Apprenticeship Utilization Ordinance

December 15th, 2014

Issue: Qualified Worker Shortage• Average Age of Construction Worker: 41 (Bureau of Labor Statistics)

• Shortage of 4.7 Million Workers with Certificates in 2018 (Georgetown University) •80% of Association of General Contractor (AGC) membership reports having trouble finding craft worker positions. (2014 Workforce Development Survey)

82% of local Association of General Contractor membership believes craft workers in local area is insufficient to meet

construction demand in next 12 months

Major Upcoming Publicly Funded Programs

• Street Levy Projects• Riverfront Park Master Plan

Implementation• Integrated Clean Water Plan

Implementation

One Potential Workforce Shortage Solution: Apprenticeships

• Combination of classroom instruction and on-the-job training

• State-approved programs allow workers to earn certificates & journey-level status = higher wages & nationwide mobility.

• Spokane Community College partners with 19 different state-approved craft programs.

• Empower local workers to start the next Garco, Max J Kuney Construction, Shamrock Paving, Inland Asphalt Company etc.

Apprenticeship: Jobs & Prosperity

• 90 to 1 Return on Investment Ratio (total net benefit of $300,000+)

• 23 to 1 Taxpayer Return on Investment Ratio (total benefit of $80,000)

• Apprenticeship completers earned median earnings of $64,000 according to Washington Employment Security Department

Proposed Ordinance: Apprenticeship Utilization Requirement on

Public Works Projects

Apprenticeship UtilizationYear 2015: 5% on $350,000 &

above projects

Year 2016: 10% on $350,000 & above projects

Year 2017: 15% on $350,000 & above projects

• Can be waived by Utilities Director

• Penalties associated for non-compliance/breach of contract

• Waiver decision appealable to Hearing Examiner

• 10% goal of Veteran apprentice utilization.

Other Cities & Organizations with Apprenticeship Utilization Requirements

• WSDOT• Eastern Washington

University• Spokane Public Schools• Edmonds Washington• Seattle Washington• Vancouver Washington• Shoreline Washington

• King County• Snohomish County• Port of Seattle• Sound Transit

Fiscal Impact to City of Spokane• A general compliance officer was added to the 2015

Budget. This position will assist in implementation of this law. The Compliance Officer will also be used by the Administration on other issues such as enforcing Responsible Bidder laws.

• Apprenticeship programs have been determined by the State Office of Financial Management to have no fiscal impact. (HB 1023/SB 5393)

• PFD utilized apprentices on their bond project and met the public’s expectations on budget.

Original Staff Concerns

• Requested longer time for implementation (Recommendation accepted – 6 month delay in going into effect)

• Concerned about lack of apprentices (Recommendation accepted – phased in utilization % requirement)

Original AGC Recommendations

• Should not apply to smaller subcontractor who may have small crew. (Recommendation Accepted)

• Raise $$ Threshold (Recommendation Accepted – Increased $150,000 )

• AGC contends there is not enough apprentices to hit the 15% initially. (Recommendation Accepted – phased in % utilization requirement)

Claim: “there’s not enough apprentices right now to meet the % utlitization requirements”

Local Apprenticeship Availability• 60 Construction Equipment Operators (Western

States)• 24 Construction Equipment Operators (Construction

Industry Training Council)• 40 Construction Equipment Operators (Inland

Northwest AGC)• 65 Electrical Workers (IBEW Local 73)• 145 Iron Workers (Iron Workers Local 14)• 13 Cement Masons (Cement Masons Local 72)• 40 Plumbers/Pipefitters (UA Local 44)

Local Apprenticeship Availability Continued…

• 100 Laborers (NW Laborers Apprenticeship Committee)

• 26 Painters (Eastern Wash./Northern Idaho Painters & Allied Trades)

• 17 Boilermakers (Boilermakers Local 242)• 60 Sheet Metal Workers (Northeast

Wash./Northern Idaho Sheet Metal Apprenticeship Committee)

Claim: “This additional regulation will make it harder for contractors bidding on city projects”

In reality, companies have been required to abide by utilization requirements such as other city or state

apprenticeship programs or disadvantaged business enterprises or be found disqualified to bid on City of

Spokane projects since 2011. Spokane Municipal Code 07.06.520 B(5)“Supplemental Responsibility Criteria”

Claim: “this ordinance won’t create any jobs”

The point of this ordinance is not to create jobs, but to create educational opportunities for apprentices – the craft workforce of the future.

It will create the skills and experience necessary for a person to compete in a competitive job market globally or right here in Spokane.

Claim: “this ordinance will displace current workers”

The intent of this ordinance is to not displace workers. The intent is for apprentices to compliment a work crew.

Apprenticeship utilization is about building a future workforce by embedding new workers with experienced workers. Both must be present on the job for the program to work.

Claim: “this ordinance will drive up bids on projects to account for the penalties”The State of Washington requires cities to award

projects to the lowest responsive bidder. 2014 Engineering Service Public Works bids have

come in on average 19% under City Engineering estimate.

With the reduction in labor costs by using apprentices, we anticipate bids will continue to come in below City Engineering Estimate.

Claim: “this ordinance requires companies to use union programs”

1. Businesses can start their own apprenticeship program through Labor & Industries.

2. Businesses are not required to sign any labor agreement to participate in a union state-approved apprentice program.

3. There are approximately 300 sponsored programs across the state – union and non-union programs that any business can utilize.

Examples: Northwest Laborers Apprentice Committee (union), Inland Northwest AGC Operators AC (non-union)

Claim: “Apprentices often quit their program before they complete it”

This is true. “Because apprenticeship programs can last many years, a significant number of people do not reach the finish line. However, even those who exit early still show wage gains from the skills they acquired.”

2015 Workforce Training Results - Washington State Workforce Training and Education Coordinating Board

Claim: “companies from Portland & Seattle will come in and take work from local contractors –

reduces competition”

Any company who wins a bid on a public works contract over $350,000 will be required to use the apprentices. This includes any contractor in the United States. The apprenticeship requirement is applied equitably.

2014

Public Works $ to Spokane County Companies: $1,126,616

Public Works $ to Companies Outside City of Spokane: $15,439,805

Projects over $350,000 - 2014• Silo Digester at Riverside Park - $11.3 million (IMCO

General Contractors Inc, Ferndale Washington)• 8th Ave/Chandler St. Transmission Main Reroute -

$887,816 (Halme Construction, Davenport Washington)

• Francis, Division to East City Limits I.T.S. - $648,366 (Arc Electric & Lighting Corporation, Spokane Washington)

• City-wide Heat Applied Thermoplastic Pedestrian Crosswalk Markings - $394,796 (Hicks Striping & Curbing Inc, Brooks Oregon)

Projects over $350,000 – 2014 cont.• 2014 Residential Chip Seal Projects - $496,669 (Poe

Asphalt Paving, Inc, Post Falls Idaho)• 9th Ave/Pine Street Reservoir Repainting - $1.88

million (HCI Industrial & Marine Coatings, Inc, Vancouver Washington)

• Lincoln Heights Reservoir Relining - $480,524 (Layfield Environmental Systems Corporation., El Cajon California)

• Fish Lake Trail from UPRR Junction to Scribner Rd. - $478,250 (Spokane Rock Products., Spokane Valley Washington)

Apprentices/workers have as much right to seek a wage and work experience on a City project, as a Contractor does to bid on the project, perform the contract and reap a

profit. 1. The City buys construction services based on

contracting best practices. 2. We update these best practices to reflect new

information, market adjustments, or to emphasis an important best-value contracting principle.

3. Apprenticeship is considered a significant part of best-value contracting.