Crew of Snohomish Electric, founded by Pete Sanders, Everett, Washington, IBEW Local 191.
Seattle Local 46 Breeds Union Residential Contractors
December 2005 IBEW Journal
 Call it organizing with a green thumb. Seattle, Washington, Local 46, is growing its own union contractors, picking ripe fruit in the residential electric repair and remodeling market and planting the seeds for a bumper crop of new residential construction.
This is no traditional organizing story. There’s nothing ordinary about a local that develops comprehensive business classes that instuct journeymen on setting up residential contracting firms. Local 46 has even put a new twist on standard “bottom-up” recruitment techniques, including a portability agreement with other IBEW locals to keep new members steadily employed and to keep contractors in business. It’s not traditional, but it is working.
The 4,000-member local followed up its business classes with a full-page ad in the phone book for “Residential Electrical Services.” Signatory residential firms report that “hits” from the ad are picking up as an operator fields calls and spreads the work around to the union shops.
Local 46 shows a 48 percent increase in hours worked on residential projects from 2003 to 2004. Residential has nearly doubled in 2005.
Seventeen union contractors are now performing residential work in Local 46’s jurisdiction. The most recent signings were Hawthorne Electric on July 14 and Starr Electric on August 8.
Greg Galusha, Local 46 organizer, said with a 75 percent market share in commercial construction and the remaining market dominated by contractors who do both commercial and residential work, Local 46 needed to decide whether it would go after residential or get left behind.
Gary Price, Local 46 business manager, attributes the local’s success to a strong group effort by organizers Galusha, Greg Boyd, Virgil Hamilton and Greg Moore who, together with the contractors, “embrace change, realizing that traditional avenues often don’t work in a market where cultures and laws have changed.”
With union-bred contractors increasing their residential customer base, Local 46 organizers are stepping up their visits to nonunion home construction sites seeking potential employees. They offer $25 gift certificates to electricians in return for completing surveys on pay and benefits and asking whether participants would be interested in working for a union contractor. Those who are willing to be contacted have their information distributed to union residential contractors. Currently, the union is developing an online bulletin board where resumes and completed surveys for nonunion residential electricians will be posted.
Neil Carriere is a new recruit, a residential journeyman at At Your Service Inc., a four-employee shop founded a year ago by Local 46 members Ryan Paddock and Patrick Gergen. Both owners attended classes at the Local 46 hall.
Local 46 organizers recommended Carriere to At Your Service Inc. after he participated in an unsuccessful organizing drive at his last employer, a 50-employee firm that installed home theatre systems and other new residential products. Carriere was initiated into the IBEW on September 15.
“There are a lot of advantages to the union,” says Carriere, 46, citing benefits like good health care, a stable retirement account and regular employment. He said he is pleased that his union dues are being used to market residential work and organize more nonunion workers. “There are still a lot of residential electricians who think that the union is exclusively commercial,” he said.
Paddock, who salted a nonunion residential contractor before co-founding At Your Service, says, “I learned that there are a lot of fly-by-night contractors doing residential services.” His firm now has the highest rating on an online referral database and performs regular installation work for clients who sell hot tubs and gas fireplaces.
Local 46’s program is a well-developed, innovative deployment of people, skills and union solidarity. Price says, “We encourage feedback from the employers to make them part of the solution. When we all understand what we are trying to do, we can drop our individual self-interest and look to make a break in the market without losing track of the overall interests and mission of the IBEW—to serve our members.”
Monique Moore is one of the program’s prime boosters. Moore is owner of Latitude Electric, a residential firm that she established last year with her husband, Kevin, a laid off Local 46 journeyman. She attended classes at the Local 46 union hall in small business management, electrical estimating and business plan development. The courses are taught by experts, including the chairman of the construction management program at the University of Washington.
Moore, a U.S. Air Force veteran of Gulf War I, said she especially appreciated the class on estimating and is grateful that Local 46 pays first-year dues to the Master Builders Association for each new residential contractor.
Dennis Winterroth founded Pyramid Electric in 1993 with three other inside wiremen from Local 46. Today they employ about 12 workers, with 30 percent of the firm’s work consisting of residential remodeling and repairs.
“We’re competitive with nonunion service shops and have a good margin,” says Winterroth, praising Everett Local 191, Tacoma Local 76 and Local 46 for working toward a common agreement.
The locals have negotiated a portability understanding. Rather than furloughing staff when work temporarily drops off, for instance, contractors can “share” them. “We don’t want to organize workers and then see them laid off,” says Galusha.
While Pyramid has wired some new custom homes, Winterroth says breaking into large tract home construction projects will depend upon solving a couple of problems. First there is a scarce labor pool to draw from. Many Local 46 journeymen are experienced in construction, but not in residential work.
Second, insurance costs for tract home projects can be costly, since potential liabilities from work defects can multiply due to the large number of units constructed.
Snohomish Electric has solved some of those problems and is building hundreds of tract houses. Local 46 assists Snohomish’s marketing by reimbursing the firm for the materials and labor to install a low-voltage panel (for communications, data and entertainment systems) and cable drops to three destinations, at no cost to new homebuyers. This tool, available to all signatory contractors, helps developers market the properties as “smart homes.”
Snohomish owner Pete Sanders, a member of Everett Local 191, says, “We’ve been around for 20 years. Insurance is expensive, but less of a problem than for new contractors. It’s refreshing to see Local 46 trying something different,” He complimented the portability agreement and looks forward to further joint measures for helping both members and owners.
Greg Fuller, a lineman out of Local 595 in Dublin, California, owner of Fuller Electric, limits his residential work to high-end remodels, where he can afford to pay journeymen’s wages. Fuller recalls leaving the San Francisco Bay area six years ago, where residential work paid $2.45 per square foot and arriving in Washington state, where the work paid only $1 per square foot. “If we really want to compete in this market,” says Fuller, “we need more workers who can work with speed and are cross-trained to perform low voltage work.”
Local 46’s evenhanded approach has stimulated camaraderie among signatory residential contractors. On September 15, they held a brainstorming luncheon on how to make further breakthroughs in that sector. Two representatives of the National Electrical Contractors Association (NECA) attended the event.
One of the participants, Pete Starr, owner of newly signed Starr Electric, says “I was glad to be a part of it,” complimenting Local 46 organizers for their efforts. He wonders, however, how much support there is among the Local 46 membership for making an even stronger push into residential, noting that the work generally pays less than commercial and would require learning in new technologies.
Starr’s questions are expressed in a wider strategic discussion taking place within the IBEW, one that has its roots in the market recovery program, originally developed by the building trades in Minnesota and then widely implemented in the Brotherhood.
When the IBEW urged local unions to establish market recovery funds in the late 1980’s to address an alarming decline in union market share, locals took off on different paths.
Some locals passed dues increases to pay for organizers and to subsidize salts. Many used the increases as direct subsidies to induce open shop firms to sign with the union or to give signatory contractors a leg up on their nonunion competitors.
Local 46 hired its first organizer in 1986, but didn’t set up a market recovery fund until 1993.
The local membership had a strong emotional commitment to bottom-up organizing recruiting workers on the nonunion job sites. Local leaders convinced them that market recovery would enhance, not undermine those efforts.
The fund could be used, for instance, to subsidize a union contractor to compete in the market for new gas station construction, previously dominated by nonunion firms. Since a subsidy to union contractors could result in lower profit margins for nonunion competitors, forcing them to exit or narrow their presence in the market, their employees could then be more open to bottom-up organizing efforts.
At the same time, nonunion contractors could be more vulnerable to “top-down” efforts—union leaders dealing directly with company officials.
Today, Local 46 does not maintain a separate market recovery fund. Instead, the construction units pay one percent of their dues into an organizing fund. The fund supports four external organizers and one internal organizer. Local leaders have the authority to use the fund for any purpose that they believe will increase market share.
Some of the money left in Local 46’s market recovery fund has been shifted from commercial to residential. “We’ve come a long way by breaking from traditional subsidies and using the funds for marketing,” Galusha said.
The Yellow Page ad is financed from market recovery funds. Monies for first-year dues to the Master Builders Association and for reimbursing firms for parts and labor for the free low-voltage panels on residential projects also come out of the fund.
Price says that the marketing tactics, new understandings on portability and brainstorming with employers are all “processes that come from hitting a problem from all sides.”
To continue to make progress, says Price, local unions have to develop new strategies to deal with changes in the marketplace. He points to growing number of general contractors who want one electrical firm to complete all work on residential buildings, including those with floors containing commercial properties. “We don’t have a complete solution to our problems, but we are working on them,” he says.
Visit the “Breaking New Ground” series at www.ibew.org for more stories on IBEW organizing.
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