NECA TransmissionsNotes from the front lines of the electrical contracting industry
  • Theory Vs. Practice

    Posted on Apr 29, 2014 by John M Grau

    Question: What do the beer supply chain and construction scheduling have in common?

    Answer: In theory, a lot; in practice, not so much.

    I attended a management workshop a number of years ago where one of the exercises was playing a game that simulated the beer supply chain. Each player assumed the role of one link in the chain: brewery production manager, beer wholesaler, distributor, sales outlet and consumer. We all sat in line along a table and passed notes to each other to convey supply, demand and price information.

    The only information each player had was the slip of paper that he received from the player next to him. Meaning the production manager at the brewery only knew what the wholesaler ordered, but not how much the consumer was buying at the store.

    As long as supply and demand were steady, everything went well. But during the course of the game, the instructor threw in some curve balls, like a rapid drop in sales at the beer depot or a big increase in production at the brewery.

    And everything fell apart. There was either too much or too little product in the supply chain. Prices became volatile, and nobody made a profit. In short, it was complete chaos.

    The lesson from the game was that better information up and down the supply chain could alleviate the problem. If the brewer knew how much the consumer was buying, he had a better chance of producing the right amount rather than relying on the wholesaler for his demand information.

    I recalled this exercise when I heard that the Construction Users Roundtable is releasing its “Labor Supply/Demand Forecasting Model.” I’ve been involved in meetings over the years where we tried to address the boom-or-bust labor supply problem.

    Construction users and construction contractors want an abundant supply of skilled manpower. When a big job comes to town, no one wants to scramble to find qualified workers or rely on travelers with dubious work habits. On the other hand, it’s hard to recruit and train new workers when a third of the local is sitting on the bench.

    Speaking from the labor supply side, we’ve asked owners to provide us with more information on upcoming projects – when and where they will be built. In theory, that’s getting information from the source to alleviate supply chain hiccups. Some have gone so far as to ask the owners to spread out their projects so that the demand doesn’t peak at the same time. That’s where theory and practice diverge.

    Construction users want their projects built when they want and need them. They have many other considerations, such as financing, consumer demand, new product launching, besides the availability of the construction workforce. To expect an owner to defer a project until the contractors are ready to serve him is unrealistic.

    So some good ideas are just blue-sky concepts that aren’t very practical in the real world. I hope CURT’s new construction labor supply/demand forecasting model is a success. Personally, I’m going to stick with beer.

     

  • The Sound of a Stagnant Economy

    Posted on Jun 13, 2013 by John M Grau

    Thud! The national jobs report has landed and it’s not an encouraging sound. Instead of gaining ground on job growth and lowering the unemployment rate, we’re moving backwards. The rounds of self-analysis and blame have begun.

    The timing was good for the Jobs for America Summit which I attended earlier this week. It made national news because Jeff Immelt, General Electric CEO and chairman of the Council on Jobs and Competitiveness, addressed the group. The highlight for me, however, was the release of a new small business outlook survey conducted by Harris Interactive.

    The survey of small business owners (annual company income of $25 million or less) tracks their attitudes about the impact of the political environment on the business environment and also includes their forecasts for upcoming business and hiring. Most NECA members fit this profile, so I assume it is at least partially reflective of their thoughts and forecasts.

    Economists claim that small businesses are the engine for job creation and growth. So what are the hiring forecasts? Nearly 65% said they have no plans to add employees this year and about 15% are reducing their workforce. That means 80% are not hiring and only 20% are creating new jobs.

    Why aren’t they hiring? Well, lack of work/orders/sales is the primary reason, but what’s behind the stagnation? The number one reason cited by small business owners is economic uncertainty. And the causes of economic uncertainty are the federal debt and deficit, regulations coming out of Washington, tax rates and tax code changes, and the requirements of the healthcare bill.

    While small business owners are by nature an optimistic group, only 39% said that their own business’s best days are ahead of them. And an even more sobering number is that only 20% believe that the country’s best days are ahead.

    While the debt and deficit are now the top agenda items for Congress and the White House, it doesn’t seem that our government leaders are doing much to confront the other causes of economic uncertainty. And until the uncertainty is resolved, it doesn’t look like small businesses will grow and create new jobs. Expect another thud next month.

  • Do Your People Help Drive Your Company’s Success?

    Posted on Aug 08, 2012 by John M Grau

    By Joe Salimando
    Salimando is a Fairfax, Virginia-based writer and contributor to energysolutions.necanet.org, eleblog.com, and tedmag.com. Reach him at ecdotcom@gmail.com.

    Obviously, the answer to the question above is YES. Most contractors I’ve met will, when asked, enthusiastically provide instances where one or another of their employees –

    • comes up with remarkable ideas,
    • finds shortcuts that save time on the job, and
    • regularly creates delighted customers.

    How can contractors get more information and knowledge into the heads of these important people? We think we have an answer.

    It’s this year’s NECA Convention & Show, to be held Sept. 30-Oct. 2 in Las Vegas. As it turns out, our Show is the biggest electrical industry showcase in North America.

    Education is everywhere at the Convention:

    • Pre-Convention Workshops, starting Fri.. Sept. 28 and running Saturday as well.
    • The Energy Forum, Sat. the 29th, starting 1PM.
    • The Safety Forum, a new event for us, running all day Saturday and ending with a final session Sunday morning the 30th.
    • Management Workshops (open only to full Convention registrants) will be held Sunday, Monday, and Tuesday mornings. General session attendance is included as well.

    Separate Show opportunities

    With more than 275 exhibiting companies and organizations, there’s not going to be enough time for one person to cover the whole Show. Think about it: If you spend 10 minutes with each exhibitor that you want/need to speak with, and our Show is open 11 hours . . . you have time for, at most, 66 exhibitors.

                . . . if you don’t each lunch, take a break, or make a phone call.

    Additionally, 17 Technical Workshops are scheduled for the Show floor (we have temporary classrooms for this). These are open to all Show attendees.

    SO: If you eat, make phone calls, take breaks, and go to just a few of these Workshops . . . you personally will have a lot, less time to see companies like Schneider Electric, Lutron Electronics, Graybar, and McCormick Systems.

    To cover all of the ground, your company might well need to send more than two legs, two arms, and one brain.

    Bringing your people

    How do you cover the waterfront?

    Kevin Mislin, vice president of Ferguson Electric (Buffalo NY), has found an answer for the employee-owned company (largest EC in Western New York). Each year, he takes several company estimators and project managers with him to The NECA Convention and Show.

    According to Kevin, there’s usually one among the group who is a younger (newer) estimator.

    “They attend the workshops, they see the products, the materials on the show floor, the tools and equipment,” Mislin said. “It’s a chance for all of us to see what’s new. In fact, for some of the time we’re there, I’ll walk the show floor with them. It’s a great investment for our company.”

     

    Your options

    If you decide to bring one or more of your people to Las Vegas, you have many options. I don’t have room here to cover all of them, so your best move might be to download the Convention brochure – a 32-page PDF.

    Obviously, you can have each of your people obtain a full registration to the event.

    Alternatively, you can have one or more register for specific pre-Convention events (Fri. & Sat.). Perhaps there’s one person you want to “ramp up” on Energy matters; send her or him to The Energy Forum.

    OR: You might have a Safety expert on your staff; that person might benefit from The Safety Forum.

    It’s possible for some or all of these people to register for the Friday and Saturday events separately, and then attend the Show Sunday (and Monday and Tuesday) – grabbing even more education on the Show floor. See the FREE Technical Session list.

    Essentially, then, you can customize the “experience” of each of the people you choose to bring to The NECA Convention & Show – for his/her interests, expertise, and knowledge you want them to have.

    Free Show attendance option

    There’s one more thing: Many of NECA’s members have told us economic times aren’t great. Perhaps you’ll want to take one or more of your people to Las Vegas, but want to keep costs down. If you can get them there, we’ll find plenty for them to do – with absolutely ZERO cost to you for their learning experiences on Sunday, Monday, and Tuesday.

    Admission to The NECA Show – three days, including a Sunday, in Las Vegas – is FREE. The admission includes the opportunity to attend one, two, or all 17 Technical Workshops (also FREE) – on a wide variety of topics.

    How can your people take advantage of this opportunity?

    Tell ‘em to go to www.necaconvention.org. Look to the upper right – click on “Register Now.” When the resulting page finishes download, you’ll see “Click here if you have a Special Admission Code.”

    Use code JG12 and proceed from there.

  • Having Fun Yet?

    Posted on Mar 12, 2012 by John M Grau

    It’s a question that’s meant to be sarcastic. People ask it when they know things are bad, and they expect a sarcastic response in return. I’ve heard it asked a lot over the past three years.

    So you may be surprised that my response is not sarcastic at all. This may be one of the most exciting, albeit challenging, times I’ve experienced at NECA. And yes, I am having fun.

    Consider:

    NECA is making a difference on Capitol Hill. We had two great victories last year in beating back onerous Financial Accounting Standards Board regulations and in repealing a misguided 3% withholding tax on government work. As a result of our impressive PAC and active political agenda, we are being noticed and even sought out by legislators for our opinion. One U.S. senator invited me to breakfast just to talk — and he picked up the check! A congressman excused himself from the House floor to meet me in the cloak room for a discussion on NECA issues. Fun stuff.

    NECA is being proactive is developing business for our members. Mostly gone are the days when our LMCCs spent dollars on billboards and baseball hats to promote our industry. Now we are employing business development specialists to find new business opportunities. We’re encouraging our members to bid less and sell more. And the opportunities abound in energy conservation projects as well as new technologies. Exciting stuff.

    NECA members have long sought out labor agreements that provide flexibility and competitive conditions. While we can’t claim we’ve reached out goal in this regard, we sure are on the right path. The CW/CE classification is providing the means to increase our labor force and lower overall crew costs. Market initiative agreements are targeting market segments where we traditionally have captured little work. In some areas, labor agreement restrictions have mostly vanished, replaced by a “just do what you need to get the work” attitude. Encouraging stuff.

    The “next generation” of NECA members is emerging as leaders in our industry, and we’re welcoming their participation. We’ve engaged our future leaders group in debating industry issues. We have asked young leaders to serve on important industry committees and task forces.  Women in NECA (WIN) is a group fostering diversity in both representation and the way we think about our industry. We’re reshaping our communications and meetings to be more relevant to all segments and types of NECA members. Wait until you see what we have planned for an executive leadership conference in 2013. Forward-thinking stuff.

    Our apprentice and journeymen training programs are the lifeblood of our industry, and they have always set the standard for electrical craftsmanship. Now we’re developing some of the most progressive teaching methods to make these programs even better. Computer-based training, distance learning, blended instruction — virtual environments are all being employed to put our training programs at the forefront of education today. Futuristic stuff.

    Of course, we can also consider underfunded pension plans, out-of-control health care costs, and high industry unemployment. Scary stuff.

    But those are just other problems we need to address. And, for some of us, the fun is in finding a solution. So let’s have some fun.

  • Getting It Right

    Posted on Nov 02, 2011 by John M Grau

    A recent article in the Wall Street Journal asked the question: Why Aren’t Companies Getting the Employees They Need? It states that even with unemployment of 9%, companies are complaining that they can’t find skilled workers. They lay the blame on schools for not giving kids the right kind of training and on government for limiting the number of high-skill immigrants.

    The author of the article lays blame with the employers themselves. The problem is that companies don’t train anymore. They expect to hire fully skilled and experienced workers at lower than market wages. It notes that apprenticeship programs have largely disappeared, along with internal management training programs.

    Why aren’t companies training? The article states that apprenticeship programs require too much cooperation among employers and bigger investments in training infrastructure than the companies are willing to provide. They also don’t want to make the investment in training a worker that someone else might hire away.

    The author suggests that companies bring back some aspects of the apprentice training system. Namely, pay the employee less while the company provides the training. Also, look more for people who could (rather than already can) do the job and bring them up to speed. The best place to find those workers is to promote from within the company.

    While it may seem old-fashioned to some, the construction industry has been employing this model for decades — especially in the union segment of the industry. The union labor agreement is the catalyst for employer cooperation and joint funding of training programs. Anyone who has seen the incredible training centers built by NECA-IBEW apprentice training committees around the country can attest to our industry’s substantial investment in a training infrastructure.

    Our system not only trains new entrants into the workforce but also provides upgrade training to current employees. And because the training costs are shared for a common pool of workers, individual employers are less concerned about investing in training for a worker they may later lose.

    Companies and industries in need of more highly skilled workers could learn something from union electrical contractors. Maybe we’re doing something right after all.

  • NECA Convention: The New(bie) Business Perception

    Posted on Oct 28, 2011 by Mir Mustafa

    NECA 2011 San Diego may have been my first convention as NECA’s new Business Development Director, but I immediately got a sense of renewed purpose for electrical contractors diving into new and emerging energy solutions markets. Whether renewable and alternative power generation or advanced lighting and building controls, many attendees were there to learn as much as they could about business and market development.

    There were many new things about NECA 2011 San Diego. The conference hosted the first-ever NECA Energy Forum, an event that saw a capacity crowd and received a tremendous amount of positive feedback.  It would have been impossible for anyone sitting in the audience to miss one speaker after another reinforcing the same positive message: Emerging technologies represent the direction in which our industry is moving and represent a tremendous opportunity for any contractor willing to tackle a new way of doing business.

    In addition to the Energy Forum, NECA also unveiled NECAWORKS™, an energy economic modeling tool. The web-based screening tool provides NECA members with the fundamental tools and resources to capture renewable and energy efficiency project opportunities by determining the Benefit/Cost Ratio. Since transitioning to a new way of doing business is never easy, even with the help of impressive tools like NECAWORKS, NECA went the extra mile in San Diego to describe the importance of business development.

    IBEW International President Edwin D. Hill spent much of his time as a guest at the podium for NECA’s 2011 Board of Governors meeting detailing the IBEW’s new emphasis on business development and expressing his strong belief in its importance in recapturing lost market share and gaining new market share.  NECA President and President/CEO of Valley Electric Consolidated, Inc. Rex Ferry also stated the importance of business development for electrical contractors during his keynote address at the conference’s opening general session. Ferry spoke of how there was a new paradigm at work and that NECA members could no longer afford to sit around waiting for bids, but how they needed to proactively engage in business development to capture work.  He talked about how VEC, Inc. was doing just that.

    NECA also successfully convened the first meeting of a new business development task force chaired by Daniel G. Schaeffer, NECA District 7 Vice President and President of Schaeffer Electric Company, as well as two meetings on the topic of business development. The first was an internal meeting of the business development working group for NECA and Labor-Management Cooperation Committee (LMCC) business developers, NECA chapter managers and staff working on business development, and IBEW business managers and staff working on business development. I was honored to host the meeting, and I had a great team of panelists: Jim Ayrer, IBEW International; Darlene Besst, Northern California Chapter; Jim Curran, St. Louis Chapter & IBEW Local 1, LMCC; Terry Hatch, Washington, Statewide LMCC; Bernie Kotlier, California, Statewide LMCC; Ken MacDougall, Penn-Del-Jersey Chapter; Thomas Martinez, Los Angeles Chapter & Local 11, LMCC; Jennifer Mefford, SE Michigan Chapter & Local 58, LMCC; and Karen Prescott, San Diego County Chapter.  Together, we updated the audience on our local and national initiatives and described the wide range of activities that constitute business development. James Willson, NECA Los Angeles County chapter manager, also spoke passionately at the event, as did President Ferry, reiterating his belief in the importance of business development.  The audience also deserves thanks for their interest, their questions and thoughtful interactions with the panelists.

    The second business development meeting was held as a convention management seminar. Karen Prescott started off the meeting with introductions. I followed with a recap of the prior day’s meeting and emphasized the wide range of activities a successful business development program can consider.  Next, Jennifer Mefford gave an impressive presentation on the nuts and bolts of business development and how to get started when it seems like you don’t know where to begin. Bernie Kotlier closed with specific game changing examples, including the California Advanced Lighting Controls Training Program (CALCTP), the Electric Vehicles Infrastructure Training Program (EVITP), and the Sustainable Sales Placement Program which is focused on retraining highly successful sales people on the art of selling sustainable services and placing these individuals at member contractor firms.

    NECA will hold its next meeting on business development at the Association Executive Institute (AEI) in at the Mandalay Bay Hotel & Casino in Las Vegas, NV on Wednesday, Feb. 29, 2012.  You can also expect to hear more from me on our business development blog, along with guest blogs authored by my business development peers from throughout the country. They are doing some amazing work, and they are growing in numbers. I wish all of them could have spoken at this year’s conference, but you will hear more from them shortly.

    I would like to close by giving thanks to all that help raised awareness of the importance of business development at this year’s conference. Emerging energy technologies and business development truly represent a paradigm shift for our industry and NECA will do everything in its power to help members prepare.

    See recent energy solutions projects from NECA Members >> Learn more about NECA’s business and new market development strategy >>

  • Field Trip!

    Posted on Oct 12, 2011 by Adrianne Gracias

    NECA Transmissions features posts from CEO John Grau and other NECA staff and leaders about industry projects or issues they are following. Today’s post comes from: Adrianne Gracias, NECA's Online Communications Manager

    Since I’ve lived in the D.C. area most of my life, it’s rare that I get to be a tourist in my own town. But this past Friday, I took at field trip to the Department of Energy’s 2011 Solar Decathlon, where 20 university-led student teams from around the world, were given two years to design, build and operate an affordable energy-efficient single-family home powered by the sun.

    The DOE developed 10 contests for grading team submissions to determine their successfulness in the real world. The “off-grid” homes were graded on: affordability, attractiveness, in-and-outdoor environmental conditions, practical living spaces, power production for home appliances, lighting, and the ability to produce hot water.

    The unfortunate timing of this event landed it during a week with barely any sun, which made the competition extremely hard. Go figure, the Solar Decathlon, without any sun! I immediately noticed just how much these homes depended on natural or ambient light. When asked why the insides of the homes appeared dark and dreary, over and over I heard students patiently answer, “Well, it is pretty cloudy today.”

    The University of Maryland team didn’t require cloudy excuses; their home was well lit and nicely landscaped. The WaterShed home was designed to promote a sustainable lifestyle, while protecting the Chesapeake Bay Watershed through a holistic approach.

    UMD Students tackled this obstacle by incorporating a modular constructed wetland to filter and recycle rain and graywater, a green roof improves energy efficiency and slows runoff, and an edible wall garden system and composter to encourage organic living practices.  WaterShed is a split-living design, with angled “butterfly” roofs that direct rainfall into the constructed wetland. Separate public and private living areas are connected by the bathroom and water axis. Having grown up in Maryland, I was particularly interested in this house, and after taking the tour I wasn’t at all surprised they took home this year’s top prize – Go Terps!

    While touring new technologies and listening to students’ worldly interpretations of the “green market” is fun, it’s also my job. Since I work for electrical contractors, I know how our members are closely following these new markets. Energy efficiency upgrades and renewable power installations are becoming the bread and butter for some electrical contractors. The innovative strategies I saw at the Solar Decathlon will directly influence the future of commercial, industrial and residential electrical construction.

    It’s imperative that we keep a close watch on these new technologies and develops training that keeps up with market innovation and customer demand. NECA works with the DOE and the NFPA to ensure that these new markets are implemented in a safe, effective and knowledgeable manner. The reassurance of hiring a qualified electrical contractor is what sets NECA contractors apart.

    So, what’s my actual reason for loving Maryland’s award-winning WaterShed home? It closely follows my personal ambitions, by promoting a clean, renewable, organic and healthy lifestyle, right in my backyard. That, and crab cakes.

    View all of my photos from the event on Flickr >>

  • The "Super Committee”

    Posted on Oct 04, 2011 by Lake Coulson

    NECA Transmissions features posts from CEO John Grau and other NECA staff and leaders about industry projects or issues they are following. Today’s post comes from Lake Coulson.

    Just before you were leaving town on your August vacation and much-needed family quality time, Congress passed legislation that would prevent the United States from defaulting on its credit obligations and created a 12-person House-Senate Super Committee (“Committee”) to consider additional deficit reductions.  The Committee has to submit a report of its recommendations by November 23 and Congress will be limited to vote up-or-down on the plan by December 23.  If Congress fails to act on the Committee’s recommendations, automatic spending cuts of $1.2 trillion will occur in domestic spending and defense.

    Many believe the odds are stacked against the Super Committee agreeing on a package of spending cuts, let alone Congress concurring, without amending, the Super Committee’s recommendations.

    However, if the naysayers are incorrect, and the Super Committee is effective at producing deficit reductions, it could very well change the way Washington does business and the way legislation is enacted.  By design, the Super Committee possesses enormous power as it supersedes the process by which legislation normally becomes law.  Legislation receives a hearing and markup in the committee of jurisdiction; however, a decent argument offers that tax and revenue legislation that has long fallen under the scope of the Ways and Means Committee now falls under the jurisdiction of the Super Committee.

    While the relevant committees cannot be ignored, and thankfully, there are several tax-writers on the Super Committee, NECA, for the immediate future, must focus its advocacy on the Super Committee’s members.  Legislation to repeal the 3% withholding tax, incentives for electric vehicles and associated infrastructure and energy efficient investments for building owners could all be in play before the Super Committee.  NECA will need to respond with strategies to be fast, focused, and flexible, as it is now forced to advocate for beneficial provisions before a Committee with some of whom have, little, if any direct tax-writing experience or direct knowledge of the benefits created by those tax incentives.

    Those arguing for greater transparency in the political process will undoubtedly lose out in this closed environment as the details of the reduction package will be restricted to the Committee’s members and House/Senate leadership.  However, those seeking action in Washington may benefit from potential streamlined decision-making as the Committee’s recommendations cannot be amended or modified; members will be limited to an up-or-down vote on the recommendations.

    In conclusion, one can argue that drastic times call for drastic measures.  It is conceivable that if this process is successful in producing a bipartisan solution at reducing the deficit, it may well serve as a model for future budget deliberations.  If this sounds like a cop out, and it probably is, it’s too soon tell whether this political model will work, but keep your calendar clear on November 23, the date when the Super Committee’s recommendations are due to Congress.

  • 50% of Women in Executive Positions: A Workable Goal?

    Posted on Sep 20, 2011 by Beth Margulies

    by Beth Margulies, NECA Director, Communications

    My job at NECA is communications for both our members and the public, which has me going through different sources to see what’s working for other shops. I thought members of the NECA Women's Peer Group (and their male colleagues) would appreciate this blog post from Richard Edelman, president and CEO of Edelman, one the most successful, independent PR agencies around. Edelman recently wrote about his goal to put women in at least half of the senior positions at the company by 2016. He also mentions that he plans to pass the company on to his three daughters, something many NWPG members can relate to.

    "Our goal is simple—50% of those on Strategy Committee, Operating Committee, GCRM and practice leadership will be women by 2016," Edelman wrote in the post about GWEN, or Global Women Executive Network, the company’s internal task force  exploring how to put more women in its top jobs. "They will have earned the positions; there will not be a quota."

    Edelman acknowledges that the PR industry has no problem attracting women. Some two-thirds of his workforce is female, he writes. But the ranks of women start to thin in leadership roles.

    While he says that his company never overtly paid attention to the gender issue, Edelman seems keenly aware of the barriers to women entering the company's executive suite, including the burdens of childcare and the frustrations of being passed over for plum assignments because moms have to leave early for soccer practice.  He even cites Sheryl Sandberg's famous "Don't Leave Before You Leave" essay. Many companies talk in general terms about increasing participation of women in the senior ranks. Few executives come out and set an actual numeric goal.

    At the National Association of Women in Construction’s annual meeting in St. Louis two weeks ago, I was frantically trying to cram in all the sessions I could, while letting as many fellow attendees know about our fledgling women’s peer group here at NECA. In the midst of all this, I managed to catch one point made by speaker Tamara Vaughn:

    “It’s been said women bring different strengths than men do to an office, and we shouldn’t try to be anything other than who we are. Women tend to be more collaborative and supportive – and that’s a good thing. But until more women are actually in control of businesses, making those senior executive decisions, we are going to have to recognize that we have to utilize some of the same strategies as men do in the office. And quit apologizing for that fact.”

    Two very interesting points about women moving into senior leadership at their companies. What do you think about it? How should company CEOs and Boards start talking about getting more women to join their company’s senior ranks?

  • A New Model for Multiemployer Pensions

    Posted on Sep 06, 2011 by John M Grau

    In the union segment of the construction industry, multiemployer pension plans are the norm. In addition to covering construction workers, these plans are also commonly found in coal mining, trucking, retail trades, printing, health care and performing arts. All told, more than 10 million Americans participate in multiemployer pension plans.

    Special rules under the Pension Protection Act of 2006 apply to multiemployer plans, and they are scheduled to sunset in 2014. While that’s still over three years away, it has generated a lot of activity among policymakers and those interested in shaping the future of these plans.

    I recently attended the formation meeting of a new coalition of multiemployer pension plan stakeholders. This group, comprised of both employer plan sponsors and unions, is attempting to draft and promote legislation prior to the 2014 sunset that will fundamentally reform the multiemployer pension plan model. The one thing on which everyone in the room agreed was that the current models for multiemployer pensions aren’t working and aren’t sustainable.

    Right now, the choices for multiemployer pension are either defined benefit plans or defined contribution plans (or some variation thereof). Neither is performing very well in today’s financial environment. When interest rates are near zero, pension plan savings don’t benefit from the “miracle” of compound interest. Liabilities mount without offsetting fund increases. In defined benefit plans, the shortfall becomes a burden for contributing employers. In defined contribution plans, the participant bears that responsibility.

    If the purpose of these plans is to attract workers to and keep them in an industry, as well as to provide them with retirement security, then they are coming up short no matter which type of plan is being used. A big part of the problem is risk. A big part of the solution will be sharing responsibility for, and managing, that risk.

    That’s why we need a new model. Apparently, they exist. Multiemployer pension arrangements exist in other countries that aren’t at the same crossroads faced by U.S. plan sponsors and participants. Currently, our laws don’t allow some of these alternatives. So we may need to blow up the current system and fundamentally rewrite our multiemployer pension laws, as well as make substantial changes to ERISA, the tax code, and labor laws. That’s the task this new coalition has started down the road to accomplish.

    For those wanting a quick fix to our pension plan problems, this isn’t it.  But ultimately, this effort promises a more permanent and sustainable solution. Stay tuned.

About NECA Transmissions

NECA Transmissions is a collaborative effort from CEO John Grau and NECA staff to provide insight and feedback on key issues from the front lines of the electrical contracting industry.

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