Employers deny claims of collusion, price-fixing as Seattle-area concrete strike nears fifth month

Employers deny claims of collusion, price-fixing as Seattle-area concrete strike nears fifth month

Now in its fourth month, a Seattle-area concrete delivery driver strike has had a profound impact on the price of construction projects across the region. Those costs prompted local leaders to question whether the suppliers are engaging in collusion to inflate their supply contracts.

Washington state Attorney General Bob Ferguson has confirmed with MyNorthwest that he has met with the Teamsters Local 174 with an anti-trust team. Councilmember Lisa Herbold has also asked that the city’s finance office “investigate if suppliers chosen by public works contractors are suspected of colluding in a way that drives up the costs of a public project,” the councilmember confirmed in a written statement.

“In addition to the unacceptable delays created by the concrete strike, pricing-fixing practices impact the taxpayer when they drive up the cost of a public works project, whether it’s the West Seattle Bridge or publicly funded affordable housing projects,” she added.

The strike has driven up the demand for concrete, a supply that city leaders repeatedly mention as having unique geographic considerations which affect the county and city’s abilities to source the construction material from other areas. That obstacle was the focus of King County Executive Dow Constantine’s recent announcement that supply demands have become so substantial that local leaders are considering incorporating concrete supply into the county, with independent analogies drawn that the process could resemble how some municipalities treat waste management.

With construction delayed over Teamsters’ strike, King County wants to supply its own concrete

Writing to the attorney general, Constantine alleges that the employers could be intentionally allowing the strike to continue into the spring, even as the union has made it clear that it is willing to fold certain strike lines to resume work on fundamental construction projects. The Teamsters and suppliers met once again on Wednesday, March 23, but failed to reach an agreement.

“Local 174 members have reported hearing from representatives of the companies that they are planning to force members to strike into the spring, which will cause members’ healthcare coverage to lapse. Such an event would likely increase the companies’ power at the bargaining table,” Constantine writes.

The union claims that despite the Teamsters’ offer to return to work at Cadman Seattle, Lehigh Cement, and Salmon Bay Sand & Gravel to resume key infrastructure projects, only four of a potential 31 Cadman workers have actually been on the job as of Tuesday. The companies previously stated that they required five days to process the partial return-to-work offer after the Teamsters’ Monday announcement.

Delayed construction projects

While price fluctuation among the concrete supply is subject to a number of variables that go beyond the direct impact of the strike, there has been demonstrable inflation in the price of construction projects in the Seattle area in recent weeks and months.

An internal memo obtained by MyNorthwest among Community Roots Housing’s (CRH) board of directors — a low-income housing group that sponsors the Yesler Family, Pride Place, and Heartwood projects — explicitly calls out the impact that the concrete supply has had on their construction.

The group claims that “the financial cost to CRH projects is significant.” Among the three housing projects, costs are “projected to increase at approximately $850,000 per month. Total cost to the projects through July is projected at $7.58 million.”

The memo goes on to detail construction costs suffered by 10 additional affordable housing projects, comprising 1,948 units in total.

“If the delays continue through June or July as projected, then the total financial cost to these affordable housing projects is likely to be at least $30 million,” the group states.

Those cost inflations prompted the group to request that the mayor broker a deal between the region’s affordable housing projects and labor to initiate “a collaborative conversation with the union about purchasing concrete from outside of King County,” citing “a moral obligation to the low-income and vulnerable populations we serve to find a way to resume our work immediately.”

While the financial cost’s relationship to the concrete strike is attributed to multiple variables, the price of concrete in the region is undeniably higher than when the strike began industry-wide Dec. 3, 2021.

Concrete prices rise

A shop steward for Cadman Seattle and Teamsters Local 174 representative tells MyNorthwest that the price of concrete had risen three-fold in recent months, noting that per-yard concrete can currently be priced as high as $500 after its sold directly to developers. Concrete order receipts from third-party contractors indicate their price ranges between $350 and $360 per cubic yard. The shop steward claims that the recent average price was closer to $120.

“As concrete is sold to contractors via sales contracts whereby a concrete manufacturer provides a per yard quote for specific jobs and then a contractor accepts the quote by signing, it is believed that those contracts may allow manufacturers to increase their price quotes based on significant changes to the union contract,” Constantine’s correspondence with Ferguson reads. “This would create an opportunity for the companies to invalidate their prior quotes to contractors.”

Leon Johnson, president of Greater Seattle Concrete, a contractor that works most often with CalPortland (Glacier), disputes the idea that their contracts with suppliers have changed over the course of the strike. According to Johnson, the demand for third-party haulers is what’s responsible for the 250% to 300% increase in price for the building material.

“The owners have been absorbing most of these costs. We have a pour today, it’s 100 yards. … For 100 yards today, we’re paying $20,000 over the contract, and I’m absorbing $10,000 of the $20,000 in the general contract. That’s the reality,” Johnson tells MyNorthwest.

“I’m only paying $96 to $200 a yard. But when I bring a third-party driver in, it’s between $290 yard to $358 — it’s all third party,” he added. “I know people are bringing in trucks from Centralia because the demand is there. These developers, they got all these projects … sitting there for three months, ready to go. That’s what is costing the [developers] a bunch of money.”

Complicating the situation is that some number of suppliers lease their own trucks and have direction with whom they contract to drive their concrete. Employees with the suppliers claim that Glacier, Stoneway, and Cadman lease some or all of their concrete delivery trucks. The Teamsters report the suppliers as having a fluid relationship with contractors.

In response to the collusion allegation mentioned by Herbold, a spokesperson for Glacier Northwest writes to MyNorthwest that the company is entitled to joint bargaining.

“The basis of any ‘collusion’ allegation or the initiation of any inquiry or request for an investigation is a specious, politically motivated one, and is being driven by certain partisan parties seeking to abuse the legal process for the purpose of gaining leverage in a labor relations dispute,” the statement continues.

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This content was originally published here.

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