By Peter Fontanes, Chair, New York Hispanics in Real Estate and Construction
The National Hispanic Construction Association has been monitoring with great interest much of this year's congressional debates. Of particular interest has been President Obama's attempt to pass significantly funded transportation, highway and jobs creation legislation bills. These bills are geared toward the development of economic opportunities for many minority owned businesses in an area of our industry that has traditionally been difficult to gain entry.
The high cost of heavy construction equipment, the stringent bonding policies, high labor pay rates, prohibitive insurance costs and lack of access to capital has deterred the minority construction business owner from electing to engage in highway or bridge work.
Similarly, the lack of MBE firms taking advantage of these opportunities has caused many majority contractors to pull out their hair in frustration. Government, in their earnest to provide for minority owned firms, laid the chicken before the egg, thus creating a door that is too small for our business owners to pass through. Ironically and sadly, truth be told, there is a serious shortage of trained, skilled manpower and properly financed management within our Latino business owners for the heavy concrete, masonry asphalt projects germane to road and bridge works. It is almost impossible for majority contractors to achieve the diversity goals set by government contracting agencies in this highly specialized field. In states like New York, this can be a very burdensome issue for the contractor on the job especially since the recruitment bar has been raised very high since the administration of former Governor David Patterson and, now even more enthusiastically, by now Governor Andrew Cuomo.
The NHCA is committed to assisting our partners in this industry in expanding the opportunities available to minority and women owned businesses. Our objective is to improve the economic viability of these growing firms through outreach and education as well as through direct and strategic alliances. However, unless the public sector and the private sector involved in heavy construction gets their act together and start dealing with the harsh of realities of the heavy construction industry and how it relates to MBE firms, little progress can be made toward resolving this problem. It is our contention that we must dispense with photo op announcements and begin thinking out of the box by enacting better and leaner bond requirements, capacity building training and providing more prompt requisition payments on projects and easier backing of credit for capital equipment purchases or rental.
First there is the issue of capitalization. Very few of the major equipment manufacturers and distributors are willing to extend any credit to minority contractors who have little or no work history in heavy construction projects such as bridge painting and road paving. We need to work with these firms to develop equipment purchases and rental terms that the prime contractor or the government contracting agency can guarantee payment for. This would greatly alleviate the financial burden of entry level minority firms.
Furthermore, many of those jobs require Private Labor Agreements or prevailing wages which can sometimes catch an unprepared minority contractor off guard as he begins to deal with " efficiency" issues for the first time under a heap of bureaucratic red tape and the mountain of paperwork and regulations that public contracts are identified with. Fifteen day labor cost requisition payments would address this problem quite effectively and, in fact, such best practices are now being implemented by many state governments. We would also like to see factoring agreements for 90% payments so that the MBE companies are not saddled with cash flow problems while their invoices are being processed.
Major heavy equipment manufacturers and vendors like Caterpillar and United Rental could establish training, safety and loans to MBE firms and can work to guarantee payment for leased or sold equipment. Tax incentives can be offered as a means of inducement for signing on such programs.
I have been in touch with senior officials from the White House and have made it clear that many of the proposed economic development and job creation legislation needs to be revamped to include ways to deal with most of the obstacles that Hispanic American and migrant construction business owners and their workers are facing as they engage themselves in the heavy construction industry, many for the first time
NHCA can serve as a conduit toward forging a more effective passage way to success in these fields that were hereto before totally closed to our Latino contractors and workers. We can help develop a construction management training program to include such topics as risk management, construction estimating, safety and effective marketing. The program could help build networks, establish fruitful joint ventures win contracts with other mainstream firms and other industry leaders and form long-term business relationships