As you read through the article, there is an interesting quote made about adding 10 million to the cost of a 38 million dollar project if the project was performed all union. That number simply doesn’t add up assuming that the bulk of a project’s cost is normally tied up in material, entitlement and land development costs and not labor itself. The project was originally estimated at 38 million total as quoted in Phllymag.com on 10/25/2012, “The Brothers Who Busted Philly Unions. For Good.”
Assuming some very generic cost ratios of 60 % material to 40% labor on a 38 million dollar project, that equates to a 15.2 million dollar labor component. With the additional 10 million, that is 25.2 million for labor; a 67% increase in labor over the 15.2 million. If union labor is often argued to be 30-40% more expensive than non-union labor, on a good day, at a 40% premium, it only added 6 million to the project. Given that some of this project may have been performed by organized trades, 40% as originally quoted in the Phillymag.com article, the higher end of the ratio should not apply. I simply do not place any faith in these assertions and believe that every side is grandstanding a bit.
At the end of a day, a developer is free to develop their property as they see fit and in a manner that balances their risk and rewards appropriately for them. It’s their money and they assume all of the risk. I’m saddened that this has gone on for a s long as it has.
Trade unions rail against non-union worksite
PHILADELPHIA Trade unions have taken their dispute with developers Michael and Matthew Pestronk to a new level, producing a sleek documentary that accuses the brothers of safety and health violations at their signature project, the unfinished Goldtex building.
The 20-minute documentary, unveiled Wednesday at a campaign-style event at the headquarters of electricians union Local 98, includes videos, photos, and interviews with two unidentified "undercover workers" at the job site, just north of Chinatown.
The documentary shows sheetrock walls splashed in mold, a diesel fuel line allegedly run through a trash chute, and an "undersized crane" used to hoist material to upper floors among other purported safety violations.
At one point, the video depicts a man scraping a ceiling while standing precariously on a bucket perched on scaffolding - a scene that drew guffaws from the large union crowd gathered for the viewing.
Local 98 leader John J. "Johnny Doc" Dougherty described the Pestronk brothers as committing "economic vandalism."
"This has to be stopped," he said.
The Pestronks, who do business as Post Bros., did not respond to the individual allegations, but released a statement calling them collectively "false and reckless."
"The labor union's 'Johnny Doc-umentary' should have been called 'Labor Gone Wild,' " the statement said. "It's nothing more than a video Hail Mary from a desperate group whose fearmongering is standing in the way of Philadelphia's real growth."
The brothers launched a rehab of the 10-story former factory into 163 apartments without an all-union workforce, the first major project to do so in the city in decades.
In March 2012, protesters organized by the Building Trades Council began picketing the site at 12th and Wood Streets, slowing deliveries and engaging in scuffles with workers. Two union members eventually were charged with assault, while the Pestronk brothers had to devise a ruse to sneak a crane onto the site.
The brothers started a website called phillybully.com to document the confrontations and rail against the unions.
They said Wednesday that they would create a section on the site devoted to posting documents on the progress of the building, including permits, air quality and mold testing reports, and tax, worker compensation, and insurance records.
The documentary cites the June building collapse at 22d and Market Streets as an example of what can happen when nonunion crews perform substandard work. Six people died in that collapse, when an unsupported wall from a demolition site fell on a Salvation Army thrift store.
"A poorly constructed building is scarier than a poorly deconstructed building," Dougherty said. "And we all know what happened at 22d and Market."
The video also compares the Goldtex project with the union-built 35-story apartment tower at 2116 Chestnut St. Two officials from the Hunter Roberts Construction Group brag that the project was done ahead of schedule and without any safety violations.
But even union supporters acknowledge that many builders are cheering on the Pestronk brothers because of the city's high cost of labor. Many of the city's biggest projects can be built only with subsidies and tax incentives.
Michael Pestronk has said the Goldtex project would have cost an additional $10 million with an all-union workforce.
Councilman Mark Squilla, one of four Council members at the Local 98 event, said unions "get a bad rap" because of the costs of their workers.
"It's not too expensive," he said. "Construction and demolition are dangerous businesses and you need competent people doing it."
Source: Philly.com
See the original Phillymag article here...
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