Jan 2009 Vol. 12 No. 2

Construction leaders call on California legislators: Act quickly to avoid industry crisis

The California legislature’s failure to resolve the state budget crisis could lead to a severe crisis within the construction industry, warned construction labor and management leaders in a joint statement issued in January that urges legislators to act immediately to avoid further layoffs and the possibility of some firms shutting down completely.

"The unemployment rate in California is already high," said Paul Cohen, director of Governmental Relations for the Northern California Carpenters Regional Council (NCCRC). "It is even higher in the construction industry, and the state’s stopping infrastructure projects mid-stream will lead to further massive layoffs. This will make the economic crisis much worse."

Construction management leaders called on legislators to reach a compromise before it’s too late.

"No one enjoys paying higher taxes, but it won’t help California if construction firms have to lay off their formerly tax-paying workers only to have them get in line for state unemployment benefits. This is not a matter to take lightly—some trade contractors and suppliers may be forced to close their doors. Stopping payment on existing projects puts businesses at risk and drives up the cost of those projects to the state when they do start up again," said Charlie Kuffner, of Swinerton Builders, and president-elect of the Construction Employers’ Association. "It’s ironic that in the supposed goal of reducing costs, these project funding delays will dramatically increase the cost of these projects, wasting already limited tax-payer dollars."

The Construction Employers Association (CEA) includes many of the largest employers in California’s building industry. It is comprised of more than 100 of the largest unionized commercial and industrial contractors that perform in excess of $10 billion in public and private construction annually in California.

The NCCRC represents nearly 40,000 career construction workers throughout the northern half of the state.

In the joint statement, CEA and NCCRC leaders said: "In a negotiation, both sides need to give and resolving this crisis demands compromise. A budget will not be possible without significant cuts and significant new revenue. At the same time, meaningful economic stimulus through fast-tracking certain shovel-ready projects and accepting the Governor’s proposal for public-private partnerships will speed California’s recovery and offset some of the negative impacts of new taxes."

The NCCRC’s Paul Cohen said, "People need to understand that we have moved beyond delaying transportation projects that were scheduled to start. The state is now freezing school, university and prison construction jobs in communities across California. It’s ironic that at the same time Congress is acting on a massive stimulus for the economy, California’s budget crisis is becoming a huge deterrent to economic recovery." Halting construction projects already in progress magnifies the economic crisis and will carry long-term consequences for all Californians, said CEA President Chuck Palley, of Cahill Contractors.

"These projects don’t turn on a dime. Stopping a project that is already underway causes massive disruptions in people’s lives and drives up the cost to the taxpayer," Palley said. "Many approved projects coming ready for construction in the next six months are now on hold and being delayed, which will only magnify an employment problem already in crisis. Something’s got to give."

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