yards total construction jobs and the potential now--though, as I describe below, there's a significant gap, greater than 50%.

Nor does the article describe what the new figures--both in terms of wage cuts and fewer jobs--do to calculations of Atlantic Yards' fiscal impact. And the construction unions offer Ratner a bye, no longer pointing out that Ratner has reneged on promises.

The news

In At Atlantic Yards, Ready to Test Plans for Prefab Tower, the New York Times's Charles Bagli reports:
In a warehouse deep inside the Brooklyn Navy Yard, a small team of carpenters, electricians and engineers have secretly labored for months on an assembly system for turning tubular steel chassis into fully equipped apartments that can be stacked and bolted together at a construction site.

On Dec. 18, they will be put to the test, as Bruce C. Ratner, chief executive of Forest City Ratner, breaks ground for the world’s tallest prefabricated, or modular, building, a 32-story residential tower at Flatbush Avenue and Dean Street. It is the first of 15 planned modular buildings at the $4.9 billion Atlantic Yards site; some are to rise to 50 stories.

If it works, Mr. Ratner and his partners say, they will be at the forefront of a new industry.

It is an ambitious and risky undertaking, more so than the $1 billion Barclays Center arena that Mr. Ratner opened there three months ago.
Savings passed on?

The Times reports:
If Mr. Ratner has, as he claims, “cracked the code,” it could lead to more affordable housing, or it could simply mean greater profits for the developer.
Note that executive MaryAnne Gilmartin told investment analysts last month, "We believe if we go modular, it would be invisible to the consumer. This building should perform at the level of finish, fit and feel commensurate with a conventional building, so it is priced accordingly."

New partnership

The Times describes "a financing commitment from Bank of New York" and "a partnership with Skanska," a Sweden-based construction company operating the factory in the Navy Yard. 

Union deal

While unions had expected to earn $85 an hour in wages and benefits, it won't be the same:
Gary La Barbera, president of the Building and Construction Trades Council, acknowledged that the unions had lost ground to nonunion residential contractors in recent years and were largely absent from the affordable housing field.
Under the new agreement, Mr. La Barbera said union factory workers would earn $55,000 a year, 25 percent less than the average union construction worker. But, he said, the trade-off is that the factory worker will work steady hours throughout the year, regardless of the weather.
We see this as an opportunity to get into markets we’re not in,” Mr. La Barbera said. We can’t ignore an emerging industry. We see it as creating more job opportunities in residential construction.”
That of course is something of a pivot. Atlantic Yards was promised as union-build, affordable housing construction. 

So if the implication is that, however much they lose on this project, they'll make it up another way, that wasn't what the unions signed on for.

How many jobs?

The Times reported that there would be 125 workers at the factory--a number once 190--with 60% of the work done there, saving the developer "as much as 20 percent on construction costs and cut the delivery time to 18 months, from 28 months." Savings would increase on the rest of the 15 towers.

How many jobs were there be--could there be 15,000 construction jobs (in job-years) as once promised, or 17,000 job-years, as detailed in some official documents?

Not even close.

If 125 workers represent 60% of the work, that suggests there would be about 208 workers total. If they all work 18 months straight--not likely for those in the field--that means the first tower, with 363 units, would require 312 job-years.

The number of job-years is about 86% of the total number of units.

That implies that the total 6,430 units would generate some 5,530 job-years. Add in an office tower, on long-term hold, and the total might go up, say, 10-15%. 

But that's still way off the original promises. Even if there are 6,500 total job-years, that suggests a total of 43.3% of 15,000 job-years and 38.2% of 17,000 job-years.

What's affordable?

The Times reports:
(Half of the 363 apartments in the first building will be for poor and working-class families.)  
Not so. Moderate-income subsidized units are hardly for "working-class families." Who can afford $2,700 a month--surely more when the building's done--for a two-bedroom unit?

2 comments:

  1. Anonymous10:28 AM

    Er, your math is way off. The 125 are the number of factory jobs needed to build the modules. The modules will still need to be installed, braced and connected on site, in addition to on site foundation and finish work. I realize that you don't like Ratner, and the number of jobs realized will fall far short of early predictions and ongoing promises. However, what is taking place is that Ratner and the unions (to their credit) are recognizing economic reality. The old ways of construction in NYC are far to expensive. Modular building will lead to a development boom in NY, and credit thousands of jobs that don't presently exist. This is a net gain, and the future. Better to realize that than tilt at windmills.

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  2. Maybe my math is off. But based on the numbers we have, I explained how we get there.

    If you have a more authoritative source and current numbers, please explain.

    Keep in mind that the number of estimated factory jobs has already been lowered.

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