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.

In 2009, the Voice's Tom Robbins reported, TOP CITY LABOR LEADER AGREES TO STAY CLEAR OF TEAMSTERS:

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."