Toyota & PLAs

Project Labor Agreements – Toyota’s Way
By Jeff Caldwell

Large-scale construction projects pose unique challenges for corporations and government entities that must adhere to maximum efficiencies and productivity. To address these challenges, many corporations and government agencies have embraced the use of Project Labor Agreements (PLA) for their construction needs.  Now, the federal government has recognized and endorsed the value of PLAs.  As the former head of construction for Toyota North America, I have had numerous real-world experiences with PLAs, and I can say without any equivocation that they are a valuable tool for any entity seeking an economical and efficient construction process.

Toyota has constructed numerous automobile, truck, and engine production facilities in the United States, with another vehicle plant currently under construction in Mississippi.  Each of these construction projects was completed, or is being completed, under a project labor agreement that ensured that our facilities were built with a steady supply of highly skilled and productive craft workers and with labor harmony.  In every instance, this process worked beautifully.  And the proof is in the results.   Toyota’s North American construction costs are roughly one-third less than other major automobile manufactures who eschew the use of project labor agreements.       

The value of a project labor agreement revolves around the fact that construction employers typically do not have a permanent workforce.  This makes it difficult for them to predict labor costs when bidding on contracts and to ensure a steady supply of labor on contracts being performed. Challenges also arise due to the fact that construction projects typically involve multiple employers at a single location. A labor dispute, or skilled manpower shortage, involving one employer can delay the entire project. A lack of coordination between and among contractors and sub-contractors, or the uncertainty about the terms and conditions of employment of various groups of workers, can create frictions and disputes in the absence of an agreed-upon resolution mechanism.

Equally important is the fact that safety input is greater on PLA projects.  Often, PLAs include language establishing labor/management committees that deal specifically with safety and health issues.  Further, an increasing number of PLAs are being used to create highly developed structures for training and recruiting young workers into careers in the skilled trades - a critical need in light of looming projected skilled manpower shortages.

Toyota’s global market success is attributable to a never-ending pursuit of improvement, a rigorous culture of kiazen. The mission of Toyota’s leaders, is to lead and support a culture that promotes the continuous change process…to change everything that blocks productivity improvements, cost reductions, better quality, safer workplaces or better customer service.

Project labor agreements are consistent with that vision.

Jeff Caldwell is the former Assistant General Manager Plant Engineering for Toyota Motor Corporation.  He is now a Senior Vice President with Graycor – a construction services corporation.