Sunbelt is fanning open-shop trend in US construction industry
Greenville, S.C. — The traffic on Interstate 85 roars through the Carolina Piedmont like one continuous freight train. It looks as if at least half the vehicles on this highway, charging up and down its rolling hills with sanguine disregard for the posted speed limit, are trailer trucks. These leviathans-in-a-hurry are hauling, among other things, brick and timber and stone - the original building blocks of the American construction industry.
Contractors are thick as pines here. The companies that baked brick from the Southern clay and hewed timber from the Appalachian hardwood stands have also helped prosper the construction companies. And as the South has industrialized since World War II, the sheer number of buildings to be built has kept builders busy as bees.
But it's been more than just the work available locally - particularly now that recovery is reaching the industry after deep recession - that has kept contractors here smiling over the last few years. These builders are virtually all open-shop contractors, and as the traditionally nonunion Sunbelt has grown and the power of the unions waned, the open shop has come into its own.
''There's a clear trend'' toward the open shop, says Les McCraw, president of Daniel International, based in Greenville. ''Owners are becoming more and more sensitive to capital costs, and to management's ability to manage, and the open shop offers management an opportunity to manage without outside interference.
''Take the Houston Ship Channel, for example. It's a massive industrial area. Ten years ago, 90 percent of the work done there was union shop, and 10 percent was open shop. But now those proportions have reversed themselves.''
James D. Pitcock, president of Williams Brothers, a large open-shop contractor in Houston, concurs. ''There's been exponential growth in open shops just in the last three years.''
Mr. McCraw defines being an open-shop contractor thus: ''It means that we hire at the gate. A person doesn't have to go through a hiring hall to get onto our jobs.'' Open-shop contractors engage specialized subcontractors - plumbers, electricians, and so on - irrespective of union affiliation or the lack of it.
The result has been that open-shop contractors are able to undercut their union-shop counterparts significantly on price - by some 20 to 30 percent, and sometimes more, according to industry officials. A Charlotte, N.C., spokesman for the Associated General Contractors of America (AGC) says, ''An open-shop contractor has a 15 percent productivity edge and up to 15 percent price edge.''
The differences are less the result of lower base wages than of differences in work rules and scheduling. ''In most open-shop jobs,'' says Mr. McCraw, ''we work four 10-hour days a week, which gives scheduling flexibility. If it rains on Tuesday, you just work on Friday.''
He is quick to point out, ''We're not anti-union; we're pro-economic. In certain parts of the country we work very well with unions.'' Still, however, the open-shop contractors tread carefully onto traditionally union territory.
Says Marcus E. Cunningham Jr., president of Yeargin Construction Company, ''If the prevailing practice of construction is closed shop or union affiliated, we'd rather not endanger the clients or ourselves with the sort of disagreements or the kind of activities that can be conjured up (in a conflict with unions).
''However, without question, there is a softening, not only in the so-called right-to-work states, but in strongholds of union-shop construction. There is much more indication of the desire on the part of the locales and the clients to think not of going against the unions, but of just saying, Why don't we allow others to take a shot at it?''
Many of the big contractors in the Carolina Piedmont are, as Mr. McCraw and Mr. Cunningham put it, ''heavily in the self-perform mode.'' This means that their own employees do a high proportion of the work on a project, with a smaller share going to subcontractors. This ''self perform'' mode gives companies further advantages of productivity and mobility.
Both Daniel and Yeargin maintain elaborate computer records of thousands of present and past employees to enable them to staff projects quickly. Open-shop contractors have also beefed up training programs - traditionally the province of the unions - to ensure that their employees' skills match those of their union counterparts.
Daniel and Yeargin both work all over the country - and indeed, Daniel, from which many of the Carolina contractors have ''spun off,'' has worked around the world. Both have been acquired by larger contractors wanting an open-shop capability: by Fluor Corporation of Irvine, Calif., and Perini Corporation of Framingham, Mass., respectively.
What's does this mean for union contractors? ''They'll absolutely have to become competitive,'' says a spokesman at AGC headquarters in Washington, D.C. ''It's the wave of the future.''