Unions, open shops and alternative models

When Calder Ridge was founded in the 1980s, it was a small concrete forming company with a non-union crew. It became unionized in the 1990s when the carpenters' union was certified for its employees, and it has worked under the province-wide ICI agreements ever since. Its sister company, Calder Homes, has stayed non-union. Nadia Okafor is often asked by younger managers which model is better. Her answer is that each model solves the same problems in a different way, and a contractor that understands the trade-offs makes better decisions whichever model it works under. This lesson compares the main models in Canadian construction.

The problems every model must solve

Whatever the labour model, a contractor has to solve the same six problems. It must find qualified workers when it wins work and release them when the work ends. It must train new workers in a skilled trade. It must set wages that attract workers but still allow it to win bids. It must provide health benefits and retirement savings to people who may work for it for only a few months. It must handle complaints and discipline fairly. And it must keep the work moving without disputes. The models differ mainly in who solves each problem: the individual employer, a union, a joint union-employer body, or an industry association.

The building trades unions

The traditional construction unions in Canada are the building trades: craft unions such as the carpenters, labourers, electrical workers, plumbers and pipefitters, ironworkers, sheet metal workers, bricklayers, operating engineers, boilermakers, insulators, painters and others. Most are Canadian branches of international unions headquartered in the United States, and they act together through Canada's Building Trades Unions nationally and provincial building trades councils. Each union represents one trade, has its own locals covering geographic areas, and claims particular work as belonging to its members.

The building trades model is built around the trade, not the employer. A carpenter's skills, apprenticeship, pension and health coverage belong to the carpenter and move with them from contractor to contractor. Employers pay hourly contributions to trust funds run jointly by union and employer trustees, and the funds provide the benefits. The union hiring hall acts as a labour pool that any signatory contractor can draw from, which lets a contractor add forty carpenters for a six-month pour sequence and release them afterwards without the cost of recruiting and laying off its own permanent staff.

Critics point to the costs: higher hourly labour costs, rules that restrict which trade may perform which task, and less flexibility to assign one worker across several crafts. Supporters answer that the higher wage buys trained, certified and productive workers, a supply of labour on demand, and a shared investment in training that individual contractors would not make on their own.

All-employee unions and CLAC

A second union model is distinctive to Canada. The Christian Labour Association of Canada (CLAC), founded in 1952 and now one of the country's larger private-sector unions, and several independent unions represent all the trades of an employer in a single bargaining unit, often called a wall-to-wall or all-employee unit. A CLAC contractor can assign a worker to framing in the morning and to setting forms in the afternoon without a jurisdictional question, because all its trades belong to one union and one agreement. CLAC's agreements often emphasize cooperation and flexibility over strikes, and its pension and benefit plans are portable among CLAC employers.

The building trades unions have long objected to CLAC, arguing that its agreements undercut craft wages and standards, and the two have competed for members, for certifications and over access to projects such as those with community benefits agreements. Labour boards in several provinces have dealt with raids, in which one union applies to replace another as the bargaining agent during the open period near the end of an agreement.

Open shop contractors

Open shop contractors operate without any union agreement. They range from small residential builders to large general contractors, and they are especially common in residential construction and in Alberta. National and provincial associations such as Merit Canada and the Progressive Contractors Association of Canada (PCA, which includes CLAC-affiliated employers) represent their interests. Open shop employers set their own wages and benefits, recruit directly, often use multi-skilled workers across traditional trade lines, and train through college programs, provincial apprenticeship and their own in-house programs.

The open shop model gives employers flexibility and often lower hourly labour costs. Its challenges are the mirror image of the union model's strengths: recruiting quickly when a large job starts, keeping workers through the downturn so they are available for the next upturn, and funding training. Many open shop firms solve these by paying above-market wages to key workers, keeping a core crew employed year-round, and investing heavily in their own training.

Running union and non-union companies together

Calder Ridge and Calder Homes are a common Canadian arrangement: related companies, one unionized and one not. Labour boards watch these arrangements closely. Under Ontario's Labour Relations Act, the OLRB can declare two businesses a single employer, or find that one is the successor of the other, if they carry on related activities under common control or direction. A union that represents Calder Ridge's carpenters could apply to have the declaration extend its rights to Calder Homes if the two shared crews, equipment, supervision or bidding on the same kind of work. Nadia keeps the companies genuinely separate: different markets (ICI work and townhouses), separate management and payroll, separate equipment, and no transfers of workers between them.

The review is not paperwork for its own sake. A single employer finding could bind Calder Homes to the collective agreements retroactively, with large back-pay and benefit contribution claims.

Comparing the cost of a crew

The most common question about labour models is cost, and it is also the most often misunderstood. Comparing hourly wages alone ignores benefits, payroll taxes, training, productivity and turnover. Ben Morrison asked Grace to compare the cost of forming a typical floor on Elmwood under Calder Ridge's union crews and under a hypothetical open shop crew, using realistic assumptions.

# Cost of forming one Elmwood floor: union crew vs a hypothetical open shop crew (illustrative)
crews = {
    # name: (wage $/h, benefits and vacation $/h, payroll taxes and WSIB % of wage, productivity m2 per worker-hour, rework %)
    "union carpenters":     (48.50, 22.40, 0.14, 1.00, 0.03),
    "open shop carpenters": (38.00, 9.60, 0.14, 0.88, 0.06),
}
floor_area = 2400  # m2 of formwork per floor
for name, (wage, ben, tax, prod, rework) in crews.items():
    cost_per_hour = wage + ben + wage * tax
    hours = floor_area / prod * (1 + rework)
    total = cost_per_hour * hours
    print(f"{name:22s} ${cost_per_hour:6.2f}/h  {hours:6.0f} h  ${total:9,.0f}  ${total / floor_area:5.2f}/m2")

union carpenters       $ 77.69/h    2472 h  $  192,050  $80.02/m2
open shop carpenters   $ 52.92/h    2891 h  $  152,987  $63.74/m2

With these assumptions the union crew costs about 47 percent more per hour, but because it is assumed to be more productive and to need less rework, the gap per square metre is much smaller, about 26 percent. The numbers are illustrative, and the real answer depends on the market. In a tight labour market, an open shop contractor may pay close to union rates to attract workers; in a region with a strong hiring hall and apprenticeship system, the union crew's productivity advantage may be larger. The point is that the comparison must be made on the cost of the work, not the cost of the hour.

How owners and the market shape the choice

Contractors do not choose a labour model in a vacuum. In Ontario's ICI sector, many large owners and general contractors work mainly with building trades unions, and a contractor that becomes bound to a province-wide agreement stays bound for every ICI job in the area the certificate covers. Until a 2019 amendment deemed municipalities, school boards and similar public bodies to be non-construction employers, some Ontario cities that had been certified could award certain work only to union contractors. Other owners insist on an open site, where union and non-union bidders compete on equal terms. And project agreements, covered in lesson 6, can require all contractors on a project to work under one set of terms whatever their usual model.

The model also affects risk over the business cycle. In a boom, union contractors can draw on the hall while open shop contractors bid against each other for scarce workers; in a slump, open shop contractors can cut costs faster, while union contractors keep paying the agreed rates. Calder Ridge's strategy, Nadia says, is to be very good at the model it has rather than to wish it had the other one.

When a union organizes

Open shop contractors may face organizing campaigns, and the law sets strict limits on what employers and supervisors may do. Under Ontario's Labour Relations Act, an employer may not interfere with the formation of a union, discriminate against workers for union activity, or threaten, coerce or intimidate them. The same principles appear in every province. Supervisors are the people most likely to break these rules, often without meaning to.

A widely used memory aid lists four things supervisors must not do during an organizing campaign, often remembered as TIPS:

• Threaten: no suggestion that the company will close, cut hours, lose work or discipline people if they support the union.
• Interrogate: no questions about how a worker feels about the union, who has signed cards or what happened at a meeting.
• Promise: no promises of raises, better schedules or other benefits in exchange for rejecting the union.
• Spy: no watching union meetings, monitoring who talks to organizers, or creating the impression of surveillance.

Supervisors may share facts and opinions about unionization in a way that is not threatening, may continue to enforce rules consistently, and must report any campaign to management so that the company can get advice. In construction, where Ontario certification is usually based on signed membership cards, a campaign can be decided quickly, so early advice matters.

What the model means for a superintendent

Luis Ferreira has run both kinds of crew. With union crews he works closely with the steward, plans manpower requests to the hiring hall days in advance, respects trade lines when assigning work, and follows the agreement on overtime, travel and breaks to the letter, because a careless instruction becomes a grievance. With open shop crews he has more freedom to move workers between tasks, but he spends more time recruiting, training and keeping good workers, and he must make sure company policies on pay and discipline are applied consistently, because there is no grievance procedure to catch his mistakes before they reach a tribunal or court. In both cases, he says, the crews that work best are the ones that trust their supervisor.