The Anti-Union, Pro-Nuke Contractors

Nuclear plant construction has historically been a source of substantial income for members of the building trades unions. Labor costs on nuclear plants average 35 to 40 percent of the total cost of a nuclear plant compared to 25 percent of coal-fired plants, and since the total nuclear construction bill is much higher than that of a coal-fired plant, the total amount paid to construction crew members is quite substantial — as much as $400 million on an average 1,000-megawatt reactor under construction today. For these reasons, the AFL-CIO building trades unions have long been staunch supporters of nuclear power. However, in recent years, “open-shop” construction firms — particularly Daniel International — have gained an increasing share of nuclear construction contracts and significantly eroded the building trades unions’ bargaining strength. 

The early years of the nuclear industry found nuclear construction dominated by the major national contractors Bechtel, Ebasco Services, Stone & Webster, United Engineers and Constructors — who have national contracts with the building trades covering all their construction projects. Of the first 50 reactors constructed in the United States, over 80 percent of them were constructed by union contractors. 

However, open shop construction firms have begun to pick up contracts. Open-shop construction means that the contractor does not have a binding agreement with any national unions and simply hires an available work force for a particular project. Sometimes there will be an agreement reached with the building trades for a particular project, but often the entire work force on that project is non-union. The open-shop construction industry has blossomed in all construction fields in recent years; in the 1950s open-shop contractors controlled less than 20 percent of the available construction projects, but now they are getting over 60 percent of the total national construction budget. 

The shift to open-shop construction came about more slowly in the power plant business, but since the early 1970s it has flourished. Much of the shift has occurred as a result of coordinated attacks on construction union power by major industrial firms and utilities. The Business Roundtable — formed in 1969 as the Construction-Users Anti-Inflation Roundtable by a group of heavy industrial and utility executives — has vigorously promoted the concept of open-shop construction. Their major weapon is a 1973 study by Herbert Northrup of the University of Pennsylvania’s Wharton School of Finance. Northrup studied construction costs on a hypothetical nuclear power plant constructed in the Southeast; he concluded that using non-union labor could save as much as $39 million on construction of a nuclear power plant. This study received widespread attention in the utility industry and prompted a host of new studies on the advantages of non-union construction. 

The utility industry showed its new determination to undercut the unions at the August 9, 1976, seminar of the American Bar Association Section on Public Utility Law entitled “Construction Labor Costs — Does the Utility Owner Have Any Options?” Of course, the only alternative the participants advocated was open-shop construction. Greenville, South Carolina, attorney Robert Thompson -- architect of the 1978 defeat of the Labor Law Reform Bill — told the audience, “There probably is no area of the economy where the impact of ‘open-shop’ construction has been more noticeable. ... It is true that more public utility work is being performed ‘open shop’ today than ever before in our memories,” and encouraged the audience to go open shop to cut construction costs. Since the audience was mostly utility officials and since the proceedings were carried in the October 9, 1976, edition of the major utility trade journal, Public Utilities Fortnightly, the message was driven home quite effectively. 

Naturally, since construction costs affect nuclear plants more than coal plants, the presumed virtues of open-shop construction have appealed to nuclear plant constructors. On December 2, 1977, S.B. Palmeter, construction manager for General Public Utilities (owners of Three Mile Island), addressed the American Nuclear Society Power Division on the topic, “Open Vs. Closed Shop Construction — How Cost Effective?” While in most public presentations, utilities blame governmental red tape and environmentalists’ intervention for their cost overruns, Palmeter identified inflation in construction costs as the primary cause for construction inflation. He cited his own calculations that a nuclear reactor in the 1980s would cost $100 to $200 million less using an open-shop contractor on a standard 1,000-megawatt reactor. He urged all utilities considering further nuclear construction to go open shop. 

Southern utilities had already learned this lesson early in the game. Although the first units of many Southern utilities — Carolina Power & Light, Virginia Electric & Power, Arkansas Power & Light, and Florida Power & Light — were built by union contractors, this pattern soon shifted. CP&L’s second plant — the two-unit Brunswick site in Southport, North Carolina — was built by non-union Brown & Root. Brown & Root also obtained the contract for the South Texas Nuclear Project being supervised by Houston Lighting and Power. Charlotte, North Carolina-based J.A. Jones Construction Co. built its only nuclear reactor at Florida Power Corporation’s Crystal River plant. And Duke Power built its reactors with its own non-union construction crew. 

But it was Daniel International which scored the lion’s share of these orders. Prior to the 1970s the company had specialized in industrial construction, mostly for the new textile plants it had courted into the North Carolina-South Carolina area; the company had also done a substantial amount of coal plant construction. Starting in the early 1970s, the company moved into the nuclear business. Daniel got the contracts for Alabama Power’s Farley reactors, South Carolina Electric & Gas’ Summer Plant and CP&L’s Shearon Harris reactors. The Farley reactors are being built under a local project agreement, but the other plants are non-union. Now, 25 of the 50 reactors being constructed by private Southern utilities are contracted to open-shop construction firms. 

TVA remains the primary union constructor in the South. Their 17 reactors are all built in-house by their own unionized construction crews. However, even this hegemony is being threatened. The Associated General Contractors have vigorously attacked TVA’s reliance on union labor, and are now producing studies which show that they could construct TVA plants far cheaper if the plants were subcontracted to them. Thus far, TVA has only subcontracted minor items but it is possible that this policy might change in the near future. 

This trend has extended into other areas of the country as well, with Daniel International taking the lead in bringing open-shop construction to the nuclear industry. In 1973 and 1974, Daniel got contracts to build two reactors for the Union Electric Co. in Missouri, one for Detroit Edison in Michigan, and one for Kansas City The Shearon Harris plant in North Carolina, a Daniel International construction project Gas & Electric in Burlington, Kansas. Other smaller non-union contractors have picked up plant contracts, and the major construction firms are now talking of going “double-breasted” — operating non-union subsidiaries not covered by their national contracts — to compete for reactor contracts. In fact, Daniel International itself was purchased by Los Angeles-based Fluor Corporation in 1977; their union plant contractor, Fluor Power Services, had only one nuclear contract, compared to Daniel’s 11. 

Halliburton Company had tried to beat everyone to the punch with a similar move in 1973 when they acquired Ebasco Services. It planned to combine Ebasco’s existing nuclear expertise with the clout of its previously purchased Brown & Root subsidiary (currently the largest contractor in the United States) to rival Bechtel as the major builder of nuclear power plants in the country. However, the federal government prosecuted the company for anti-trust violations in connection with the purchase, and Halliburton eventually sold Ebasco to the Enserch Corporation — a holding company whose predominant interest is a gas utility — in 1976. Nevertheless, similar combinations could result in the near future. 

All of this might seem somewhat academic given the complete dropoff in new reactor orders, but it is important because of the significant impact the open-shop contractors have had on the building trades unions. As lawyer Lawrence T. Zimmerman noted at the 1976 ABA conference on open-shop construction, “Ironically, the expansion of open-shop contractors makes the use of the national contractor a more attractive alternative than before, for it has had the practical consequence of curbing unproductive union practices and largely eliminating the competitive cost savings formerly obtained through open-shop labor.” (In an effort to retain some of the contracts, many unions have not pressed builders for significant improvements in wages and benefits.) In fact, construction wages, traditionally pacesetters for pay raises throughout the blue-collar trades, have risen several percent less than average manufacturing wages over the past few years, and many new union jobs have project agreements that don’t contain many of the contractual items trades unions have fought for the hardest. 

On April 1, 1978, 16 major building trades unions and four national union contractors — Bechtel, Stone & Webster, Ebasco Services and United Engineers and Constructors — signed the “Nuclear Power Construction Stabilization Agreement.” The nuclear industry itself promoted the agreement as a patriotic gesture by both sides to speed up the construction of what they consider to be vitally needed nuclear reactors: in fact, Nuclear Industry magazine refers to the agreement as the “National Nuclear Security Arrangement.” The agreement mandates that there will be no strikes of any type by labor and no lockouts by management. There will be “significant flexibility in work processes and manning patterns,” meaning that crafted workers like carpenters and electricians might be forced to perform other duties and that non-craft employees can perform jobs ordinarily reserved for craft members and apprentices. The agreement also allows for four-day 10-hour work weeks on rotating shifts operating seven days a week instead of the five-day eight-hour work week schedules preferred by the construction unions. Wages at the plants would be adjusted periodically by a joint labor-management committee with the help of an outside “umpire.” Finally, there are no penalties for work stoppages by the utilities because of regulatory delays or simple construction postponements due to a lack of demand; the contract simply states that “management be encouraged to develop as continuous operations as possible.” 

An indication of just how this new arrangement will work came in May, 1979, when Gulf States Utilities and contractor Stone & Webster signed the first contract with labor under the new agreement for the construction of River Bend Unit No. 1. On virtually every negotiable item in the contract, the company got the upper hand. There is a four-hour 10-day work week for employees, with rotating shifts working seven days a week, instead of the standard five-day week. There is no overtime allowance for Saturday work, as in five-day work week contracts. In fact, the company was even reluctant to grant overtime for Sunday work, but finally settled on time-and-a-half for Sunday work (five-day week contracts allow double time on Sunday). Essentially, Zimmerman’s conclusion holds true: there is little difference between work conditions at the River Plant and those in an open-shop arrangement. 

The supreme irony in the industry’s promotion of open-shop contractors like Daniel International and the subsequent erosion of the unions’ bargaining position is that the nuclear industry has courted the AFL-CIO heavily since the beginning of the nuclear age; in fact, the AFL-CIO as a whole has remained among the most aggressive supporters of nuclear power in the country. And this courting continues as strongly today as ever, even with the increasing drive to construct open shop. For instance, Nuclear Industry paid compliments to the Texas AFL-CIO for their role in helping defeat the Austin referendum on nuclear power (see article page 110). The juxtaposition of this friendly role on the one hand and the example of Palmeter’s talk to the American Nuclear Society on the other should raise questions about the true sympathies of the nuclear industry in the minds of even the strongest trades union supporters of nuclear power. 

A further fact undermining the friendly relationship is the often callous fashion in which utilities use their construction workers as bargaining pawns in rate increase cases. For instance, in 1978, when the Louisiana Public Service Commission granted Louisiana Power & Light only $5 million on a rate increase request of $54 million, the utility immediately laid off 300 construction workers at its Waterford Unit No. 3 and refused to rehire them until a further rate increase was granted. 

A similar case occurred in Alabama in 1977 when Alabama Power stopped work at a coal plant until it received a rate increase. The hearings on the increase presented a rather sad spectacle as building trades union members severely heckled other union members, primarily Steelworkers, who came forward to speak against the rate increase. Eventually, the rate increase was granted, but the pitting of union members against union members typifies the viselike grip the power companies now often exert on the beleaguered building trades. Alabama Power repeated this pattern in 1979 when it laid off 4,000 workers from the Farley nuclear plant until another rate increase was granted.

Organizers against utility abuses and nuclear power are just beginning to understand the potential for alliances with labor. Though not the easiest unions to work with, the building trades are directly involved in the fate of utility expansion and alternative energy development. If they are not courted carefully by the enemies of nuclear power, they will remain the industry’s loyal friends — even in the face of some very rough treatment.