For Shawmut Design
For Shawmut Design
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.
When he called on Bob Marshall back in 1984, Local 33's business representative wasn't rude, says Ansara, "just not very interested. He handed me an agreement and said, 'Sign if you want, but if you don't sign, don't try to do any work in Boston.' I didn't see us joining the union. I thought I could talk to them, show them that we could coexist." Wishful thinker. Coexistence wasn't in the union's vocabulary.
The issue facing Ansara in 1984, and still in 1985 when his financial problems began to come to a head, wasn't the union per se. His jobs weren't being picketed. No one was pressuring him. Ansara was really trying to figure out what business Shawmut was going to be in and where its market lay -- with the prestigious city jobs or somewhere else.
To his credit, Ansara came to the subject of unionization as a pragmatist, not an ideologue. That's probably what has made his union experience work so far. His original visit to Marshall had been prompted by the possibility of Shawmut's landing a highly visible downtown renovation job. "I was worried about being picketed or harrassed," he recalls, "and I wanted to avoid that, not because I was noble, but because I wanted to keep my options open."
He had lots of them.
He could stay out of Boston, for instance. Shawmut wasn't so big or so hidebound that it couldn't adapt itself to another kind of contracting -- maybe office or retail buildings in the suburbs, where unions would be a nonissue.
Or, Shawmut could, like other contractors, become "double-breasted." It could get union work, at the same time creating a nonunion subsidiary for other jbos.
Or, it could remains small and inconspicuous, hoping that the union wouldn't notice or bother with it for as long as possible.
Ansara began talking to people. He talked to other contractors. Their response, he says, was, "Why would you want to go union? You've got a growing company. You're a nice boy. You don't want to get involved with them." They told him horror stories -- about, for instance, union stewards who draw pay but don't work. When you're running jobs with small crews -- three or four people, as Shawmut often did -- a nonworking body on the payroll can eat up any profit.
Those were other people's experiences. But then, over dinner one night, a nonunion subcontractor told Ansara he could always tell when he was on a union job: it was cleaner and better organized. What Ansara saw with his own eyes confirmed this. "We had started working with a union subcontractor," he recalls. "He did astounding work, and I was amazed at how organized and knowledgeable his people were on the job. We noticed the amount of production he got out of them, and that his average worker was 35 to 45, not 25 like ours. I think that he was the first person I talked reality with, and he told me to go see Andy Silins. He said Andy was a reasonable and progressive guy."
"When Jim first came in," says Silins, the well-dressed general agent for the carpenters' Boston District Council, "he was scared stiff of the union." The two men met off and on for six months in 1985.
"Andy," Ansara recalls, "said that unions had made big mistakes in the '60s and '70s in not recognizing changing times and that there was new leadership, better training, and more flexibility. . . . He was very laid back about it and said, 'We'd love to have you, but we need you to feel comfortable. Feel free to ask questions, to come back and talk to me.' Each time I sat with him, I got a little clearer picture of what it would be like."
So, on the one hand were the horror stories his more experienced colleagues told, and on the other was his own limited experience and this charming, almost conciliatory union organizer.
Ansara broached the union issue with his supervisors and project managers. Most were skeptical, some reluctant almost to the point of opposition. "My inclination," says David Coolidge, a project manager, "was . . . I have a lot of problems with unions. Not philosophical, but the reality of what you have to deal with. In previous companies, I've seen nightmares. The worst was a dispute in Portland, Maine, between plumbers and carpenters over who would do work on a lift, and the issue was the diameter of the piping. That fight shut the job down. It was a situation that I didn't want to get back into."
The Shawmut managers thought parts of the union agreement were pregnant with problems for a small contractor. Three clauses in particular bothered them. They took their qualms to Silins, who was soothing. Shawmut wouldn't have any problems with those clauses, he assured them, but when Ansara asked for formal exemption from parts of the three clauses, Silins deferred to Bob Marshall, Local 33's business agent and the president of the District Council. So they took their fears to Marshall, tough guy to Silins's smoothie. No way, he said in short.
"Marshall gave us verbal assurance on lots of small issues," Ansara recalls. But on Shawmut's big three concerns, there would be no side agreements. Take it or leave it. "I couldn't rip a contract apart for just one company," Marshall says. But, Ansara says, he did promise them there wouldn't be a problem. "'Follow the rules,' he told us, 'treat people with respect, and we'll return the courtesy.' I believed it 75%, so we went ahead and signed."
The decision to sign didn't come out of his head, Ansara says, but from somewhere closer to his ample waistline. He wanted to graduate from the small jobs to more challenging, highly visible work in the city. He wanted a classy company. He wanted Shawmut to be a respected company, to have prestige. "As I saw more of union companies," he says, "I wanted to be affiliated with them. I wanted Shawmut to have that image. Somehow, having a union would legitimize us."
The decision to go union was really a decision to move downtown, to play in the big leagues. It had little to do with money and profitability. Indeed, one of Ansara's business problems from the start has been that he never paid enough attention to profits. The decision to go union, in fact, was almost axiomatic, given Ansara's ambitions for Shawmut. It just happened to be a good business decision as well. Taking the company union, whatever it did for Shawmut's prestige and Ansara's pride, has helped clean up the company's bottom line and straighten out its management mess.
So were the doubters at Shawmut. "I see," says Charlie Mann, the company's general superintendent, "that a lot of my preconceived notions about unions were just wrong."
But how can paying carpenters nearly $25 an hour in wages and benefits instead of $17 an hour improve a company's profitability?
Shawmut's experience suggests that hiring union gets it a better carpenter -- more mature, more experienced, more skilled. "If you're 35 with lots of experience," says carpenter Joe Powers, 35, "are you going to work for $19 plus benefits or $10 without benefits?" Dave Coolidge, the most reluctant of Shawmut's managers to embrace the union, sings a new tune. "I will say that the best carpenters in Boston are in the union, and in hindsight, that was the best reason for signing the contract."
So, while the company's hourly labor rate went up, says controller Davidson, its labor costs on many jobs have gone down. "We can do some jobs much faster than we were previously estimating," Davidson says. "Shawmut has been able to turn itself around, not just because of good carpenters, but they certainly had some effect on it."
A more mature work force has paid other dividends as well. Site supervisors say they spend almost no time now mediating spats among workers. "It's made the supervisors' jobs so much easier," says Scott Shear. "I don't have to worry about this guy not showing up or some guy being pissed at some other guy and not being able to work with him."
"I was sick of dealing with personnel problems with people in the field," says Ansara. "Early on, I had personal relationships with all the people, but it became impractical. Meantime, we had a company with no rules or policies. People were happy to work here, but there was too much energy expended on solving problems. Someone was mad at someone else; young people weren't used to showing up with their tools at 7 a.m. . . . I saw the union as a way to solve these problems quickly. Everybody would follow the rules. There would be no arguing over who gets more money than someone else, and everybody gets big money so we can attract good people. We were struggling on so many fronts that personnel problems were just draining energy."
Going union has brought Shawmut men such as Mark Erlich, who has 15 years in the trade and nearly as many lecturing to college and union audiences on labor history and labor relations. Erlich wrote With Our Hands, a 239-page history of carpenters in Massachusetts from colonial times through the present, published last year by Temple University Press. With credentials like these, he is Shawmut's best recruiter. "I'm in a position to tell others in the union that this is a good situation," Erlich says.
An hourly wage earner like his union comrades, Erlich was supervising a restaurant renovation job in a downtown department store. "My title is working foreman," he explains, "but I'm acting as a supervisor. The culture of the craft is so strong that there's a blurry line between management and foremen's responsibilities. On small jobs you need people who can take on responsibility, and when a contractor really means it, like Jim Ansara does, he can say, Go out there and do something, and know that it'll get done."
It's all lollipops and roses?
Well, so far it has been. Shawmut works hard at respecting the spirit of the union rules. Consequently, it is frequently excused from the letter. "A guy treats you nice, if he needs a favor at 3:10," says Rich Moran, 23, a laborer, "he'll get it." "If a company is willing to play by the rules," says Erlich, "Bob Marshall and Andy Silins are willing to stretch them."
Shawmut's site supervisors say the union stewards on their jobs work as hard as anyone else. When jurisdictional problems arise between union locals, a phone call straightens them out.
Will it stay lollipops and roses?
No one can say. Ansara has gotten along so far because he wanted to. "Jim Ansara's decision [to go union] came at a time when no one was forcing him," says Local 33's Marshall. "That was good for both of us." But times change; markets change. So long as the union controls the downtown labor force, Shawmut will be competing against other union contractors, all paying the same wage. If the union loses its hold, could Shawmut stay in the fold and still compete with encroaching nonunion contractors? What if downtown jobs dry up and Shawmut, with its high labor rates, has to move into nonunion territory? What if the company tried to hire nonunion? "It is not correct to say that this union is any more enlightened than others," says Erlich about his own outfit. "They'll screw a company that tries to screw them. . . . I'm a militant labor SOB. That's what I am. . . . Right now, I don't see my objectives and those of the company I work for being in conflict. But who knows about the future? My assumption is that there is a basic conflict between employees and employers, and labor relations is an attempt to resolve that conflict if it can be resolved. . . . If Ansara tries to do something nonunion, half the people here would leave. There is no way he'll undercut my loyalty to the union."
"Cynics outside the company tell me that the union will screw you in the end," Ansara says. "We like to think that we're not naive about it."
So for now?
"I tell Andy Silins," says Erlich, "when you go out organizing, you should take Jim with you. He's a walking example that you can go union and make more money."