PRESIDENT'S CORNER
by James M. Sweeney, President-Business Manager
United and Strong
The past year has been one of the most difficult Local 150, its members, and our families have ever faced. The economic crisis that started last fall is far from over. Working people worldwide are still suffering the inevitable effects of many years of greed and mismanagement. Nationally, unemployment has hit 10 percent of the American workforce and seems like it is still climbing. In Illinois, unemployment was 10.3 percent as of June; Indiana and Iowa were not much better. By the end of last month, over 15 percent of Local 150 members were still out of work (about the same as the average for IUOE Operators across the U.S. and Canada), with many others underemployed—by that, I mean not working the number of hours we have come to see as normal. In fact, it is now looking like hours worked in 2009 could actually end up down as much as 20 percent. Of all the Building Trades Unions in the Midwest, we are one of the ones that are better off. It has been this harsh reality that has defined the year that I have had the honor to serve as Local 150’s President-Business Manager. It is therefore appropriate that this Annual Report reviews the challenges we have faced and what we have done to meet them in these, the most challenging of times in our history.
Getting our members out to work this season was obviously our most important objective, but also the one over which we had the least control. Obviously, we cannot do anything about interest rates, fuel costs, or the way private businesses invest their money. But we can and have tried to influence government to spend more money on public works. That effort has occupied much of our time and energy over the last year. But while we put together and executed a plan that was eventually successful, there were a number of more immediate needs we had to address.
One of the most immediate and fundamental needs we had to meet was helping Local 150 members feed their families. In my career as an operating engineer, the last time the work picture was as bad as it is now was 1983. U.S. unemployment was over 10 percent that year, too, and I can remember how important it was when the Union handed out boxes of cheese. It is a hard thing to do when you are accustomed to taking care of your own, but swallowing your pride is a little easier when you know the help is coming from your Union brothers and sisters. Local 150 members in District 7 have been providing holiday assistance to less fortunate Local 150 families for many years, so their experience was extremely valuable in setting up what has become the Local 150 Food Bank Trust. As I have said before, just a few months ago, the Food Bank was little more than a good idea. Today, we have in place a legal not-for-profit incorporated entity, multiple funding mechanisms, economical sources of supply, and a distribution system that has already given out over 400 boxes of food which amount to a week-long supply to Local 150 members. We will keep this up as long as there is a need to do so.
The next most pressing need for Local 150 members has been to help those who have not worked the hours to maintain their MOE Health & Welfare coverage. As we all know, Local 150 members need 300 hours of contributions per calendar quarter (or 1,200 hours in the previous calendar year) to maintain their employer-funded healthcare coverage. When we are short those hours, we are allowed to make up the difference by making self-payments. At one point recently, we had over 600 members making self-payments to the MOE and another 600 who could not afford to. Until the work picture improves, these numbers are likely to get worse before they get better. This is one of the many areas, however, where President Barack Obama’s stimulus plan passed earlier this year really helps. Also known as the American Recovery and Reinvestment Act (ARRA) of 2009, the stimulus plan provides for a substantial subsidy to individuals who have lost their employer-paid healthcare to keep their insurance by paying for it themselves. The federal law that allows employees to keep their employer-based health insurance is called COBRA. It is not different insurance, just a right to pay for the same insurance after people have lost their jobs. For Local 150 members, it would give us the right to continue our MOE healthcare coverage after we lost coverage because, for example, we have not worked enough hours to get the employer contributions needed. COBRA coverage is different from self-pays under the MOE plan, in that self-payments allow members continue the MOE healthcare coverage by making up the difference between what the employer pays and the necessary 300 hours. Most members do not opt for COBRA because until now, self-payment was easier and cheaper. With the federal stimulus money, however, the subsidy from the government is now often better for members and for the MOE Health & Welfare Fund. Last month, the officers of Local 150 and the trustees of MOE developed a plan that allows us to take advantage of the government subsidy, and an additional subsidy from Local 150’s Member Assistance Fund. (We are also working to ensure that COBRA coverage does not jeopardize eligibility for retiree healthcare down the road). This plan would get the cost of family coverage down from about $1,200.00 per month to just over $200.00 a month. The Assistance Fund has enough money in it to get us through one quarter, maybe two. The idea is to get our unemployed and underemployed members past this bad stretch, until the various government-spending programs can kick in and get us back to work.
Fortunately, the process of getting Local 150 members back to work on public construction projects has already started. The Chicago Sun-Times recently reported that Illinois actually leads the way in getting federal stimulus money into the pipeline for road and bridge construction. The State has already spent over half the $985 million of the money dedicated to 340 road and bridge construction projects in Illinois. According to a recent public interest research report, 54 percent of Illinois roads are considered in “poor” condition, and 822 bridges are considered “deficient.” The report adds that repair work on roads and bridges actually creates 16 percent more jobs than new construction. The piece of the stimulus package that went to construction was badly needed, much appreciated, but just not enough.
That is where our political efforts at the state level come in. While we cannot take credit for the passage of the federal ARRA stimulus package, Local 150 can take credit for the various state programs that have been enacted which are sure to provide some relief for our members. Once again, it was Indiana that led the way, with Local 150’s support instrumental to the passage of the “Major Moves” program a few years ago. Indiana Governor Mitch Daniels funded that multi-billion-dollar construction program by leasing the state “lemon”—the Indiana toll road—and turning it into lemonade. Hundreds of millions of dollars in Indiana roadwork has already helped Districts 6 and 7 weather the economic crisis a bit better than elsewhere in our jurisdiction.
Our political work in Indiana helped in a much more fundamental way when anti-union conservatives there tired to change Indiana unemployment law to make construction workers ineligible for unemployment benefits. Local 150 was able to convince the Governor and legislative leaders that this was a really bad idea, and the effort was dropped.
Unfortunately, we were less successful in our Iowa political efforts. Although we were assured by the Democratic majority in the State Legislature that we had the votes to finally pass prevailing wage legislation, we fell six votes short. Needless to say, those are six legislators who will not be getting Local 150 support.
One of the next really big projects we think will grow out of Major Moves is the “Illiana” Toll Road, an east-west corridor which will link interstates I-65 in Indiana to I-57 in Illinois, basically where the last leg of the I-355 Illinois Tollway would cut the corner west of where I-80 and I-57 connect now. Several months ago, Governor Daniels asked for Local 150’s help in connecting his highway planners with the right people in Illinois to get this project going. We got with Illinois Governor Pat Quinn’s people to get them on board, then we went one better: we also met with some private investors who realize what a boost this east-west link would be to local development—especially if a cargo-based third airport gets off the ground. A monster inter-modal facility linking Indiana-Illinois trucking to a modern air freight facility and high-speed rail is no longer a pipedream. We are going to make it happen this time.
One of the advantages to the Illinois-side of the Illiana Toll Road is that it is expected to tap Illinois State Toll Highway Authority resources for its funding. So it is also high on our agenda to get Governor Quinn to push the Tollway towards releasing up to $2 billion to these and other improvements in the Tollway system, including further extensions to the north leg of I-355, Route 53 in Lake and McHenry Counties. We think this is close, and will add another revenue source to the Illinois roadwork picture.
By far, our most significant political success, and that which had and will have the biggest impact on Local 150 members, were the two capital bills passed out of the Illinois Legislature this spring. Our first effort led to the “Jumpstart” Bill passed in April. That package could lead ultimately to $9 billion worth of public works programs in Illinois. Every legislator we talked to in the weeks that led up to the passage of that bill told us that it was the phone calls, post cards, and e-mails from Local 150 members that were most on their minds when we showed up on their doorstep to push for that bill. We have already seen some of those projects underway.
As big as Jumpstart was, it pales in comparison to the Capital Bill signed by Governor Quinn last month. At $31 billion, it triples the largest capital spending program passed ten years ago known as “Illinois First.” I will not repeat the details of that program, and I am disappointed that it took so long to get completed that its effect will not likely be felt until next season. But now that it is in place, it looks like the light at the end of the recession tunnel for most Local 150 members. And again, these programs are a direct result of Local 150 members grabbing the bull by the horns and getting the job done.
As I said at the outset of this Report, there is almost nothing we can do about the desperate need for private investment to keep our members working. Nevertheless, one area that we have spent considerable energy on is in protecting our jurisdiction in the construction of wind farms. This is probably the single biggest area of non-public construction work going right now, most of it centered in Local 150’s Districts 4 and 5 where it is needed the most. We have been fighting with other trades who not surprisingly are also trying to get their own members back to work. I understand why they are doing it, but just the same, I am not going to let it happen at our expense. In an effort to expand work opportunities in this area, Local 150 is also exploring a government grant that would allow us to get a windmill training program started.
Finally, with respect to future work opportunities, we are all still keeping our fingers crossed that Chicago will win the 2016 Olympics. The potential for long-term infrastructure improvements as well as short-term housing and event venues makes this a huge potential source of work for Local 150 members and the Cook County Building Trades, generally. We are doing everything we can to support the City in its bid, and it is hard to believe that we will know the final decision in October, now just a few months away.
Another problem we have had to address because of the unusual number of members out of work is the shortfall in the Union’s revenue. Most of the time, we can run the Union on existing dues money with a little left over. We try to build up a reserve so we have something to fall back on for rainy days. Well, it does not get much rainier than this. Just the same, we do not want to exhaust our reserves when we do not yet know what the future holds. So we have taken a number of steps designed to stabilize our budget. The first thing we have done is imposed a hiring freeze on our own staff. As agents, organizers, and others have retired or left, we have chosen not to replace them just yet. The problem with this approach is it inevitably affects service to our members. The other most visible change we have made is to replace our auto fleet of Crown Vics with Ford Tauruses. These new cars are a little cheaper, but get almost 25 percent better gas mileage. And with gas prices as unpredictable as they are now, we already saved a bundle. More controversial was our decision to close the Union halls on Saturdays. (MOE Health and Welfare and Pension offices in Countryside remain open, as do the Pharmacy and the Credit Union). Local 150 was one of the only unions in the United States to maintain Saturday hours—something we have done since the 1960s—so we did not come to this decision lightly. We have extended Thursday hours to 7:30 p.m. to give members the opportunity to conduct business after work. But the savings in overtime and energy costs has been substantial. Sixteen hours of overtime wages and pension contributions per month is the sacrifice our staff have made, which amounts to over $1 million a year. We only hope it will be enough. The next cost-saving move we are considering is to retrofit the buildings at the Countryside campus to geothermal energy. We have made a real effort to organize that industry, and have come to understand that the savings in energy costs can be substantial—easily over $150,000.00 a year. We are also exploring the possibility of getting a U.S. Department of Energy grant to subsidize the installation costs, but even without it, this move looks to be a great investment.
No Annual Report would be complete without a discussion of our pensions. I do not have to remind everyone that the collapse of the stock market last fall hit all investors including pension funds incredibly hard. By the time the dust settled, what was at one time a 40-percent drop in the market ended up meaning losses to the MOE Pension Fund of 25 percent. As these events unfolded, the investment consultants, actuaries, lawyers, and other experts offered the Pension Fund trustees a variety of options over how to deal with this crisis. One option was to do nothing. Federal law would not have required the trustees of the MOE Pension Fund to do anything until 2011 because under existing pension fund regulations, the Pension Fund is “green” until then. But there was no way we could do that knowing that the reality of the situation called for immediate action. We have not played politics with our pensions in the past and never will. What may be the politically smart thing to do is not the right thing to do in this case. So in order to protect our pensions over the long haul, we have done a number of things that, although they seem harsh, are nowhere near as bad as if we had not acted at all. The first thing the trustees agreed to do was reduce the “multiplier”—the number by which contributions are increased, when you can assume an annual return on investment of 7.5 percent. Because the experts say we cannot assume the necessary return, and the government only gives us an eight-year period to do the calculation, we cut the multiplier from 2.0 to 1.5 effective October 2009. It is important to understand that this reduction applies to future contributions only. This move reduced our long-term commitments should the investment markets not recover, or take a long time to do so. Other pension funds, including the IUOE Central Pension Fund, have reduced their multiplier to a flat 1.0. We do not like this option because it shifts too much of the burden to the youngest members. Another option available to us was to direct future employer contributions to the Fund, but not credit them to individual members. This move is very common—the experts call this practice putting money in the “bucket.” They call it that because it goes to shore up the Funds generally, but does not increase the Funds’ obligations because individual members get no credit for it. The Carpenters in Indiana just recently directed their entire wage and benefit increases for the next three years--$4.90—to their pension fund (“bucket”). Chicago Cement Finishers have taken a similar drastic step. Every other Building Trades Local Union in our area has simultaneously directed more of their negotiated increases to their pensions—well in excess of those we may be required to put in. We have decided to use this option too, but because we were quick to act, we only have to put $1 of our future raises into the “bucket”—for now. We would expect to bargain for another $1.00 in 2010, and $.50 in 2011 and 2012. We do expect that a portion of future increases will likely also need to go into the “bucket,” and not as credit to individual members. We do not like doing any of these things, but as I said, a “head in the sand” approach only makes the problem worse. We need to hope for the best, but plan for the worst. Obviously, if the markets improve dramatically, or the government tells us we can calculate our liabilities over a longer experience period (which tends to treat market fluctuations more realistically), then we can always return to a higher multiplier and/or full credit for contributions. But if we do not get relief from Congress, or the markets stay stagnant or fall further, we will have already prepared ourselves for that scenario. We will continue to watch these problems closely and will report to the members on an ongoing basis as we have thus far.
As much as we have accomplished together, and as challenging as this past year has been, 2010 will be equally challenging. The main reason is all of our biggest contracts (or nearly all) are up for renegotiation next year. The Heavy, Highway & Underground and Building Agreements for Districts 1, 2, and 3 expire next year, as does the companion Illinois Valley Agreements covering District 5. The Northwest Indiana Heavy, Highway and the Northwest Indiana Contractors Association Building Agreement (formerly known as the Calumet Builders Agreement) will also be up. The Quad cities Heavy, Highway and Building Agreements are also up. The last of our big five-year agreements, the Northern Illinois Material Producers Agreement, likewise expires. As full a plate as this is, I am confident that we will be able to accomplish all our negotiation goals next year. We have continued to control our market share through aggressive organizing, and so far this year, we have made no concessions in bargaining. Every time the contractors have pointed to the economic crisis as their reason to ask for give-backs, we have told them “no.” Together, United and Strong, we will tell them “no” again next year.
I know it has been a tough year, and we are not out of the woods yet. But I also know this: there is no better Local Union in these United States than Local 150. The unselfish way our members have stepped up make me proud to be an Operating Engineer. I want to thank Local 150 members for all their hard work raising money for the Food Bank, lobbying politicians, and being good at their jobs. I also want to thank all the individual members who have offered me personal support and encouragement. As always, United (and Strong) We Stand, Divided We Fall.