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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy all the way.

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Speaker 2: So Tracy, everyone just like very into affordability these days

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Speaker 2: in the cost of living and all that stuff. But

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Speaker 2: I think, you know, there's all kinds of things you

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Speaker 2: can do and whatever, but it seems like one fundamental thing,

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Speaker 2: which is probably true, is whatever we're talking about, whether

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Speaker 2: it's building infrastructure for public transportation, whether it's building offices,

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Speaker 2: whether it's building houses, Like, there's various costs involved, but

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Speaker 2: one is like just the cost of construction. And if

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Speaker 2: the cost of construction is very high, it's hard to

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Speaker 2: imagine affordability improving much on anything, right.

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Speaker 3: So, yes, absolutely, I can't really that point, But it

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Speaker 3: does seem like construction is this like one area where

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Speaker 3: so many different things come into play. So you have

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Speaker 3: the cost of basic materials, which have gone up, especially

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Speaker 3: since the pandemic. You have the cost of labor, which

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Speaker 3: has also gone up since the pandemic. You have the

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Speaker 3: cost of insurance, which has also gone up since the pandemic.

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Speaker 3: You have regulations which we've done many many episodes about

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Speaker 3: the added costs from the permitting process for various things.

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Speaker 3: It just seems like it's this bucket where you can

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Speaker 3: throw all these different factors in and then get this

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Speaker 3: kind of like reinforces itself and just makes it even

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Speaker 3: more expensive.

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Speaker 4: Yeah, totally.

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Speaker 2: And then you know you sort of hit it with

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Speaker 2: the insurance, but also just like cost of financing, right

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Speaker 2: because like as interest rates go high.

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Speaker 3: The yeah, I forgot financing that too. It's a big bucket.

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Speaker 4: It's a big bucket.

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Speaker 2: And like we know that construction is an area across

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Speaker 2: the economy, not just in New York City where we

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Speaker 2: talked about it. With residential housing, there's been a lot

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Speaker 2: of productivity growth, right, Yeah, like there's.

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Speaker 3: Been like no productivity growth according to at least one

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Speaker 3: paper I read. I think it was a Richmond fed

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Speaker 3: I will have to go back and check. But it's

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Speaker 3: a really unusual industry in the sense that you haven't

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Speaker 3: actually seen you know, we don't have robots building houses yet.

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Speaker 2: We don't have robots building houses yet, So I don't know,

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Speaker 2: you know, I think we need to learn more. You know,

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Speaker 2: sometimes you see these viral statistics like oh, the MTA

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Speaker 2: spent sixty million dollars on building an elevator, or cost

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Speaker 2: three million.

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Speaker 3: Dollars to build seven million installing those plastic fins on

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Speaker 3: the subway turnstiles. I'm not even sure that qualifies as construction,

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Speaker 3: but seven million.

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Speaker 2: Millions to build a bathroom, which is not fun if

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Speaker 2: like you have little kids, all kinds of things. Anyway,

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Speaker 2: we should do more about wide costs a lot to

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Speaker 2: build and maybe whether there's something that can be done

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Speaker 2: about it.

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Speaker 3: Absolutely, let's do it. Well.

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Speaker 2: I'm very excited to say we really do have two

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Speaker 2: perfect guests.

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Speaker 4: Today.

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Speaker 2: We're going to be talking about the high cost of construction,

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Speaker 2: more infrastructure and stuff like that. In New York City.

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Speaker 2: We're going to be speaking with Elizabeth Crowley. She's the

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Speaker 2: president and CEO of the Building Trades Employers Association, also

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Speaker 2: known as BTA, as well as Michael Capasso. He is

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Speaker 2: a president and CEO of CAC Industries, Inc. So Elizabeth

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Speaker 2: and Michael, thank you so much for coming on od lots,

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Speaker 2: thank you for having us.

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Speaker 5: Yeah, thank you, Joan Tracy. We are grateful for the

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Speaker 5: opportunity to talk today. I represent over twelve hundred contractors

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Speaker 5: in the BTA who are building our skyscrapers, our subways,

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Speaker 5: building commercial buildings, hospitals, schools, about sixty five billion dollars

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Speaker 5: worth of work annually.

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Speaker 2: And wants to tell us about sac industries. What's your background?

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Speaker 6: Michaelac's Public Works heavy highway contractor based in New York

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Speaker 6: City and Queens. We work for the public agencies, Port

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Speaker 6: Authority of New York, Department of Design and Construction, Department

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Speaker 6: of Environmental Protection, MTA mays Battery Park City.

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Speaker 3: Did you see the highline as well? Yes, that's amazing, amazing.

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Speaker 3: Do you know that I do some research before I

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Speaker 3: come on this podcast. I know a lot of people

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Speaker 3: don't think so, but you know a little bit. Okay,

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Speaker 3: let me ask the first question. Let's just get it

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Speaker 3: out of the way. But your organization represents unionized workers,

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Speaker 3: and I think your company is also unionized workers. A

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Speaker 3: lot of people are going to hear a high cost

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Speaker 3: of construction and NYC and immediately go to the union factor.

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Speaker 3: What is your response to that.

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Speaker 5: Well, our members are employers, so they're really businesses. We're

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Speaker 5: a business association and our members are employing over one

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Speaker 5: hundred thousand workers and we're proud that we're union contractors.

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Speaker 5: You know, we're the good guys, and there are a

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Speaker 5: lot of non union contractors out there that are racing

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Speaker 5: to the bottom. We're paying for benefits and wages, and

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Speaker 5: that's just part of the cost of construction. And really

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Speaker 5: what we're looking at doing is reforming costs that are

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Speaker 5: more controllable, you know, the costs, the hidden costs that

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Speaker 5: go into construction, such as construction insurance.

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Speaker 2: Definitely want to talk about construction insurance and all this stuff,

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Speaker 2: But again just on this point of like how much

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Speaker 2: is quote hidden costs versus how much is just labor.

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Speaker 2: Maybe Michael, you could like sort of break down or

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Speaker 2: either one of you breakdown how we should think about, like,

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Speaker 2: in a given project, when people see these big numbers,

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Speaker 2: how much should people think about the labor components specifically

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Speaker 2: versus measuring these these other costs.

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Speaker 6: Yeah, I mean, I would say typically labor ranges thirty

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Speaker 6: to thirty five percent of the total construction cost. But

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Speaker 6: getting back to your original statements about union and sometimes

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Speaker 6: people think that raises the cost of construction, I would

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Speaker 6: actually take the counter argument to that. All the public

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Speaker 6: works contracts in New York and the utility contracts are

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Speaker 6: subject to the city or the state prevailing wage laws,

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Speaker 6: which the union's rates are in line with Labor Law

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Speaker 6: two twenty, which are in the city contracts. Those the

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Speaker 6: wages and benefits you have to pay the employee. So

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Speaker 6: it's not the union wages that are costing too much money.

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Speaker 6: They're in line with all the rules and regulations of

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Speaker 6: the city and state. When we think about union wages

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Speaker 6: and why maybe there's this misconception. Yes, compared to people

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Speaker 6: that are not paying union wages, these people are paying good,

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Speaker 6: honest wages and benefits for the work they put in

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Speaker 6: during the day. There are people cut corners who don't

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Speaker 6: pay that fair market rate, which is where that kind

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Speaker 6: of concept comes from.

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Speaker 5: And look, there's a lot of cost to the delays.

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Speaker 5: And when we look at yeah, when we look at

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Speaker 5: our government leaders. Now we have a new mayor in

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Speaker 5: the City of New York who believes that we should

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Speaker 5: pay baristas forty dollars an Now, so when Mike talks

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Speaker 5: about the cost of union labor, it's not much more

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Speaker 5: an hourly rate. And these are inherently dangerous jobs. But

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Speaker 5: we have a mayor that wants to build more abundantly,

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Speaker 5: wants to cut the time it takes to build. So

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Speaker 5: the land use process from two years down to under

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Speaker 5: six months, and we support that, and the stars are

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Speaker 5: aligning also with the governor. You know, she has an

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Speaker 5: ambitious plan to build a new subway or railway from

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Speaker 5: Brooklyn to Queens. We haven't built like that in like

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Speaker 5: over one hundred years. She's in her budget going after

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Speaker 5: our environmental review. I mean environmental review should only take

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Speaker 5: a few months. You can see that process sometimes take

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Speaker 5: well over a few years, some bad cases five years.

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Speaker 5: And so what we're doing here as an industry leader,

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Speaker 5: the BTA, we're looking to reform insurance costs so that

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Speaker 5: we can not only build more abundantly, build faster, but

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Speaker 5: bring down the cost. And this is a substantial cost.

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Speaker 5: We found out from a recent report that nearly ten

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Speaker 5: percent of construction costs are wasted in New York as

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Speaker 5: opposed to any other state, even expensive states like California,

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Speaker 5: the cost of insurance is only about two percent for

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Speaker 5: the total project costs, where we're spending upwards of ten

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Speaker 5: twelve percent.

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Speaker 3: Definitely want to talk about insurance. But you said something

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Speaker 3: interesting there that just reminded me. You said, delays add

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Speaker 3: to the cost pressure This might be a dumb question,

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Speaker 3: But why is that? Because I think back to like

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Speaker 3: my own home construction project. If I have a contractor

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Speaker 3: and he says it's going to take six weeks, but

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Speaker 3: then he gets caught up on another project, it ends

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Speaker 3: up taking eight weeks. The cost usually doesn't go up.

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Speaker 3: It's just frustrating for me because I have to live

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Speaker 3: in a construction site. Also, I want to say, my

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Speaker 3: contractor knows I have a podcast. He's a very good contractor.

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Speaker 3: Delays rarely happen, so thank you very much. But why

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Speaker 3: would that cause additional expenses?

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Speaker 5: Well, just sheer time. I mean what can be controllable,

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Speaker 5: certainly the land news process. Before representing the BTA, I

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Speaker 5: was a New York City Council member, so I served

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Speaker 5: for nine years, and a quick case by the time

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Speaker 5: it goes through the local community board, the borough President's

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Speaker 5: office and then comes to the council with the best lobbyists,

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Speaker 5: happens within two years. And so if the mayor could

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Speaker 5: get that narrowed down, and the council speaker is also

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Speaker 5: pledging to reduce the time to a window of less

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Speaker 5: than six months, that's twenty five percent of the average,

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Speaker 5: and so that's significant time saved. That's something that we

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Speaker 5: should be able to control, and if our government leaders

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Speaker 5: want to control it, that's real reform.

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Speaker 2: I'm not surprised at all to hear about like delays

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Speaker 2: a particularly environmental review. People like talk about this. Let's

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Speaker 2: actually talk about it a little bit more grainuarly. Like, so,

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Speaker 2: like you get like some projects that you want to

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Speaker 2: do I don't know, maybe something with a highway or

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Speaker 2: something like that, and you have some time frame or

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Speaker 2: some window that you think like you could get this done,

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Speaker 2: and then we always hear, oh, delays, Right, what drives

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Speaker 2: the delays, who intervenes, and what are the processes by which,

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Speaker 2: like these calendars get very extended.

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Speaker 6: There could be design errors or omissions in the bid documents. Okay,

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Speaker 6: so when you actually go out to commence construction and

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Speaker 6: do your preliminary work, the drawings don't match up with

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Speaker 6: actual field conditions, which then result in changes to the

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Speaker 6: contract and that process can be very lengthy. So now

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Speaker 6: you have to document the changes. Then as a contractor

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Speaker 6: with one of the public agencies, need to negotiate those

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Speaker 6: changes then get it approved. Depending on what the agency is,

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Speaker 6: it could be with the Controller's office in the City

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Speaker 6: of New York, or if it's at the MTA with

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Speaker 6: the board or whoever approves it at the MTA, and

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Speaker 6: all those steps take time. While those delays are being incurred,

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Speaker 6: contractors are then experiencing indirect overhead costs that are assigned

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Speaker 6: to the project. Well, no productive work explain it.

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Speaker 4: What are these indirect overhead cost?

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Speaker 6: Project managers, projects, supervision, safety directors, quality assurance personnel.

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Speaker 2: So their salaries and their fees continue to run.

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Speaker 3: You can't reassign them to another project while they're waiting.

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Speaker 6: Correct, they're assigned to a project. You don't know when

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Speaker 6: those processes will come to an end, so it could

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Speaker 6: go very expeditiously, it could be delayed longer, depending on

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Speaker 6: how complex the changes are. So that project staff sits

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Speaker 6: there in theory underutilized, and then, as is our contractual right,

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Speaker 6: we will file a claim with that contracting agency for

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Speaker 6: those additional costs coupled with that and I don't know

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Speaker 6: how these costs are calculated. The agent see internally also

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Speaker 6: has those same costs for the people on those projects,

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Speaker 6: whether in house staff or through third party consultants, accombination

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Speaker 6: of the two. So those costs all get compounded while

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Speaker 6: these changes happened.

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Speaker 5: And what are the last projects I've funded as a

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Speaker 5: council member was to pay for turf in a park

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Speaker 5: like just like a running athletic field replacement, simple replacement.

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Speaker 5: It was funded fully in the budget. I left the

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Speaker 5: council in twenty seventeen. They only cut the ribbon on

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Speaker 5: that project being fully completed just in twenty twenty four.

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Speaker 3: So what happened to those sing like, what are these

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Speaker 3: studying by the turf? You stick it on?

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Speaker 4: What happened?

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Speaker 5: The Parks Department said it was going to be a

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Speaker 5: four million dollar field replacement. Then the contractor came out

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Speaker 5: to the site. There was a lot of surface repair

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Speaker 5: underneath that needed to happen underlying, you know, just you know,

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Speaker 5: uneven surface or something like that. They sent it back.

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Speaker 5: I had to go back before Design Review Council. I mean,

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Speaker 5: it really is something so small and so simple that

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Speaker 5: shouldn't even cost as much as it does. Gets the

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Speaker 5: lave a far too long, and we need real reform

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Speaker 5: in city government. I believe government leaders are finally addressing

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Speaker 5: this as an impediment to building abundantly.

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Speaker 3: Really, yeah, so this just reminded me. This is something

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Speaker 3: else I want to ask, But when you mentioned site reviews,

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Speaker 3: is there something unique or sort of inherent about the

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Speaker 3: way New York City is laid out and built and

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Speaker 3: its geography that also makes it more expensive. I'm thinking

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Speaker 3: like in Manhattan, obviously we have crowded buildings. Is some

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Speaker 3: of Manhattan on reclaimed land? I can't remember now.

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Speaker 6: Well, Battery Park cities all reclaim land there.

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Speaker 3: We go reclaim land and it's mostly an island with

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Speaker 3: few ins and outs, right, So I imagine there are some

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Speaker 3: restrictions on how much material you can actually get into

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Speaker 3: the city. Does just the physicality of the city make

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Speaker 3: it more expensive?

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Speaker 6: Yeah, all that's built into the contract costs. So when

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Speaker 6: we're getting vendor quotes for different types of materials that

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Speaker 6: will go into a construction project, most of the manufacturing

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Speaker 6: base is not within the Five boroughs, right, So it's

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Speaker 6: coming either from upstate out on Long Island, New Jersey,

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Speaker 6: maybe Pennsylvania, Southern New Jersey. You have the cost of

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Speaker 6: that transportation into the Five boroughs, right. So this if

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Speaker 6: you're a vendor who's manufacturing somewhere in Central Jersey, well

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Speaker 6: you probably can make multiple deliveries within the state of

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Speaker 6: New Jersey, where maybe that same freight carrier can only

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Speaker 6: make one delivery a day into the five boroughs.

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Speaker 2: By the way, Ken Burns's brother, he made a great

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Speaker 2: documentary about New York. It's like a ten hour eleven

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Speaker 2: hour documentary. And there's a whole section on the speed

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Speaker 2: with which steel got from the Bethlehem steel Mill to

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Speaker 2: build the Chrysler building or something like that. Is just

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Speaker 2: an unbelievable logistics I imagine it would be a little

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Speaker 2: bit slower today. Let's get to insurance and all of

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Speaker 2: that stuff. You even brought us a nice report material

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Speaker 2: scaffold Law Economic Impact, which evidently, even though on the

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Speaker 2: cover of the report has a picture of a scaffold,

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Speaker 2: is not about scaffold.

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Speaker 3: Not just about skefla, not about.

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Speaker 2: Scaffold per se per se. But what is the scaffold

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Speaker 2: law and why is this like an important priority of yours?

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Speaker 5: Well, look, if a worker was to fall off the scaffold,

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Speaker 5: then the scaffold law would apply, and it's to any

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Speaker 5: height related injury. A New York contractor, New York City

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Speaker 5: contractor is held one hundred percent liable and in forty

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Speaker 5: nine other states, it's comparable negligence. So what we found

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Speaker 5: through that economic impact study was that every hundred million

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Speaker 5: dollars that is wasted on frivolous claims, when you look

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Speaker 5: at reinvesting that into the economy, that's one hundred and

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Speaker 5: forty million dollar output, and that amounts to about fifty

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Speaker 5: five million dollars in wages and over six hundred jobs.

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Speaker 5: And we look at big projects like the President wants

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Speaker 5: to build Penn Station that's estimated to be seven billion

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Speaker 5: dollars in cost. If we were to put comparative negligence

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Speaker 5: on that project, we could save over five hundred million dollars.

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Speaker 5: That's half a billion dollars.

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Speaker 3: So just so we understand the difference between comparative negligence

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Speaker 3: and absolute liability. So if I'm a construction worker working

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Speaker 3: on a skyrise or something and I am not wearing

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Speaker 3: my helmet and I fall off a sixty story building,

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Speaker 3: I would be dead. But let's assume that I get injured.

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Speaker 3: I would probably be dead, all right, three story building, yeah, okay,

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Speaker 3: one story okay, But I'm not wearing my helmet, even

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Speaker 3: though my employer says I should be wearing a helmet.

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Speaker 3: And then I, you know, file acclaim. The absolute liability

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Speaker 3: rule basically says that you can't divide blood between the

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Speaker 3: company and the worker. Is that right? So instead of

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Speaker 3: being ninety percent at fault for my own injury because

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Speaker 3: I wasn't wearing a helmet and I got a head injury,

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Speaker 3: the company is now one hundred percent at fault.

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Speaker 5: That's absolutely right. And in other states they do comparative

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Speaker 5: netligence and it's really driving up the cost of insurance

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Speaker 5: so much so that insurance don't even want to write

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Speaker 5: insurance in New York anymore.

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Speaker 6: The market's limited.

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Speaker 2: It tell us about the insurance market for you, because

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Speaker 2: this is a good thing for us.

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Speaker 6: So I mean, there's zero purchasing power. Contractors make a

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Speaker 6: significant investment in safety. I promise you there's nothing more

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Speaker 6: important to the contracting community than for every employee to

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Speaker 6: go home safe to their family, loved ones, or whoever

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Speaker 6: that may be. At the end of the day. I

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Speaker 6: know everybody cares about that. But when we go to

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Speaker 6: renew our insurance every year, and the large insurance carriers

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Speaker 6: look at what this market for them is considered or

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Speaker 6: the least favorable market to write insurance. So much so

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Speaker 6: that carriers don't even want to write insurance in this

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Speaker 6: market anymore, and if they do, deductibles are really high.

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Speaker 6: Rates are really high, So on a percentage base of revenue,

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Speaker 6: we're talking about five, six, ten x other states with

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Speaker 6: much higher deductibles. So now contractors carry the cost of

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Speaker 6: those deductible payouts in their bids, which goes into these

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Speaker 6: public work bid numbers. So that's where you exponentially see

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Speaker 6: the higher cost of construction. But it actually take it

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Speaker 6: a step further. All the subcontractors and vendors that are

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Speaker 6: going to be working on our jobs also have the

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Speaker 6: same problem. And typically the subcontractors are smaller contractors by

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Speaker 6: either volume or revenue or employees, so they're typically paying

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Speaker 6: a higher premium on a percentage basis. So those numbers

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Speaker 6: are also baked into our contract pricing.

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Speaker 5: Yeah, our report really when we say contractors in New

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Speaker 5: York are paying ten percent of total construction costs to insurance,

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Speaker 5: that's five hundred percent more than other states, when in

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Speaker 5: other states it's only about two percent. And then Michael

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Speaker 5: mentioned the subcontractor. They get hit the worst on average,

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Speaker 5: if you were a concrete subcontractor or a steel painting

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Speaker 5: contractor you're paying fifteen to twenty percent your total volume

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Speaker 5: of work, and it's unsustainable.

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Speaker 3: So New York is the only city or only state city,

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Speaker 3: state that still has this long place. Is that right?

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Speaker 1: Yes?

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Speaker 3: What happened in other states when we saw it go away.

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Speaker 5: So the last state to reform the so called scaffol

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Speaker 5: law absolute liability standard was Illinois in nineteen ninety five.

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Speaker 5: So this is one hundred and forty year old law.

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Speaker 5: It's antiquated, it's broken policy. Even both the Democrats and

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Speaker 5: the Republicans when you speak to them one on one,

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Speaker 5: they know this is bail policy. An interesting thing Illinois,

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Speaker 5: the number of fatalities declined after they put a comparative

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Speaker 5: negligence model in. So those that say it's you know,

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Speaker 5: you have some trial lawyers, then there really it is

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Speaker 5: a cash count for the trial. Why I mean that was.

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Speaker 3: Gonna be my next question. So if everyone agrees that

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Speaker 3: this is an antiquated law, who's actually standing in the way.

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Speaker 2: You're definitely going to get any email after this episode

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Speaker 2: and they're like, your guests are totally biased. There's gonna

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Speaker 2: be from some lawyer and they're like, come on and

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Speaker 2: do a follow up, But this raised the question, Okay,

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Speaker 2: the law has been around for over one hundred years,

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Speaker 2: so why not. I mean, like I can understand that

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Speaker 2: that might raise Yes, Okay, New York is going to

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Speaker 2: be a higher cost state. That doesn't explain the surge

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Speaker 2: per se. Has something changed in the last five, ten,

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Speaker 2: twenty eight years. I mean New York used to do

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Speaker 2: a lot more building, or used to build a lot.

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Speaker 2: Has something changed such that the law has more teeth

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Speaker 2: or bites more.

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Speaker 4: Than it did?

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Speaker 2: I mean, and you talk about the disappearance of certain

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Speaker 2: insurance carriers.

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Speaker 4: The law existed fifty years ago.

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Speaker 6: Right right when I was first started my business. Yeah,

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Speaker 6: a little over thirty years ago. You know, insurance was

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Speaker 6: an add on the bid where you didn't really focus

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Speaker 6: about it. We're talking about one two percent of the

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Speaker 6: contract price, and that held true maybe up until even

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Speaker 6: ten years ago. And in the last ten years we've

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Speaker 6: seen a significant rise in the cost of insurance. And

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Speaker 6: I think it directly correlates with frequency of claims, third

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Speaker 6: party claims, payouts of those claims, and how either a

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Speaker 6: judge or jury awards damages in those cases. There's been

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Speaker 6: well documented cases of staged construction accidents on sites.

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Speaker 5: What Michael said is absolutely true. In New York for

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Speaker 5: scaffold laws, the bodily injury claimed settlements for scaffolows six

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Speaker 5: and a half times the average of other claim settlements.

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Speaker 5: The sheer volume has been increased by tenfolds. We're talking

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Speaker 5: about in fifteen years. And that's why these insurers are leaving.

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Speaker 5: You know why, Now, why do we think we have

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Speaker 5: a real opportunity, Not just because we have this economic

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Speaker 5: impact report that shows is exactly how much we're spending.

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Speaker 5: Because government leaders are finally talking about the fraud and

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Speaker 5: abuse that's happening. Our governor and her state of the

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Speaker 5: state a last month called on insurance reform for the

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Speaker 5: automobile industry. Now half of the consumers in the state

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Speaker 5: are car owners. Right, they're driving. They could relate to

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Speaker 5: us paying so much more. But we're paying fifty percent

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Speaker 5: more in car insurance compared to every other state, but

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Speaker 5: our contractors are paying five hundred percent more. And the

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Speaker 5: governor touched upon fraud and abuse, just like Mike said.

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Speaker 5: The governor says we need to address that, we need

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Speaker 5: to lower litigation costs and minds you and that these

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Speaker 5: are order insurance claims out much much less than the

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Speaker 5: scaffold law claims, and we need to fix this. We

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Speaker 5: need reform. So this is a step in the right direction,

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Speaker 5: and we're really focused on reform in Washington right now

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Speaker 5: that there's movements there. There's a lot of support on

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Speaker 5: this big federal infrastructure package that's a part of a

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Speaker 5: surface Reauthorization transit bill that gets reauthorized every five years.

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Speaker 5: It pays for big projects like a second avenue subway

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Speaker 5: or major roads and highways bridges, and it's a must

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Speaker 5: pass bill, and we think that we'll see reform there first,

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Speaker 5: and we're very hopeful that reform will come soon.

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Speaker 3: In Albany, how would you actually go about reducing litigation costs?

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Speaker 3: Because my assumption is as long as you're doing like

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Speaker 3: a jury process, it's going to be pretty expensive unless

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Speaker 3: you go to something like arbitration.

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Speaker 5: Yeah, well, the litigated costs, one would say it goes

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Speaker 5: to jury, but all of these insurance companies right now

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Speaker 5: are just afraid to get that far.

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Speaker 3: In New York State, so they settle pretty quickly.

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Speaker 5: One insurance company, Tradesman Insurance, they filed five different reco

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Speaker 5: cases in recent years. Probably i've heard them say that

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Speaker 5: they invested over sixteen million dollars to do personal investigations

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Speaker 5: to stop fraud and abuse. And they say that because

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Speaker 5: they were able to get so many claims dropped by

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Speaker 5: showing the Ford that there were bad actors, they saved

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Speaker 5: over two billion dollars. And the numbers keep growing. And

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Speaker 5: one law firm, Super and Assault shit that had like

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Speaker 5: three hundred different cases dropped, apparently closed their doors last month.

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Speaker 5: So it shouldn't get to that where insurance companies have

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Speaker 5: to do the reform. This is bad public policy and

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Speaker 5: we need our leaders in Washington and Albany to do reform. Now.

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Speaker 6: It's I mean, I think it's well documented. It's all

438
00:23:45,960 --> 00:23:49,120
Speaker 6: public information of just one building or a couple of buildings,

439
00:23:49,160 --> 00:23:53,280
Speaker 6: where multiple claimants from the same building, with the same

440
00:23:53,359 --> 00:23:58,880
Speaker 6: law firm utilizing the same medical practices filing these lawsuits.

441
00:23:59,119 --> 00:24:01,920
Speaker 5: Yeah, and some of the doctors are losing their licenses

442
00:24:02,400 --> 00:24:06,440
Speaker 5: and they're barred from workers' comp cases, and so that

443
00:24:06,720 --> 00:24:11,280
Speaker 5: is reassuring to see action happen. And we've reaching a

444
00:24:11,320 --> 00:24:13,720
Speaker 5: critical mass at this point. So I think that's why

445
00:24:14,440 --> 00:24:16,480
Speaker 5: now we're hopeful for reform.

446
00:24:16,760 --> 00:24:19,720
Speaker 2: Michael, can you talk a little bit more about today

447
00:24:19,800 --> 00:24:23,280
Speaker 2: versus mid nineties. You win a bid with the city

448
00:24:23,400 --> 00:24:26,240
Speaker 2: or whatever, you have a project. You mentioned Back then,

449
00:24:26,560 --> 00:24:28,159
Speaker 2: insurance was an add on. Okay, there was one or

450
00:24:28,160 --> 00:24:29,960
Speaker 2: two percent. I was ten percent. But setting aside the

451
00:24:30,000 --> 00:24:33,040
Speaker 2: price going out and finding which carrier will take that,

452
00:24:33,320 --> 00:24:34,920
Speaker 2: can you just talk about what life was like I

453
00:24:34,920 --> 00:24:37,359
Speaker 2: don't know again thirty years ago verus today in terms

454
00:24:37,359 --> 00:24:41,120
Speaker 2: of going out into the market for finding that insurance available, options,

455
00:24:41,240 --> 00:24:42,440
Speaker 2: negotiations and so forth.

456
00:24:42,560 --> 00:24:44,280
Speaker 6: Yeah, I mean it was much easier and much more

457
00:24:44,320 --> 00:24:47,240
Speaker 6: simple twenty thirty years ago than it is today.

458
00:24:47,240 --> 00:24:47,960
Speaker 4: All Right, what did you do?

459
00:24:48,359 --> 00:24:50,440
Speaker 6: You talked to your insurance broker. They would come back

460
00:24:50,480 --> 00:24:53,200
Speaker 6: with three or four quotes, all roughly the same. What

461
00:24:53,320 --> 00:24:56,200
Speaker 6: did you feel comfortable with? You would do your annual renewals.

462
00:24:56,200 --> 00:25:00,399
Speaker 6: There would be incremental cost of living in fla shenary

463
00:25:00,480 --> 00:25:03,919
Speaker 6: adjustments to your annual rate. You signed on again for

464
00:25:03,920 --> 00:25:07,640
Speaker 6: another year. Now it's a much more detailed, thorough process,

465
00:25:07,760 --> 00:25:10,960
Speaker 6: thorough review, how much you're going to raise your deductibles.

466
00:25:11,280 --> 00:25:15,199
Speaker 6: Where back then deductibles might have been twenty five thousand dollars,

467
00:25:15,240 --> 00:25:16,920
Speaker 6: I mean, I think we're at seven hundred and fifty

468
00:25:16,960 --> 00:25:20,040
Speaker 6: five hundred and seven hundred and fifty thousand now per occurrence.

469
00:25:20,480 --> 00:25:25,119
Speaker 6: I mean significant significant changes where now the insurance company

470
00:25:25,119 --> 00:25:28,119
Speaker 6: will dictate when you're going through your quotes, if you

471
00:25:28,160 --> 00:25:31,080
Speaker 6: don't raise your deductible, we won't even write your insurance

472
00:25:31,560 --> 00:25:33,600
Speaker 6: where that didn't happen back then. So there was much

473
00:25:33,640 --> 00:25:38,320
Speaker 6: more purchasing power in the contracting community twenty thirty years

474
00:25:38,359 --> 00:25:40,200
Speaker 6: ago in the marketplace than there is today.

475
00:25:40,400 --> 00:25:42,320
Speaker 3: Yeah, this is what I wanted to ask. So if

476
00:25:42,320 --> 00:25:45,919
Speaker 3: the scaffolding law goes away, are you confident that new

477
00:25:46,080 --> 00:25:48,919
Speaker 3: insurance actors would actually come into the market, because it

478
00:25:48,960 --> 00:25:51,280
Speaker 3: feels like part of the problem here is a lot

479
00:25:51,280 --> 00:25:53,800
Speaker 3: of people have exited, so you have limited insurers to

480
00:25:53,880 --> 00:25:57,119
Speaker 3: actually choose from, which means they now have all the

481
00:25:57,160 --> 00:25:57,879
Speaker 3: pricing power.

482
00:25:58,640 --> 00:26:01,800
Speaker 5: I think the free market will work itself. It's a

483
00:26:01,840 --> 00:26:05,240
Speaker 5: competitive market right now for the limited that do do

484
00:26:05,359 --> 00:26:08,000
Speaker 5: business in New York. I was just on the phone

485
00:26:08,040 --> 00:26:12,320
Speaker 5: earlier today with Zorich, which is a worldwide inshore, and

486
00:26:12,640 --> 00:26:16,200
Speaker 5: they stopped ensuring small contractors and they'll only do big

487
00:26:16,400 --> 00:26:20,560
Speaker 5: wrap up projects. In New York State, our Department of

488
00:26:20,600 --> 00:26:24,320
Speaker 5: Financial Services regulates the companies to make sure that they

489
00:26:24,320 --> 00:26:28,040
Speaker 5: can't charge too much or too little. And again it's

490
00:26:28,080 --> 00:26:31,760
Speaker 5: the market. As long as they can prove they can

491
00:26:31,800 --> 00:26:34,000
Speaker 5: make money here in New York, they'll come back.

492
00:26:34,359 --> 00:26:37,080
Speaker 6: It just dawned on me. One other thing to consider,

493
00:26:37,920 --> 00:26:41,800
Speaker 6: which sometimes is good for the local contracting community, but

494
00:26:41,920 --> 00:26:45,359
Speaker 6: also not necessarily good for the overall city of New York.

495
00:26:45,760 --> 00:26:50,440
Speaker 6: There are contractors based in other states that won't work

496
00:26:50,480 --> 00:26:55,640
Speaker 6: here because their insurance companies will exclude their policy from

497
00:26:55,680 --> 00:26:57,359
Speaker 6: working in New York, and then they would have to

498
00:26:57,359 --> 00:27:01,560
Speaker 6: buy jobs specific or site specific policies, which are also

499
00:27:01,720 --> 00:27:04,960
Speaker 6: very uncompetitive rates. So it's easier for them just to

500
00:27:05,000 --> 00:27:08,000
Speaker 6: stay out of the marketplace that then, in theory, may

501
00:27:08,080 --> 00:27:12,920
Speaker 6: drive down competition right from a low cause bid analysis,

502
00:27:13,080 --> 00:27:13,320
Speaker 6: I think.

503
00:27:13,400 --> 00:27:15,679
Speaker 5: And interesting, you know, to bring it back to what

504
00:27:15,720 --> 00:27:18,480
Speaker 5: the governor has taken on in her state of the

505
00:27:18,480 --> 00:27:21,439
Speaker 5: state or her and her budget auto insurance. You know,

506
00:27:21,720 --> 00:27:24,520
Speaker 5: we mentioned the trial lawyers and how this is really

507
00:27:24,560 --> 00:27:27,000
Speaker 5: a cash cow for them, but you know, they like

508
00:27:27,080 --> 00:27:29,960
Speaker 5: to paint the insurance companies as the bad actors.

509
00:27:30,280 --> 00:27:31,280
Speaker 6: But we look in.

510
00:27:31,600 --> 00:27:34,720
Speaker 5: Places like Florida, for example, they had a similar no

511
00:27:34,880 --> 00:27:38,400
Speaker 5: fault auto insurance policy like New York currently has, and

512
00:27:38,800 --> 00:27:42,400
Speaker 5: they changed the policies there and they've given rate payers

513
00:27:42,520 --> 00:27:46,080
Speaker 5: double digit refunds. So there is a situation, a scenario

514
00:27:46,160 --> 00:27:49,200
Speaker 5: where we could see the same for our contractors if

515
00:27:49,280 --> 00:27:50,880
Speaker 5: real reform happens here in New York.

516
00:27:51,320 --> 00:27:53,880
Speaker 3: Just to be clear, does the high cost of insurance

517
00:27:53,920 --> 00:27:58,359
Speaker 3: also apply to projects where heights presumably don't come into

518
00:27:58,400 --> 00:28:00,199
Speaker 3: it very much? So you know, if you're build a

519
00:28:00,200 --> 00:28:03,360
Speaker 3: new subway tunnel or something like that, I assume there's

520
00:28:03,400 --> 00:28:06,399
Speaker 3: probably some scaffolding involved, but like maybe you're not falling

521
00:28:06,720 --> 00:28:07,280
Speaker 3: too much.

522
00:28:07,520 --> 00:28:10,840
Speaker 6: You could be standing on a ladder in a sewer trench,

523
00:28:11,119 --> 00:28:14,240
Speaker 6: six inches up on the ladder, with the ladder secured

524
00:28:14,280 --> 00:28:15,760
Speaker 6: on the bottom of the hole, tied up, all in

525
00:28:16,320 --> 00:28:20,320
Speaker 6: conformance with ocean regulations, and if the employee falls six

526
00:28:20,359 --> 00:28:25,080
Speaker 6: inches to the ground, which typically we all think we

527
00:28:25,080 --> 00:28:28,400
Speaker 6: would be okay falling six inches, but then some injury

528
00:28:28,440 --> 00:28:33,639
Speaker 6: arises months later and ends up in a lawyer's desk

529
00:28:33,800 --> 00:28:37,639
Speaker 6: and the contractors ensued there'll be some sort of payout

530
00:28:38,160 --> 00:28:40,320
Speaker 6: and that would fall under the scaffold loss. So even

531
00:28:40,360 --> 00:28:42,480
Speaker 6: though you're not up on the heights of a building,

532
00:28:42,560 --> 00:28:45,640
Speaker 6: not building a superstructure, that law still applies.

533
00:29:01,960 --> 00:29:04,520
Speaker 2: I find this argument to be very compelling, and the

534
00:29:04,840 --> 00:29:07,760
Speaker 2: high cost of insurance on a per project basis in

535
00:29:07,760 --> 00:29:10,760
Speaker 2: New York City versus every other state, that seems like

536
00:29:10,800 --> 00:29:11,360
Speaker 2: an issue.

537
00:29:11,480 --> 00:29:13,400
Speaker 4: Unquestionably. All that Big.

538
00:29:13,200 --> 00:29:17,360
Speaker 2: Said, some of the numbers you read about construction processes, Okay,

539
00:29:17,440 --> 00:29:21,240
Speaker 2: let's say we take only thirty percent for labor or

540
00:29:21,360 --> 00:29:23,240
Speaker 2: labor is thirty percent of the job, and then let's

541
00:29:23,240 --> 00:29:24,960
Speaker 2: say insurance is ten percent of the job.

542
00:29:25,000 --> 00:29:26,400
Speaker 4: So this other part.

543
00:29:26,760 --> 00:29:30,160
Speaker 2: And when you read about the cost of an elevator

544
00:29:30,240 --> 00:29:32,920
Speaker 2: in a subway, it seems like even if we like

545
00:29:33,000 --> 00:29:35,880
Speaker 2: knocked off a lot of it for insurance and labor, whatever,

546
00:29:36,320 --> 00:29:38,120
Speaker 2: it still seems crazy expensive in New York.

547
00:29:38,160 --> 00:29:40,600
Speaker 4: So can we just talk about, like are these numbers real?

548
00:29:40,720 --> 00:29:42,600
Speaker 2: Like when we see like, oh, it cost sixty million

549
00:29:42,640 --> 00:29:45,160
Speaker 2: dollars to build an elevator somewhere, is that real or

550
00:29:45,160 --> 00:29:45,800
Speaker 2: is that clickbait?

551
00:29:45,800 --> 00:29:46,560
Speaker 4: What's going on there?

552
00:29:46,640 --> 00:29:48,520
Speaker 6: I mean, I don't know where it costs sixty million

553
00:29:48,680 --> 00:29:52,480
Speaker 6: to build an elevator. But look, remember there are subsurface

554
00:29:52,560 --> 00:29:55,400
Speaker 6: conditions in New York that you have to deal with,

555
00:29:55,640 --> 00:29:59,720
Speaker 6: like relocating utilities and gas manes and steam mains and

556
00:29:59,760 --> 00:30:02,800
Speaker 6: a lot that all may go into the cost of

557
00:30:02,840 --> 00:30:05,320
Speaker 6: that elevator, but it's really not the direct cost of

558
00:30:05,360 --> 00:30:08,320
Speaker 6: the elevator. So like when the MTA goes and puts

559
00:30:08,320 --> 00:30:11,600
Speaker 6: a new elevator in on a corner. Yeah, yes, maybe

560
00:30:11,640 --> 00:30:15,080
Speaker 6: the cost of that elevator project sounds enormous, and it

561
00:30:15,120 --> 00:30:16,880
Speaker 6: is for the elevator project, but not all of it

562
00:30:16,920 --> 00:30:19,240
Speaker 6: is directly tied to the elevator. It's clearing away.

563
00:30:19,320 --> 00:30:22,640
Speaker 2: But other cities have this too, right, Like I mean, yeah, absolutely,

564
00:30:22,640 --> 00:30:24,600
Speaker 2: it's not all There's going to be real estate acquisition

565
00:30:24,720 --> 00:30:27,400
Speaker 2: costs and all the issues and materials and everything. But

566
00:30:27,920 --> 00:30:29,920
Speaker 2: I get the impression that like building an elevator in

567
00:30:29,960 --> 00:30:33,280
Speaker 2: New York City, like, should taxpayers.

568
00:30:32,680 --> 00:30:33,800
Speaker 4: Be happy with?

569
00:30:33,880 --> 00:30:37,040
Speaker 2: Like the numbers and they seem very high, and they

570
00:30:37,080 --> 00:30:39,640
Speaker 2: seem out of proportion with what we see in other city.

571
00:30:39,840 --> 00:30:41,640
Speaker 6: Yeah, I don't know the comparative data.

572
00:30:41,800 --> 00:30:46,000
Speaker 5: Yeah, we are most expensive to build in comparison to

573
00:30:46,240 --> 00:30:50,000
Speaker 5: other cities like San Francisco. Yeah, but it's still very

574
00:30:50,040 --> 00:30:51,280
Speaker 5: expensive to build there too.

575
00:30:51,320 --> 00:30:52,479
Speaker 4: Sure, so what are we paying for?

576
00:30:52,520 --> 00:30:52,600
Speaker 6: Like?

577
00:30:52,640 --> 00:30:55,280
Speaker 2: What what are these number? I mean again, let's go

578
00:30:55,320 --> 00:30:59,040
Speaker 2: back to the turf example. Yeah, turf on let's and.

579
00:30:59,360 --> 00:31:02,480
Speaker 5: You did and I laughed before when you mentioned the Skyscraper,

580
00:31:02,520 --> 00:31:05,400
Speaker 5: the Chrysler Building, and the Bethlehem Steel and how that

581
00:31:05,520 --> 00:31:07,600
Speaker 5: was probably put together in less than a year, the

582
00:31:07,640 --> 00:31:10,800
Speaker 5: Empire State Building, and today we're building mega towers that

583
00:31:10,880 --> 00:31:15,000
Speaker 5: were taken three four years. And while they're important projects

584
00:31:15,120 --> 00:31:17,880
Speaker 5: and the very expensive projects, we were able to do

585
00:31:17,960 --> 00:31:20,520
Speaker 5: it in such a shorter time frame back then. Of course,

586
00:31:20,720 --> 00:31:23,760
Speaker 5: you save money when you reduce the time. Back to

587
00:31:23,840 --> 00:31:26,960
Speaker 5: that track, it was in Juniper Park, and it's funny

588
00:31:27,040 --> 00:31:30,240
Speaker 5: that you mentioned that, but actually I realized after you

589
00:31:31,160 --> 00:31:34,160
Speaker 5: spoke about Battery Park and how you know that was

590
00:31:34,200 --> 00:31:38,280
Speaker 5: water before we expanded, that was a swampland once in

591
00:31:38,360 --> 00:31:42,040
Speaker 5: Queens that particular park. And so those are the constraints

592
00:31:42,120 --> 00:31:44,760
Speaker 5: that we don't think about when we're building In New York.

593
00:31:45,200 --> 00:31:48,600
Speaker 5: It's so hard to find schools, you know, places to

594
00:31:48,640 --> 00:31:51,520
Speaker 5: build schools. I remember as a council member just having

595
00:31:51,520 --> 00:31:54,840
Speaker 5: the most overcrowded school district and so many sites were

596
00:31:54,840 --> 00:31:57,840
Speaker 5: contaminated and we couldn't find a good site. It's just

597
00:31:57,920 --> 00:32:01,080
Speaker 5: these difficult things that happen in such dense city and

598
00:32:01,600 --> 00:32:03,880
Speaker 5: part of the reason it's so expensive to build here.

599
00:32:04,040 --> 00:32:07,320
Speaker 3: Does anyone have any good examples of building like efficiently

600
00:32:07,920 --> 00:32:12,200
Speaker 3: at not so much cost relatively in New York City

601
00:32:12,320 --> 00:32:15,680
Speaker 3: or New York State speak, but still to a high standard,

602
00:32:15,800 --> 00:32:19,760
Speaker 3: like an example of a project that was done really well. Michael,

603
00:32:19,760 --> 00:32:22,040
Speaker 3: surely you should be naming some of your own Yeah, No.

604
00:32:22,680 --> 00:32:28,280
Speaker 6: We don't have, unless they're a major design flaws or errors.

605
00:32:28,960 --> 00:32:31,479
Speaker 6: I feel like almost all of our projects do go

606
00:32:31,720 --> 00:32:34,280
Speaker 6: extremely well. Right. It's a competitive marketplace. We're the low

607
00:32:34,320 --> 00:32:37,720
Speaker 6: bitter right typically when you get the job, which means

608
00:32:37,720 --> 00:32:42,880
Speaker 6: we're the cheapest price, the lowest responsible bidder, and more

609
00:32:42,920 --> 00:32:47,920
Speaker 6: often than not, we don't have these major overruns or changes.

610
00:32:48,600 --> 00:32:49,960
Speaker 6: They seem to go fairly well.

611
00:32:50,160 --> 00:32:53,360
Speaker 5: And Michael introduced himself as the president of the company

612
00:32:53,440 --> 00:32:56,400
Speaker 5: is But me and Michael worked together on the Mayor's

613
00:32:56,480 --> 00:32:59,440
Speaker 5: Task Force for Capital Reform, and we went up to

614
00:32:59,480 --> 00:33:03,000
Speaker 5: Albany as part of the reforms two years ago and

615
00:33:03,120 --> 00:33:07,120
Speaker 5: push for progressive design bills or different ways of building

616
00:33:07,200 --> 00:33:10,560
Speaker 5: projects that New York didn't use, in other states used

617
00:33:10,600 --> 00:33:14,400
Speaker 5: and that actually decreased the timeline and you were able

618
00:33:14,440 --> 00:33:17,760
Speaker 5: to build for less by using these delivery methods. And

619
00:33:17,840 --> 00:33:20,800
Speaker 5: I think that at Shirley Chisholm Park they just may

620
00:33:20,880 --> 00:33:23,640
Speaker 5: Or Mom Dommy cut the ribbon. But DDC is pointing

621
00:33:23,800 --> 00:33:26,720
Speaker 5: to that project that's coming in under budget and in

622
00:33:26,800 --> 00:33:28,800
Speaker 5: a short amount of time that was estimated that it

623
00:33:28,800 --> 00:33:30,800
Speaker 5: would take to build. So there are ways we could

624
00:33:30,800 --> 00:33:34,719
Speaker 5: work together, putting our minds together to bring about real reform.

625
00:33:35,160 --> 00:33:38,200
Speaker 6: I think one area that we didn't touch on, which

626
00:33:38,240 --> 00:33:39,720
Speaker 6: I think is important. I know you probably know the

627
00:33:39,760 --> 00:33:43,080
Speaker 6: statistics right if you look at the counter argument, like

628
00:33:43,080 --> 00:33:46,280
Speaker 6: if you said the trial lawyers to what's driving these

629
00:33:46,280 --> 00:33:51,880
Speaker 6: insurance costs? You would think if these stricter rules and

630
00:33:51,960 --> 00:33:55,360
Speaker 6: laws are in place, it would make everything much safer

631
00:33:55,600 --> 00:33:59,480
Speaker 6: or safer for the worker, less injuries. And do you

632
00:33:59,560 --> 00:34:01,240
Speaker 6: want to touch timulous.

633
00:34:01,480 --> 00:34:04,920
Speaker 5: There's nothing more important than safety. That's a cornerstone of

634
00:34:04,960 --> 00:34:07,520
Speaker 5: the work that our contractors do. You know, they want

635
00:34:07,520 --> 00:34:10,560
Speaker 5: their workers to go home as safe as they were

636
00:34:10,719 --> 00:34:13,200
Speaker 5: when they came to work that day. We're you know,

637
00:34:13,280 --> 00:34:16,960
Speaker 5: even focusing on culture on the job site and total wellness.

638
00:34:17,480 --> 00:34:22,080
Speaker 5: That's important. So we need to continue to be forward thinking.

639
00:34:23,160 --> 00:34:26,520
Speaker 6: But the data set, the results in New York are

640
00:34:26,800 --> 00:34:30,080
Speaker 6: equal to other states, oh, in.

641
00:34:30,080 --> 00:34:33,799
Speaker 5: Terms of our rate of fatalities. In fact, New York

642
00:34:33,840 --> 00:34:37,040
Speaker 5: has a higher rate of fatalities. Despite this law in

643
00:34:37,040 --> 00:34:39,960
Speaker 5: comparison to state like New Jersey or the average in

644
00:34:40,000 --> 00:34:42,960
Speaker 5: the country. You know, when we have nearly twelve fatalities

645
00:34:43,040 --> 00:34:47,360
Speaker 5: per one hundred thousand workers, whereas the national average is

646
00:34:47,480 --> 00:34:49,960
Speaker 5: under ten, and so we're twenty percent higher in New

647
00:34:50,040 --> 00:34:54,239
Speaker 5: York despite having such a strict liability on contractors.

648
00:34:54,360 --> 00:34:56,799
Speaker 4: Can we talk a little bit about current conditions.

649
00:34:56,840 --> 00:34:58,560
Speaker 2: So one of the things that we hurt a lot

650
00:34:58,680 --> 00:35:02,920
Speaker 2: in like twenty twenty one, twenty three, this like intense

651
00:35:02,920 --> 00:35:07,720
Speaker 2: scarcity of skilled tradesmen and various things electrical, et cetera.

652
00:35:08,000 --> 00:35:09,960
Speaker 2: How is that Is that still a big Is that

653
00:35:10,000 --> 00:35:13,120
Speaker 2: a big issue? Still a major constraint right now finding

654
00:35:13,360 --> 00:35:14,200
Speaker 2: available labor?

655
00:35:14,320 --> 00:35:17,640
Speaker 6: I think an aging workforce at least I mean without

656
00:35:17,640 --> 00:35:22,359
Speaker 6: me having any demographic data, just like visual context, and

657
00:35:23,640 --> 00:35:26,319
Speaker 6: we do have an aging workforce. I don't think the

658
00:35:26,400 --> 00:35:30,680
Speaker 6: younger generations are so inclined to either go to a

659
00:35:30,760 --> 00:35:34,640
Speaker 6: vocational school or some type of trade school. I would

660
00:35:34,640 --> 00:35:36,839
Speaker 6: sit here and I would tell anyone I think it

661
00:35:36,880 --> 00:35:39,359
Speaker 6: would be a great industry with the disruption going on

662
00:35:39,480 --> 00:35:43,120
Speaker 6: in the world right now, with you know, the advent

663
00:35:43,160 --> 00:35:44,920
Speaker 6: of AI and on all these jobs.

664
00:35:44,800 --> 00:35:47,399
Speaker 2: Like for you, like right now, is this like when

665
00:35:47,440 --> 00:35:49,040
Speaker 2: you think of the various headaches that you have in

666
00:35:49,080 --> 00:35:52,719
Speaker 2: your life, is keeping a sort of steady the available

667
00:35:52,760 --> 00:35:55,440
Speaker 2: flow of labor that knows how to build things like

668
00:35:55,520 --> 00:35:57,040
Speaker 2: one of the things that keeps you up at night.

669
00:35:57,160 --> 00:35:59,279
Speaker 6: Yeah, I mean available flow of labor is one of

670
00:35:59,280 --> 00:36:01,440
Speaker 6: the things that's kept up at night since I started

671
00:36:01,440 --> 00:36:04,720
Speaker 6: my business. Okay, we converted to a one hundred percent

672
00:36:04,760 --> 00:36:07,680
Speaker 6: employee owned company a couple of years ago, so much

673
00:36:07,719 --> 00:36:11,080
Speaker 6: so that I included the trades people, So the collectively

674
00:36:11,120 --> 00:36:14,160
Speaker 6: bargained employees or the different unions in the city are

675
00:36:14,239 --> 00:36:15,120
Speaker 6: part of that ESOP.

676
00:36:15,600 --> 00:36:19,759
Speaker 5: That's very unusual, and I applaud Michael and his team

677
00:36:19,800 --> 00:36:23,480
Speaker 5: for doing that. But when we think about workforce needs,

678
00:36:23,680 --> 00:36:26,959
Speaker 5: many of our contractors that are doing the infrastructure work,

679
00:36:27,080 --> 00:36:32,359
Speaker 5: like Michael, are experiencing difficulties and often take talent from

680
00:36:32,360 --> 00:36:35,600
Speaker 5: one another. So ESOP is going to stop that for sure.

681
00:36:36,000 --> 00:36:39,480
Speaker 5: But when you look at the commercial buildings that are

682
00:36:39,520 --> 00:36:43,960
Speaker 5: going up, which is more of a private market or residential,

683
00:36:44,040 --> 00:36:46,160
Speaker 5: that is not happening. We really didn't have a chance

684
00:36:46,200 --> 00:36:50,200
Speaker 5: to talk much about affordable housing, but that any of

685
00:36:50,200 --> 00:36:53,800
Speaker 5: that building is much more likely to be non union today,

686
00:36:54,400 --> 00:36:57,240
Speaker 5: which is a real shame because a lot of times

687
00:36:57,640 --> 00:37:02,760
Speaker 5: those workers are not getting paid on the books. More likely,

688
00:37:02,840 --> 00:37:05,080
Speaker 5: eighty percent of the injuries that happen on job sites

689
00:37:05,120 --> 00:37:08,040
Speaker 5: are happening on non union job sites. So we really

690
00:37:08,080 --> 00:37:11,000
Speaker 5: want to prevent that and help promote union employment as

691
00:37:11,080 --> 00:37:11,800
Speaker 5: much as possible.

692
00:37:12,000 --> 00:37:14,560
Speaker 3: Michael, you mentioned AI, So now I have to ask,

693
00:37:14,600 --> 00:37:16,920
Speaker 3: you know, we dug in a little bit into construction

694
00:37:17,000 --> 00:37:19,920
Speaker 3: productivity at the beginning of this conversation, and you know,

695
00:37:20,000 --> 00:37:23,799
Speaker 3: I think construction is largely done now as it was

696
00:37:23,920 --> 00:37:26,400
Speaker 3: probably like twenty or thirty years ago, and there happened

697
00:37:26,400 --> 00:37:30,399
Speaker 3: some technological advances like the nail gun, but beyond that,

698
00:37:30,480 --> 00:37:33,520
Speaker 3: we don't have actual robots that are like putting shingles

699
00:37:33,560 --> 00:37:36,360
Speaker 3: on our houses and things like that. But how confident

700
00:37:36,440 --> 00:37:39,400
Speaker 3: are you that it's gonna actually stay that way forever?

701
00:37:39,520 --> 00:37:43,560
Speaker 3: Because I mean ms chat GPT kind.

702
00:37:43,440 --> 00:37:44,799
Speaker 2: Of like how you're looking at me, like I've got

703
00:37:44,880 --> 00:37:48,040
Speaker 2: like vibe code. I'm going to vibe code the Running show.

704
00:37:48,080 --> 00:37:50,560
Speaker 3: It's all Joe's fault. But it came out of nowhere

705
00:37:50,600 --> 00:37:52,760
Speaker 3: for white collar workers. Could it come out of nowhere

706
00:37:52,800 --> 00:37:55,239
Speaker 3: for blue collar I think so.

707
00:37:55,440 --> 00:37:57,480
Speaker 6: Look, I don't think it's going to replace the Workforce.

708
00:37:57,880 --> 00:38:01,399
Speaker 6: Actually was at a construction conference a couple of weeks ago,

709
00:38:02,040 --> 00:38:08,120
Speaker 6: and my biggest takeaway is AI isn't replacing employees, but

710
00:38:08,200 --> 00:38:11,640
Speaker 6: employees who use AI will replace the employees who aren't.

711
00:38:11,680 --> 00:38:14,200
Speaker 2: Do you see that, Like are there in your firm

712
00:38:14,280 --> 00:38:17,040
Speaker 2: or are you getting value from it? Is anyone doing

713
00:38:17,080 --> 00:38:19,759
Speaker 2: anything with like tech or anything? So is anyone using it.

714
00:38:19,719 --> 00:38:23,799
Speaker 6: For We had our off site strategy session last week

715
00:38:23,800 --> 00:38:27,600
Speaker 6: and one of our quarterly priorities is all around implementing

716
00:38:27,719 --> 00:38:31,440
Speaker 6: artificial intelligence in our processes and workflows. So really, how

717
00:38:31,440 --> 00:38:34,799
Speaker 6: can we get information sooner? So instead of relying on

718
00:38:34,880 --> 00:38:38,719
Speaker 6: maybe these incumbent software models, taking the data we have

719
00:38:38,800 --> 00:38:41,919
Speaker 6: and using AI to give us analysis of that data

720
00:38:42,000 --> 00:38:42,560
Speaker 6: much quicker.

721
00:38:42,640 --> 00:38:45,640
Speaker 3: So not so much the physical process of putting up drywall,

722
00:38:45,680 --> 00:38:46,520
Speaker 3: but the planning and.

723
00:38:46,800 --> 00:38:49,040
Speaker 6: Look that's coming. I mean I have friends who have

724
00:38:49,160 --> 00:38:52,799
Speaker 6: robots that can tie rebars now with wire right. They've

725
00:38:52,840 --> 00:38:56,799
Speaker 6: invested in these companies and I'm not utilizing those robots yet,

726
00:38:57,160 --> 00:39:02,080
Speaker 6: but they're out there. Caterpillar has technology the having equipment

727
00:39:02,080 --> 00:39:06,239
Speaker 6: manufacturer where someone can sit let's call it like what

728
00:39:06,320 --> 00:39:08,200
Speaker 6: we grew up with a video game, Like it looks

729
00:39:08,239 --> 00:39:11,120
Speaker 6: like a pole position, I don't I if I'm dating myself,

730
00:39:11,560 --> 00:39:14,120
Speaker 6: and you can operate four different machines, not at the

731
00:39:14,160 --> 00:39:18,680
Speaker 6: same time, but from one TV screen for actual caterpillar

732
00:39:18,760 --> 00:39:23,239
Speaker 6: machines at four different locations, just sitting in like what

733
00:39:23,280 --> 00:39:26,280
Speaker 6: I would call an arcade machine WOW, with no operator

734
00:39:26,280 --> 00:39:26,759
Speaker 6: in the seat.

735
00:39:27,239 --> 00:39:31,440
Speaker 5: Interestingly enough, you know I mentioned Zorich earlier. Zoric Insurance

736
00:39:31,719 --> 00:39:35,239
Speaker 5: will only ensure a project in New York if their

737
00:39:35,680 --> 00:39:41,000
Speaker 5: cameras watching. Now, they use AI after a day's work

738
00:39:41,400 --> 00:39:44,960
Speaker 5: to study any movement that was dangerous. So it's not

739
00:39:45,040 --> 00:39:48,400
Speaker 5: just like people, you know, believe it's for surveillance to

740
00:39:48,920 --> 00:39:51,320
Speaker 5: stop fraud and abuse from happening, but it's really to

741
00:39:51,440 --> 00:39:54,759
Speaker 5: correct workers to and reduce risk. And they've seen that

742
00:39:54,960 --> 00:39:59,600
Speaker 5: their incidents have gone down significantly and their job sites

743
00:39:59,600 --> 00:40:00,560
Speaker 5: are much more safer.

744
00:40:00,920 --> 00:40:03,879
Speaker 6: I'm part of a tri venture group doing the East

745
00:40:03,920 --> 00:40:06,320
Speaker 6: Coast Resiliency project on the Lower East Side. It is

746
00:40:06,400 --> 00:40:11,600
Speaker 6: one point three billion dollar project and we're utilizing that

747
00:40:11,680 --> 00:40:16,520
Speaker 6: exact system. The cameras are located on machines on poles

748
00:40:17,120 --> 00:40:20,800
Speaker 6: and the data gets downloaded every night analyzed by AI.

749
00:40:21,640 --> 00:40:24,399
Speaker 6: So not only do we get like near misses or data,

750
00:40:24,440 --> 00:40:26,600
Speaker 6: but we also use it for training the workforce, so

751
00:40:26,640 --> 00:40:30,720
Speaker 6: the videos that it captures to make the job site safer.

752
00:40:31,040 --> 00:40:34,440
Speaker 2: Yeah, what about again, just talk about current conditions. What

753
00:40:34,520 --> 00:40:36,279
Speaker 2: about materials cost? So we know that the cost of

754
00:40:36,320 --> 00:40:40,080
Speaker 2: everything surged a lot immediately in the wake of the pandemic,

755
00:40:40,560 --> 00:40:43,320
Speaker 2: you get to any relief. Have the pacent price increases

756
00:40:43,440 --> 00:40:46,560
Speaker 2: gone slowed at all? Are there any parts we've talked about,

757
00:40:46,640 --> 00:40:49,799
Speaker 2: like transformers, like various key electrical parts that you can't

758
00:40:49,840 --> 00:40:52,160
Speaker 2: get easily at any price. What are you saying right

759
00:40:52,200 --> 00:40:54,279
Speaker 2: now on just acquisition of materials?

760
00:40:54,520 --> 00:40:57,000
Speaker 6: Yeah, I have not seen prices come down. Okay, you

761
00:40:57,040 --> 00:40:58,800
Speaker 6: know it's no different when there was like a fuel

762
00:40:58,880 --> 00:41:02,200
Speaker 6: search charge, right that the oil market spiked and every

763
00:41:02,320 --> 00:41:06,080
Speaker 6: vendor would put a fuel searcharge on deliveries. Somehow those

764
00:41:06,120 --> 00:41:07,600
Speaker 6: fuel search charges never go away.

765
00:41:08,080 --> 00:41:11,160
Speaker 2: What about other like just other raw materials, like other

766
00:41:11,239 --> 00:41:13,719
Speaker 2: things that are in like scarcity that you like have

767
00:41:13,800 --> 00:41:18,279
Speaker 2: a difficult time finding at all at any price right now?

768
00:41:18,400 --> 00:41:21,000
Speaker 6: No, I think we're pretty much getting everything we need.

769
00:41:21,040 --> 00:41:23,279
Speaker 6: I know COVID and coming out of COVID, there was

770
00:41:23,360 --> 00:41:24,040
Speaker 6: big issues.

771
00:41:24,360 --> 00:41:26,800
Speaker 3: When you walk into a building like the Bloomberg offices,

772
00:41:26,960 --> 00:41:28,640
Speaker 3: do you look around and you think, like, what a

773
00:41:28,640 --> 00:41:31,200
Speaker 3: marvel of structural engineering or do you think I wonder

774
00:41:31,239 --> 00:41:32,399
Speaker 3: what the insurance costs are?

775
00:41:32,560 --> 00:41:34,080
Speaker 6: No, I think I should have done something different in

776
00:41:34,120 --> 00:41:34,520
Speaker 6: my career.

777
00:41:37,080 --> 00:41:40,200
Speaker 2: One last thing that you mentioned, and I've read people

778
00:41:40,200 --> 00:41:42,399
Speaker 2: who like talk about like you know, abundance, et cetera.

779
00:41:42,600 --> 00:41:44,960
Speaker 2: They talk about how a lot of like public projects,

780
00:41:45,960 --> 00:41:49,000
Speaker 2: there's a big consultant element that many aspects of it

781
00:41:49,040 --> 00:41:52,720
Speaker 2: have been outsourced from the public sector, that these third parties,

782
00:41:52,760 --> 00:41:55,640
Speaker 2: and that that drives up you mentioned consultants. Does that

783
00:41:55,840 --> 00:41:58,839
Speaker 2: Does that resonate with you in terms of where you

784
00:41:58,880 --> 00:42:01,360
Speaker 2: see potent cost bloat and so forth.

785
00:42:01,480 --> 00:42:03,560
Speaker 6: Yeah, I mean I don't know the value of the

786
00:42:03,600 --> 00:42:07,080
Speaker 6: consultant contracts, but I can tell you based on my experience.

787
00:42:08,239 --> 00:42:11,160
Speaker 6: We used to work on a lot more contracts that

788
00:42:11,200 --> 00:42:14,880
Speaker 6: were run in house by the agencies, and now you

789
00:42:14,960 --> 00:42:18,719
Speaker 6: see a lot of third party like resident engineer and

790
00:42:18,719 --> 00:42:22,280
Speaker 6: inspection services and other tests that used to be performed

791
00:42:22,280 --> 00:42:24,600
Speaker 6: in ou so that are now performed by third party consultants.

792
00:42:25,120 --> 00:42:29,000
Speaker 5: And often they're called owners reps. And we'll get complaints

793
00:42:29,000 --> 00:42:33,280
Speaker 5: from our contractors that owners reps are delaying the project,

794
00:42:33,400 --> 00:42:36,120
Speaker 5: so they continue to get paid for the project, and

795
00:42:36,160 --> 00:42:40,160
Speaker 5: that's something where we're interested in seeing some reform too.

796
00:42:40,880 --> 00:42:43,160
Speaker 5: I've heard of that on more than one type of

797
00:42:43,160 --> 00:42:45,360
Speaker 5: project that could you know, it could be a school

798
00:42:45,400 --> 00:42:48,640
Speaker 5: being built or a bridge being painted.

799
00:42:48,760 --> 00:42:50,799
Speaker 2: Michael and Elizabeth, thank you so much for coming on

800
00:42:50,800 --> 00:42:51,239
Speaker 2: Odd Loves.

801
00:42:51,239 --> 00:42:51,879
Speaker 4: That's a lot of fun.

802
00:42:53,160 --> 00:42:54,239
Speaker 5: Thank thanks for having us.

803
00:42:54,239 --> 00:42:55,719
Speaker 3: That was great us.

804
00:42:56,560 --> 00:42:57,560
Speaker 6: Yeah, that's very nice.

805
00:43:10,239 --> 00:43:13,000
Speaker 2: Tracy, that was a fun conversation. I like it felt

806
00:43:13,000 --> 00:43:15,680
Speaker 2: like we learned about the city in some way, you

807
00:43:15,719 --> 00:43:16,360
Speaker 2: know what I'm saying.

808
00:43:16,560 --> 00:43:18,520
Speaker 3: I learned a lot about absolute liability.

809
00:43:18,600 --> 00:43:19,800
Speaker 4: Ye, absolute liability.

810
00:43:19,920 --> 00:43:23,080
Speaker 3: That is interesting. Look, I also think the point about

811
00:43:23,160 --> 00:43:26,239
Speaker 3: delays is very striking to me because again, that would

812
00:43:26,239 --> 00:43:28,640
Speaker 3: seem to be an issue where you're still paying people

813
00:43:28,840 --> 00:43:32,200
Speaker 3: to build something, but building it is taking ten years

814
00:43:32,280 --> 00:43:33,400
Speaker 3: instead of five years.

815
00:43:33,800 --> 00:43:36,160
Speaker 2: Or especially at a time when interest rates are high,

816
00:43:36,200 --> 00:43:37,879
Speaker 2: can they compound extra right?

817
00:43:37,920 --> 00:43:41,560
Speaker 3: And also it seems like there's a potential problem of

818
00:43:41,560 --> 00:43:45,320
Speaker 3: incentives here, right, Like if I am a consultant working

819
00:43:45,440 --> 00:43:48,680
Speaker 3: on a project and I am still getting paid, the

820
00:43:48,719 --> 00:43:51,319
Speaker 3: project's not actually going and I can spend a lot

821
00:43:51,320 --> 00:43:54,080
Speaker 3: of time I don't know, pointing out like individual issues

822
00:43:54,120 --> 00:43:57,920
Speaker 3: and potentially delaying stuff like that's an incentive problem.

823
00:43:58,000 --> 00:44:01,920
Speaker 2: Absolutely, I guess I would say I find the point

824
00:44:01,960 --> 00:44:04,799
Speaker 2: about insurance to be compelling, and the point about like

825
00:44:05,560 --> 00:44:09,000
Speaker 2: forty nine other states have gotten rid of these laws

826
00:44:09,440 --> 00:44:13,200
Speaker 2: and they're not actually even making New York a safer workplace.

827
00:44:13,239 --> 00:44:14,480
Speaker 2: I mean, it would be one thing, I guess if

828
00:44:14,520 --> 00:44:16,960
Speaker 2: like New York had like half the accent right as

829
00:44:17,000 --> 00:44:18,920
Speaker 2: the rest of the country, and then you say, okay, well,

830
00:44:18,960 --> 00:44:21,120
Speaker 2: look like you could point to a law like this

831
00:44:21,239 --> 00:44:24,080
Speaker 2: and say this is clearly making causing everyone to take

832
00:44:24,120 --> 00:44:27,440
Speaker 2: safety board. Seriously, if you can't point to that, if

833
00:44:27,440 --> 00:44:30,319
Speaker 2: every other state has gotten rid of it, I mean,

834
00:44:30,360 --> 00:44:32,960
Speaker 2: I don't have any opinion. But and again I'm sure

835
00:44:32,960 --> 00:44:34,200
Speaker 2: we're going to hear from lawyer.

836
00:44:34,080 --> 00:44:36,440
Speaker 3: About to get make an enemy out of the child bar.

837
00:44:36,600 --> 00:44:39,440
Speaker 2: Well, yeah, we're gonna get emails from lawyers saying we

838
00:44:39,520 --> 00:44:43,640
Speaker 2: want to do a rebuttal episode. But my gut is

839
00:44:43,640 --> 00:44:45,879
Speaker 2: that there's probably so definitely something to that.

840
00:44:46,040 --> 00:44:47,640
Speaker 3: Well, the other thing I was thinking about on the

841
00:44:47,680 --> 00:44:49,920
Speaker 3: insurance point is, you know, I have this pet theory

842
00:44:49,960 --> 00:44:53,080
Speaker 3: that like insurers basically run the world. Yeah, I mean,

843
00:44:53,080 --> 00:44:55,680
Speaker 3: they control a lot of money. They set like not

844
00:44:55,719 --> 00:44:58,640
Speaker 3: just safety standards, but social standards for a lot of things.

845
00:44:58,840 --> 00:45:02,879
Speaker 3: Is really interesting here about using AI to monitor yeah,

846
00:45:03,080 --> 00:45:07,560
Speaker 3: oh yeah, security camerage, footage, like for health and safety,

847
00:45:07,719 --> 00:45:11,480
Speaker 3: because I can imagine, you know, if that helps the insurers.

848
00:45:11,640 --> 00:45:14,800
Speaker 3: I can imagine them asking that to become standard practice everywhere.

849
00:45:14,840 --> 00:45:16,879
Speaker 2: It's super interesting to think, like, Okay, yeah, you want

850
00:45:16,920 --> 00:45:19,880
Speaker 2: to have cameras because if there's an accident, then you could.

851
00:45:19,719 --> 00:45:21,120
Speaker 4: Go back and review the footage.

852
00:45:21,320 --> 00:45:23,680
Speaker 2: But this idea that like, oh you could like see

853
00:45:23,680 --> 00:45:25,440
Speaker 2: if there was a near miss or something like that,

854
00:45:25,600 --> 00:45:28,719
Speaker 2: the AI can detect it directly potentially.

855
00:45:28,760 --> 00:45:29,440
Speaker 4: That's interesting.

856
00:45:29,680 --> 00:45:31,320
Speaker 2: And then of course there's gonna be all these questions

857
00:45:31,320 --> 00:45:34,160
Speaker 2: about surveillance and whether people like that. But this is

858
00:45:34,200 --> 00:45:36,520
Speaker 2: going to be it's gonna be a big topic. Yeah,

859
00:45:36,960 --> 00:45:39,000
Speaker 2: it's only it's gonna come on very fast.

860
00:45:39,120 --> 00:45:40,800
Speaker 3: I know I keep saying this, but we really should

861
00:45:40,840 --> 00:45:42,360
Speaker 3: do more on insurance. We'll figure out.

862
00:45:42,239 --> 00:45:43,680
Speaker 2: We're sureing to do more, you know, like if we

863
00:45:43,719 --> 00:45:46,879
Speaker 2: keep saying it like we are, you know, no, yes,

864
00:45:47,280 --> 00:45:49,360
Speaker 2: but even more even more I agree.

865
00:45:49,520 --> 00:45:50,200
Speaker 3: Shall we leave it there?

866
00:45:50,280 --> 00:45:51,239
Speaker 4: Yeah, let's leave it there.

867
00:45:51,239 --> 00:45:51,479
Speaker 6: Okay.

868
00:45:51,520 --> 00:45:53,880
Speaker 3: This has been another episode of the ad Thoughts podcast.

869
00:45:53,960 --> 00:45:57,040
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

870
00:45:56,880 --> 00:45:58,000
Speaker 4: And I'm Jill Wisenthal.

871
00:45:58,040 --> 00:46:00,760
Speaker 2: You can follow me at the Stalwart hellow our producers

872
00:46:00,800 --> 00:46:03,920
Speaker 2: Kerman Rodriguez at Kerman armand dash Ol Bennett at dashbod

873
00:46:04,000 --> 00:46:06,960
Speaker 2: and Keil Brooks at Kelbrooks. More odd Laws content, go

874
00:46:07,040 --> 00:46:09,359
Speaker 2: to Bloomberg dot com slash odd Lots with the daily

875
00:46:09,480 --> 00:46:12,120
Speaker 2: newsletter and all of our episodes. You can chat about

876
00:46:12,120 --> 00:46:14,000
Speaker 2: all of these topics twenty four to seven in our

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Speaker 2: discord discord gg slash odlines.

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Speaker 3: And if you enjoy odd Lots, if you want us

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Speaker 3: to do even more on insurers, then please leave us

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Speaker 3: a positive review on your favorite podcast platform. And remember,

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Speaker 3: if you are a Bloomberg subscriber, you can listen to

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Speaker 3: all of our episodes absolutely add free. All you need

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Speaker 3: to do is find the Bloomberg channel on Apple Podcasts

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Speaker 3: and follow the instructions there. Thanks for listening.

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Speaker 2: In e