JIM ANSARA'S SMALL GENERAL contracting company was losing money. He didn't have the internal systems or controls that could tell him where or why. The company's workers were neither as skilled nor as reliable as Ansara would have liked. And in the midst of a local building boom, he was running out of work.
So what did Ansara do? Among other things, he invited the union in.
What? An unprofitable company, beset with management shortcomings, should voluntarily saddle itself with union work rules? With a union pay scale? With all the risks of union work stoppages?
OK, it's not a turnaround strategy you're likely to read about in a management book or one that any consultant will promote. But it has turned out well -- so far -- for this young man and his Boston-based business.
Ansara only stumbled into the construction business. First he had to learn that he wasn't a scholar -- short stays at Brown University and Amherst College taught him that. A year with a semipro team in Binghamton, N.Y., taught him that he wasn't a hockey player, either. At home in Dorchester, Mass., with nothing else to do, he renovated his brother's kitchen.
That was 1979; Ansara was 22. He got other renovation jobs, worked for a couple of contractors, became a subcontractor himself, and picked the name Shawmut from a subway station. Soon, Shawmut Design & Construction began hiring people.
Ansara had no long-term strategy except for a notion of concentrating on quality work. "I hadn't succeeded at school," he says, "and I hadn't succeeded at sports. I needed to be the best in something."
The company nearly went broke in its first year, running up a $20,000 deficit in Ansara's personal checking account, which doubled as the company accounting system. "I fired all but 2 of the 14 guys working for me," he says, "and started over." On more piddling kitchen and porch work. Luckily for him, though, one of the houses belonged to a part-owner of Steve's Home-made Ice Cream Inc., a local company, who asked Ansara to bid on the renovation for one of his stores. He hesitated. "The job seemed so complicated," he says. But Ansara plunged in, won the bid, and pocketed a nice bonus for finishing in five and a half weeks instead of eight. No one was more surprised -- that he did it at all, never mind early -- than Ansara. Shawmut did more Steve's Ice Cream stores, and, as the story goes, the business grew.
Ice-cream shops led to pizza parlors, which led to restaurants and to upscale food stores. Ansara built a reputation for taking on messy jobs that required as much on-site problem-solving as they did construction, and for turning out a better-than-average-quality product. Most of Shawmut's contracts were negotiated, not competitively bid. People wanted Shawmut; they'd work out the price.
The company nearly went broke again in the fall of 1985. It was in the hole by several hundred thousand dollars on annual sales of about $4 million, owing in large part to Shawmut's poor accounting systems, cost controls, and internal management. Ansara had already brought in an experienced controller, Tom Davidson, who was working on that part of the mess. "It took me several months just to figure out that the company was in trouble," Davidson says, "by trying to reconstruct records that didn't exist."
Another big problem was Ansara's ideas about staffing. Other firms in the industry were skinnying down to become contract managers -- "briefcase contractors," they're called -- building companies without a single tradesperson on the payroll. Their overheads are negligible, and they subcontract everything. But Ansara dreamed of Shawmut as a full-service company. So he'd opened his own cabinet shop, created a design division, and tried to keep a core group of carpenters, plumbers, electricians, and laborers on Shawmut's permanent payroll. Handling all that profitably demanded management sophistication that Ansara didn't have.
Another problem was that contracts were taking longer than expected to complete at higher than anticipated costs. Shawmut was undertaking projects that taxed the expertise of the builders it was able to hire. People occasionally had to do things twice, sometimes three times, before they got them right.
Still another problem was that Shawmut was outgrowing its little niche -- doing nice, but still small, restaurant renovations on the fringes of Boston's exploding downtown. A bigger company needed bigger jobs.
And that is where the union came in.
Ansara had first visited the Carpenters Local Union No. 33 back in 1984. No one can be in the construction business in Massachusetts for long and remain unaware of the construction trade unions. Twenty years ago, Massachusetts was, by and large, a union state. But a serious recession in the building trades during the 1970s depleted union rolls. By the early '80s, many Massachusetts contractors outside the Boston metropolitan area ran open, that is, non-union, shops. Only The Boston District Council of four locals retained its muscle.
A good indication of building activity in the city itself was the growing membership of Local 33. Its jurisdiction included downtown Boston, and its membership, about 600 in the mid-'50s, had climbed to about 2,000 journeymen and apprentices by the mid-'80s. There were new high rises going up and inside-out renovations underway seemingly on every downtown block, and the carpenters working these jobs, the great majority of them, anyway, carried union cards.
So sure was the union of its ability to control the supply of labor to downtown contractors that in 1981 it turned down a 31% increase in wages and benefits over two years. A five-week strike got the members a better offer. In 1983, the Boston District Council won another 13% raise for members of its four locals. As part of that package, union wages in Boston last month rose to $18.86 an hour plus $5.98 in benefits.
However, the union's influence declined, as did carpenters' wages and employment, roughly in proportion to a job site's distance from Beacon Hill. That's why Shawmut, working largely on downtown's edge, had been ignored by union organizers. Where the Boston District Council held sway, though, a contractor had a stark choice: either hire union labor, or stay small.
