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

  • Feeling Better?

    Posted on Dec 23, 2010 by John M Grau

    It’s year’s end, and I’m reading a lot of financial and economic reports. They tell us how we did in 2010 and make predictions about what 2011 will be like.

    The consensus is that, economically, the worst is over, and we are recovering. But it is a very slow recovery.

    It all sounds to me like how we characterize being sick with a bad cold or the flu.

    First, we had the warning signs in 2008. We partied a little too hard, picked up some inflated asset germs, and then — wham! — we feel it in the gut. Next thing we know, it’s 2009, we’re fevered, anxious, lying in bed, and believing death might be a viable option.

    We stayed in bed into 2010. We took our medicine, we were cautious about what we ate, and things started to turn around. Now, we’re on the mend, but not completely well. We want to feel better more quickly, so overall we’re a bit cranky.

    As far as economic recovery goes, we’re in the cranky phase. So watch out. The November elections are evidence of what we do when we’re cranky.

    It’s going to improve. My prediction is, we’ll still be pretty cranky in the first part of 2011. Later we’ll just be annoyed, and by the end of the year we’ll definitely be feeling better. We’ll probably even be appreciative of the weight we lost while sick.

    2012 might be time to start partying again. But we won’t stay out too late.

  • Health Care Reform: Prognosis Undetermined

    Posted on Jun 12, 2009 by John M Grau

    I can't decide how I feel about health care reform. It's now near the top of the legislative agenda and lots of proposals and ideas are being floated by the House and Senate committees working on a bill.

    Almost every American has a stake in the outcome. The health care industry is a huge segment of our economy. We all use health care services and most of us are covered by some type of insurance. We almost all agree that there's something wrong with our current system. But we’re also afraid to change it.

    Both sides of the reform debate seem to agree that there should be some form of mandatory coverage. Under our current system, those who have insurance end up paying more for coverage to subsidize services for those who don't. If everyone were required to have health care insurance, the overall cost should even out and insurers should be able to guarantee coverage even for people with pre-existing conditions.

    The idea of allowing individuals to select coverage from a number of competitive plans also appeals to me. I understand how the concept of employer-provided health insurance got started, but is it really the best way? Why should the employer be responsible for health care, and why should an individual be restricted to the type of coverage provided by his or her employer?

    Every individual has different health insurance needs - just like we do for auto or life insurance. If we had guaranteed access to coverage, we could pick the type of coverage that best suits our individual or family needs.

    Now comes the harder decisions.

    Should there be a public option among the competing insurance plans? In other words, should the federal government offer an alternative to private insurance? Would the government plan eventually force the private plans out of business so that we would be left with only government-controlled health insurance?

    An even bigger question is how do we pay for all this? Some ideas include taxing the individual for coverage beyond a certain amount and/or limiting the deductibility of insurance premiums paid by the employer. I know the unions aren't too happy about this idea, since most unions plans offer top-tier coverage. From an employer's point of view, wouldn't that create some incentive to control the cost of health coverage in our labor agreements?

    I like the fact that the United States has the best and most innovative health care system. I like the fact that we have free access to the doctors and hospitals of our choosing and that we don't have to wait months for elective care. I hate the bureaucratic morass of insurance claims statements, bloated costs, unnecessary tests, waste and fraud.

    So what do I want from health care reform? Something better, but exactly what, I can't tell you.

  • 'Tis the Season

    Posted on Nov 21, 2008 by John M Grau

    No. not that season. At least not quite yet.

    It’s the season for 2009 construction economic forecasts. The reports are coming across my desk, and they don’t paint a pretty picture.

    I mainly rely on the annual forecast produced by McGraw-Hill Construction. Other groups that try to crystal ball the construction economy are the U.S. Dept of Commerce, the Homebuilders association, the General Contractors, the Architects and the Portland Cement Association.

    I look most closely at the forecasts for non-residential markets because that’s where the bulk of NECA members earn their bread and butter. Those markets had been doing well the last few years — until now. Overall, non-residential building is predicted to decline by about 10 percent next year.

    The biggest decreases are predicted for office buildings, hotels, retail stores and manufacturing facilities. The more stable markets are power, transportation, and health care and educational buildings.

    One ominous note in all these forecasts is that they present a best-case scenario. In other words, they assume that the government efforts to unfreeze credit markets and stimulate the economy will work. It they don’t, all bets are off.

    An economist at a recent meeting of the Construction Users Roundtable predicts that after the current downturn runs its course, there will be a steep increase in construction and that workforce shortages will be greater than ever. That’s a warning to us that we can’t stop hiring and training apprentices even in a down economy.

    So my read on all this is that contractors will be burning through their backlog in 2009. The last half of next year and a good part of 2010 may be tough times. Bidding for projects will come back in 2010, with construction starts rebounding sharply in 2011.

    This all presumes, of course, that you believe economists know what they’re talking about.

  • Not Going to be a Statistical Victim

    Posted on Jun 02, 2008 by John M Grau

    The other day I was glancing at a magazine published by a non-union electrical contractors group. In an opening editorial by the group’s president, I came across a line claiming the group represented contractors performing “86% of private sector construction work in the U.S.” That caused me to sit bolt upright in my chair, ready to fight.

    Non-union groups are good at throwing around exaggerated statistics that go unchallenged most of the time. Our recent market analysis shows that union electrical contractors perform around one-third of all electrical work in the country. Our own data aside, it’s pretty ballsy for an association of only about 1,800 members nationwide to claim that they represent all non-union electrical contractors. I also noted the clever phrasing referencing “private sector” versus “all” electrical construction work.

    Then I sat back, took at deep breath, and started thinking about what I was doing. I was reminded of a CIR presentation I witnessed where the management representative stated in his oral argument that union electrical contractors in his area had a 12 percent market share. In rebuttal, the union business agent called the chapter manager a liar, because he had a study showing that they had a 15 percent market share. 

    Maybe the spread between 14 percent and 33 percent is a little bigger than the difference between 12 and 15 percent, but is the distinction any different?  What kind of bragging rights does a 33 percent market share actually earn us? 

    The bigger danger in trying to justify a low market share is that we accept viewing ourselves in a permanent minority position. If 33 percent is okay, then falling to 25 percent isn’t all that bad. 

    In my mind, if we don’t really think we can control a majority of the market, then we never will.

    I remember when I first became CEO of NECA the publisher of our magazine, ELECTRICAL CONTRACTOR, told me that in terms of display advertising revenue, we had a 20 percent market share. He explained that our major competitors at the time, EC&M and CEE, were owned by McGraw-Hill and could draw on their vast resources to outdo us every time. He said that give or take a percentage point or two, 20 percent of the advertising market was the best we could ever expect. 

    When that publisher retired, I replaced him with a young fellow with lots of new ideas who didn’t accept limitations on what he could achieve. Within a couple years, he had our market share up to 50 percent. Today we have the top magazine in the field with market share in the 70-80 percent range.

    The lesson here is that we shouldn’t waste our time quibbling about statistics or trying to justify a poor position. If we don’t perform a majority of the work in a market area, then we’ve lost. Period. Our goals should be ambitious and our effort should match it. Let’s chose to be the victor, not a victim.

  • Health Care is Front and Center, Not on the Fringe

    Posted on Feb 08, 2008 by John M Grau

    Last week, NECA and the IBEW held their annual employee benefits conference. I couldn’t be there this year, but several NECA contractors and staff made the trip.

    I remember in the late 1980s suggesting to then-IBEW Secretary Jack Moore that NECA and the IBEW jointly sponsor a conference dedicated to employee benefit issues. The management of local health and pension plans is a serious responsibility that consumes a large chunk of our plan trustees’ time. We needed a forum for sharing ideas and conveying the latest information on rules, regulations and plan management.

    While the annual IBEW-NECA benefits conference has served some of that purpose, I think we can do better. Attendees have rightly criticized the conference program for promoting joint IBEW-NECA programs and sponsors too much. A number of NECA plan trustees have requested a conference of our own, in order to focus on current and emerging issues relevant to electrical construction industry plans. We’re planning such a meeting for years alternating with the NECA Labor Relations Conference – in other words, next year.

    I think we all recognize that fringe benefits aren’t so “fringe” anymore. They’re a big part of our labor costs and a major factor in our struggle to complete with non-union costs. It doesn’t mean, however, that these benefit plans have to be an albatross hung around our necks. Properly structured and managed, our fringe benefit programs can be part of our competitive advantage. 

    Health and pension plans can serve as a key component in attracting and retaining a qualified workforce. Most surveys I’ve seen show that most non-union electrical contractors offer some amount of health care coverage for their employees, though it usually isn’t the same high level of coverage offered by union employers.

    And this is where we have an opportunity to be more flexible. The marketplace for employer-provided health insurance has changed dramatically in the last few years. Some of our plans are now offering tiered levels of coverage at varying costs. Some no longer pick up the whole premium for family coverage.

    If a plan’s benefit level is structured correctly, then the advantages of a jointly managed healthcare trust come into play. Group-buying through the trust arrangement saves employers significantly, especially compared with individual-buyer options. And since the union is a part of the healthcare trust management, we find that the employees, through their representatives, are as interested in cost efficiencies as we are. 

    If you’ve recently heard about U.S. auto companies turning over the responsibilities for their healthcare and pension plans to the unions, they’re basically trying to achieve this same level of shared responsibility. Rather than making direct contributions to the plan, the company puts a big chunk of cash into a trust fund that the union would manage. And instead of just bargaining for benefits and leaving the cost up to the employer, the unions would have a stake in efficiently managing the trust – and their own benefits. The auto industry may just now be figuring this out, but we’ve had it in the construction industry for years.

    Suffice it to say that fringe benefits and their impact on our industry are at the top of our agenda at NECA. Our objective is to turn what many see as a problem into an opportunity.  It’s not an easy task to accomplish, but it is a vital one well worth pursuing.

    As always, your thoughts and suggestions on this subject are encouraged.


  • 2008 Budget is More Than Numbers

    Posted on Jan 18, 2008 by John M Grau

    Mike Thompson and I may be the only people at NECA who get excited about our annual budget. I find that the process of creating the budget is one of the best methods for me to keep my finger on the pulse of what’s going on at this large and complex organization and to steer its overall direction.

    The 2008 NECA Executive Committee held their first meeting of the year last week. This meeting is traditionally devoted to approving the annual budget and plan of operations for the association.

    Our budget presentation to the committee is detailed and well-organized. A number of years ago, one of the District Vice Presidents commented that it really is more of a plan of operations than a budget, so that’s what we’ve called it that ever since. 

    We have an active agenda planned for 2008, including more progress on what the committee has labeled “The NECA Agenda 2007-2008.” Labor relations is a big part of the Agenda. As I’m writing this, a trial session of our new labor relations workshop series is taking place. We’re adding content to our online labor agreement and wages database every day, and our field staff is working hard to provide all the local labor relations assistance that’s requested from our chapters and members. 

    Workforce development is focused on apprentice recruiting and expansion of the CW/CE classification. A seminar to help members effectively use CW/CE is in the works. And since we know workforce development means bringing new managers into the industry,   the ELECTRI International “Talent Initiative” will expand our recruitment efforts to colleges and universities.

    We’re also continuing to work on the communications, business development and membership development priorities described in NECA Agenda. On this front, District 3 Vice President Frank Russell has agreed to explore the creation of a mentoring program for NECA members.

    A new issue raised by Executive Committee members at the meeting was NECA’s support for our contractors’ safety needs. We have decided to hire a full-time safety director to improve our current safety programs and assist members and chapters to meet this need.

    All told, NECA will be investing $30 million in programs and activities in 2008. Of course, it’s not how much we spend that counts, but what we do with it. Our plan of operations is ambitious. We’re going to do some big things, and we’re expecting big results. That’s why I find this whole budget process so exciting. It’s not just numbers. It’s our future.

  • Visiting Chapters Without the Air Miles

    Posted on Jan 10, 2008 by John M Grau

    I remember hearing a story about how one of my predecessors, Lawrence Davis, took an extended trip by railroad in the 1930’s to some of NECA’s west coast chapters. It was a major excursion, and it took him three or four weeks to visit a half-dozen chapters. I don’t know if he ever did it again, but if he did, it wasn’t until several years later.

    Today, I’m able to travel to dozens of meetings across the country and around the world. I spend hours, not days, getting to where I’m going, and I rack up nearly 100,000 air miles every year in the process. However, I’m only able to personally visit a handful of chapters. The travel logistics may be easier today than they were in the 1930’s, but conflicts and time constraints make it impossible for me to make a personal visit to each of our 120 chapters, let alone meet several thousand NECA members.

    But just as technology helped us overcome the time and distance barriers to travel, it’s helped us stay in touch. Over the past few months, we have been conducting an experiment in communications. NECA President Milner Irvin and I have had telephone conference calls with several different NECA chapters’ boards of directors. The idea is to use technology to approximate an experience we can’t do physically. (Ideally, we would visit each chapter for an extended face-to-face discussion about industry issues and their local concerns.)

    In 2007, we held 25 chapter board conference calls. The results have been very encouraging.

    During the typical 45-minute conference, we take some time to let the local chapter learn about the work we’re doing on the national level. The chapter then tells us about their key issues and projects. We leave plenty of time for questions, comments, and open discussion. Most of all, we listen.

    Both Milner and I agree that we’ve learned a lot from these sessions. While there is much in common between members and chapters across the U.S., there are also significant differences. Most often, those differences can be seen in the priorities each chapter places on various issues. For some, open portability of manpower is crucial; for others, it is less so. 

    The kind of relationship the chapter has with their local union leadership is another key factor. If the relationship is good, then the chapter leaders are optimistic about the future of the industry. If the relationship is poor, then almost any solution seems unattainable.

    Our “listening tour” continues this year with a goal of eventually meeting with every chapter board who wants a dialogue with us. 

    I keep thinking back to Larry Davis’s chapter tour in the 1930’s. Without a cell phone and emails on a PDA, what do you suppose he did on the train all day?

  • Q&A on Code of Excellence

    Posted on Jul 12, 2007 by John M Grau

    NECA member Jerry Hayes of United Electric in Atlanta sent a question in response to my recent post “Executive Committee Meeting Recap.” In that post, I said that the committee had taken action to make the Code of Excellence Category I language. Jerry responded with his perspective on what including the Code of Excellence in Category I language would mean. His message clearly expressed similar thoughts I’d heard from other folks, so I was glad that he graciously agreed to let me post both his question and my response to him on NECA Transmissions.

    Feel free to keep the conversation going by sending your comments through the Feedback link below.

    “To me, it looks like the 'Code of Excellence' is another article in the agreements that says labor will do what they are supposed to do. Aren’t we giving trouble-makers a list of things to use as excuses that they could not perform? What do we hope to get by having this a Category 1 language? I am doing this in my shop, but only with my supervision. That is where it counts.”

     - Jerry Hayes

    Jerry raises a good point about the Code of Excellence becoming Category I language. Just because something is good in one area doesn't mean it's good for everyone. In this case, however, I have trouble seeing a downside.

    First, for clarification, the Category I language we're suggesting would be enabling language that would state that each area should develop and adopt its own Code of Excellence with some minimum guidelines.

    Therefore, what's contained in the jointly agreed-to Code and how it is enforced should be customized for each area.

    Second, the Code of Excellence is not just for labor. It establishes obligations for employers, employees, NECA chapters, and IBEW locals.

    And you're right in that it really only says that everybody will do what they already are supposed to do under the local labor agreement. Asking labor to give eight hours work for eight hours pay isn't a novel concept. Neither is suggesting that it's the contractor's obligation to see that the job has proper tools and materials.

    What is important is that both parties to the labor agreement all state in writing that they intend to live up to the spirit as well as the letter of the agreement. Instead of giving trouble-makers a list of excuses, the Code of Excellence takes those excuses away. We can clearly see changes in areas where both parties have embraced the Code and made it their own; they have experienced a dramatic improvement in the quality and attitude of workers. 

    Basically, it’s all about attitude. Poor worker attitudes and the resulting poor productivity is the number one complaint I hear from our member contractors and construction users. Based on what I’ve seen, the Code of Excellence offers a good way out of this destructive cycle. This leads me to the reason for adopting the Code of Excellence across our industry by means of Category I language.

    If we're serious about reforming our industry, we need to make some broad-based changes. Attitudes can be contagious. As they spread and are adopted by others, they form an industry’s culture. We want our industry’s culture to be positive, productive, and customer-oriented – not negative, self-centered, and doing the bare minimum.

    The construction user community is aware of the Code of Excellence, and they view it as one of the most positive changes in the union construction industry recently. Many are demanding that all of the union trades working on their jobs adopt a Code of Excellence similar to the one we’ve pioneered here. Our plan is to be out in front of the pack. We want to be able to tell our customers that our whole industry works under the Code of Excellence, no matter how large or small the job is. I see only good things about being able to do that.

  • Hard-Won Changes

    Posted on Apr 03, 2007 by John M Grau

    Two weeks ago, I sat in the front row at the annual IBEW Construction Conference next to my old colleague, Jack Moore, Secretary Emeritus of the IBEW. Jack is looking good and feeling good. We both commented that we miss the day-to-day interaction we shared as co-trustees of the NEBF before he retired in 1997. 

    The current national officers of the IBEW were there as well, along with business managers from construction locals across the country. As I sat between my former and current colleagues, I realized just how much has changed about the conference during the years that I’ve been attending.

    In the past, much of the conference was dedicated to national politics. Speaker after speaker would rail against big business and anti-union forces. A word or two was said about the need to organize, but there was hardly a mention of NECA or signatory employers.

    Today, the focus has completely shifted. In fact, you might think you were at a joint NECA-IBEW conference. Speakers now urge the local union leaders to work cooperatively with NECA and NECA contractors to recover and build markets. You’re more likely to hear about increasing market share, improving worker attitudes, and delivering customer service than the same-old bashing of White House. 

    IBEW International President Ed Hill used his keynote to promote the benefits of using the new CW/CE classifications to organize non-union workers, make contractors more competitive, and alleviate worker shortages. He hammered home the need to provide a full day's work for a full day's pay. Ed even said it’s time to adopt the Code of Excellence nationally, perhaps as Category I language.

    Hard-won changes like this – an openness to new ideas and an appreciation for NECA contractors – means that our message is getting through.  It means that Ed understands what we’ve been saying about the competitive challenges our contractors are facing and what we need to do about them.

    These changing perspectives at the IBEW are good news for NECA contractors, too. Let’s hope that the local union leaders were listening.

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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