Las Vegas Sun

February 22, 2019

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Perini seeks union givebacks

CityCenter, Cosmopolitan contractor looks to workers to cut projects’ costs


Steve Marcus

Construction workers leave MGM Mirage’s CityCenter after work on Friday. Perini Building Co., the general contractor on CityCenter and Cosmopolitan, in meetings with unions this week sought wage and raise concessions from about 11,000 workers on the sites. Both projects are suffering financial difficulties in the deepening recession.

Cosmopolitan/CityCenter (6-3-2009)

The CityCenter project on the Las Vegas Strip. Launch slideshow »

MGM Mirage's woes

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CityCenter and Cosmopolitan general contractor Perini Building Co. has asked building trades unions to take pay cuts and make other concessions as they work to complete the financially troubled projects, according to several sources familiar with the negotiations.

In meetings Thursday, Perini Chief Executive Craig Shaw and top executives of the CityCenter and Cosmopolitan projects asked for $2-an-hour wage decreases from about 11,000 trades members on those jobs, say sources involved in the discussion who did not want to be identified because the meetings were confidential.

Perini met in separate sessions with Southern Nevada Building and Construction Trades Council leaders and officials of the local carpenters and operating engineers unions.

In addition to wage concessions, Perini asked both groups to give up raises of about $1.75 to $3 an hour set to take effect over the summer for many trades. They also asked that workers stop taking 15-minute breaks in the mornings, sources said.

The requests come amid an increasingly bleak outlook for the $9 billion CityCenter project and the Cosmopolitan, which costs more than $3 billion. Both projects are facing financial difficulties and are struggling to finish by the end of the year and mid-2010, as planned.

After what was described as heated discussions, neither the building trades nor carpenters groups agreed to the provisions. The building trades will discuss the deal further at a union meeting Monday, building trades Secretary-Treasurer Steve Ross said Friday.

Sources at the meetings said Perini executives did not threaten directly to halt the projects if the unions do not agree to the company’s demands.

Ross and building trades spokesman Steve Redlinger confirmed there were negotiations with Perini on Thursday but declined to provide details.

Redlinger said he thought the talks centered only on the future of the Cosmopolitan and was not aware of a discussion about CityCenter.

MGM Mirage spokesman Alan Feldman said he could not confirm the discussions. He said the company is seeking to cut costs at CityCenter amid the recession.

Perini spokeswoman Leslie Pittman did not comment.

The projects — while on shaky financial ground — nonetheless remain rare bright spots amid a dismal job market for building trades members, who have very little significant work on the horizon.

MGM Mirage is facing a major cash crunch as it seeks more than $1 billion to finish CityCenter at a time when earnings are plummeting and more than $9 billion in bonds comes due in the next three years.

With banks reluctant to lend during the recession, some analysts say the company will be forced to sell casinos to pay for CityCenter or file for Chapter 11 bankruptcy protection, which could eliminate a significant chunk of debt, freeing up earnings to pay for CityCenter and for other needs.

Feldman said there have been no discussions about putting CityCenter on hold.

Structural problems at CityCenter’s Harmon hotel forced the company to scale back the building to barely half its original size. That and cost-cutting moves have trimmed about $600 million from the CityCenter budget, which had peaked at more than $9 billion. Those cost reduction efforts are ongoing, Feldman said.

Cosmopolitan owner Deutsche Bank foreclosed on the property last year when its developer defaulted on more than $760 million in loans. The bank continues to fund work on the Cosmopolitan and hopes to open the 3,000-room resort in June 2010.

Analysts say Deutsche Bank is expected to sell the property once the economy improves and the bank is more comfortable financing a sale because it doesn’t want to own or run casinos.

Ross stressed that unions do not want to be an impediment to finishing the jobs.

“What we want to do is be part of a solution and help contractors to the best of our ability,” Ross said. “Unions are very supportive of contractors and always will be. Our success is based on those relationships and partnerships and we take that very seriously. We’re reviewing our options.”

But some people involved said they doubt the building trades union leaders would vote to approve the concessions because that would likely put unions in a diminished position as they enter into other contract negotiations. It’s also not likely to be popular with members, they said.

One union official involved in discussions with Perini said he is skeptical that the provisions Perini seeks would make a big enough financial impact.

One person estimated the concessions would represent less than $100 million in savings — less than one-tenth of the total financing MGM Mirage is seeking for CityCenter.

“The amount of money is so insignificant,” said one union official involved in discussions. “These things will either get funded or won’t get funded.”

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