Skip to main content

Union head LaBarbera: “We are negotiating with the market” (and was that the way to look at modular deal?)

There was an interesting quote in the 6/12/15 Wall Street Journal profile of Gary LaBarbera, Growth of Nonunion Construction Tests New York City Labor Leader, subtitled "New reality for unions leads to negotiated compromise on hours, wages":
Even five years ago, it was unimaginable that a developer would defy the city’s powerful construction unions, led by Gary LaBarbera, and try to build a complicated Manhattan building without relying entirely on his members.
...Developers’ increasing willingness to work with nonunion workers has been prompted by rising construction costs, an increase in foreign investment and ownership that has upended long-term loyalties, and a pool of nonunion workers now capable of building high-rises.
In this context, Mr. LaBarbera, 6 foot 2 inches tall with a Long Island accent and a booming voice, would seem on first meeting to fit the stereotype of the union boss knocking heads together.
...But one of Mr. LaBarbera’s frequent sayings—“We are negotiating with the market”—suggests an understanding of business realities that might have seemed anathema to union leaders of old.
That may be a frequent saying, but it was the first time I'd seen it in an article.

What's the "market"?

It sounds reasonable, but, as we've learned with Atlantic Yards, "the market" isn't always free.

Remember MTA Chairman Peter Kalikow's 2005 comment that the $214.5 million appraisal for the Vanderbilt Yard was "just some guy's idea of what it's worth," then adding, as if in some bizarro free-market world, "That was his opinion, and it wasn't borne out by the marketplace.” (Forest City Ratner had the inside track, so only one rival bidder emerged.)

Or the 2009 deal revision, in which the MTA agreed to provide more favorable terms to Forest City Ratner without seeking any other bidders or adding clauses to provide more returns to the public in case the economy turned. 

“Y’know, these railyards have been there for a very long time,” suggested Jeffrey Kay, director of the Mayor’s Office of Operations. “The reality is, it’s only worth what someone’s willing to provide... There is no other market.”

The Atlantic Yards modular deal

Since 2009, LaBarbera has been president of the Building and Construction Trades Council of Greater New York (BCTC), which consists "of local affiliates of 15 national and international unions representing 100,000 working men and women in the New York City."

His "frequent saying" certainly seems to address the BCTC's agreement with Forest City Ratner to agree to a new division, at a lower wage rate, inside the factory in the Brooklyn Navy Yard to build pieces of the B2 modular tower. 

The WSJ reported:
“People told me it would be a cold day in hell or it would be an impossible feat to get the unions’ head around modular construction,” said MaryAnne Gilmartin, president and chief executive officer of Forest City. Ms. Gilmartin said that Mr. LaBarbera was ultimately convinced that modular would open a new avenue of business for unions.
Looking back at the modular deal

That may be true. But it was a little more complicated than that.

As I wrote in November 2012 regarding Forest City's modular deal, the Forest City press release stated:
Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, said, “Today, we move forward with an innovative approach to development that will allow us to realize the vision of the Atlantic Yards project and create traditional construction jobs that may otherwise have been at risk. And as we bring training, skill, quality and safety to modular construction through a strong labor-management partnership on this project, we see the potential to have this approach improve our competitiveness elsewhere in the local market and expand into an export industry to create even more sustainable union jobs that pay good wages and benefits.”
From the Times:
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.”
From the Daily News:
"It's not a pay cut," said La Barbera. "We're trying to create jobs for our members. I mean this as a 125-person modular jobs and we have 100,000 members. Also, the first six months of this job are no different than a regular job with site excavation and building the steel structure. This whole thing is a win-win for everyone."
Actually, there was a clear pay cut, if you look at the compensation that was originally expected for those working on Atlantic Yards.

The unions, interestingly enough, apparently agreed that they didn't have enough leverage to maintain the original Atlantic Yards promises. However, given that Forest City Ratner promised to build union, it would seem that the unions had significant leverage.

LaBarbera's history

The Wall Street Journal reported:
Mr. LaBarbera, 55 years old, had been involved with the Teamsters since 1981, starting as a forklift operator. ...During his time as the city’s top Teamsters official, he was credited with cleaning up corruption and getting rid of the influence of the Gambino crime family.
In 2009, he resolved an internal union dispute alleging that he turned a blind eye to an employer that failed to make payments into the union’s benefit fund. Under the resolution, Mr. LaBarbera, who said he had no intention of seeking office in the Teamsters local in the future, agreed not to do so.
The phrasing of the paragraph directly above--"he resolved an internal union dispute"--skates a bit over what actually happened.

LaBarbera did not admit or deny the charges. But the charges, interestingly enough, came from the same investigator who LaBarbera used to clean up the Teamsters. The Village Voice reported in 2008:
Members of LaBarbera's Local 282 haul construction material and debris, and last month, the union's name surfaced in the big Gambino crime-family case in Brooklyn. Some of the schemes charged in the indictment stem from trucking employers who allegedly used mob muscle to scam the union out of benefits owed on behalf of employees.
But unlike the bad old days when John Gotti's gang ruled the roost at the local, LaBarbera helped squelch the scammers. He did so by retaining an independent, court-supervised investigator who helped break the case. The investigator, Robert Machado, was first to spot the schemes, tipping off federal investigators at the Office of Labor Racketeering. "I got nothing but cooperation from LaBarbera," said Machado.
Gary La Barbera, the current president of the city's Building and Construction Trades Council and a top supporter of Mayor Bloomberg's push to overturn term limits, has agreed not to seek to rejoin the Teamsters union where he was once the city's top local official.
The deal follows a complaint filed in June by a special investigator for Teamsters Local 282, the powerful 3,000-member union that represents drivers who haul construction materials at building sites. Investigator Robert Machado had sought La Barbera's ouster from the Teamsters for having allegedly allowed an employer to skip payments to the union's benefit funds. The complaint was reported in June by the New York Times.
The complaint said that La Barbera had purposely looked the other way after being warned by members and others that a contractor, Joseph Sullo, was secretly running a rogue nonunion shop alongside a separate company that had a signed contract with Local 282. La Barbera denied it but Sullo pled guilty in 2005 to federal charges of defrauding Teamster benefit funds.
Bruce Maffeo, La Barbera's attorney, said that the settlement "contains neither admission nor denial of the charges which we believe were completely unfounded."


  1. Anonymous11:08 PM

    Great as usual. reminds us of Stu Applebaum the unanimously re-elected President of the Retail, Wholesale, and Department Store Union. Supports varied tiers of pay and benefits for workers. Endorsed Quinn despite her clear antipathy to all things labor.


Post a Comment

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…