June 03, 2009 Chip fab deal includes union pay GlobalFoundries pact with state opens way for $1.2B in cash, tax breaks; $15M more for unplanned costs
By JAMES M. ODATO, Capitol bureau
ALBANY -- The Paterson administration has helped reach a deal with labor unions and GlobalFoundries so that the company agrees to pay union wages on the construction of the $4.2 billion chip-manufacturing facility in Saratoga County, officials familiar with the deal said Tuesday.
The deal would give GlobalFoundries, the partnership building the Luther Forest plant in Malta, at least $1.2 billion in cash and tax breaks already committed plus about $15 million more for unplanned costs, according to a person briefed on the terms. The agreement, still subject to signing by all the parties, includes a project labor agreement, meaning union wages will be paid by all firms chosen to work on the project whether they are union or non-union companies, said Edward Malloy, president of the New York State Building and Construction Trades Council.
The deal also calls for women-owned and minority-owned businesses and local vendors to get opportunities with the massive project.
"It's a great agreement," Malloy said. "It's probably the biggest job in New York state."
He said about 1,500 people should work on the construction of the plant. More than five million work hours are projected, he said.
"As we move New York state into the new economy, public-private partnerships will be critical in reshaping the economic landscape," Gov. David Paterson said Tuesday, confirming the deal. "Bringing economic development like this not only creates jobs and leverages private investment, but it positions New York as a technology giant. The collaboration of GlobalFoundries with the local building trades is a model of the private sector and organized labor working together."
Malloy said the agreement came together after numerous discussions among officials with GlobalFoundries and Paterson's staff. Key negotiators were Larry Schwartz, the governor's top aide, and economic development officials Tim Gilchrist and Michael Skrebutenas.
"All of the terms have been agreed to. We're just trying to get final signatures," said Travis Bullard, the GlobalFoundries spokesman.
He acknowledged that more funding from the state is expected "down the road" since additional costs have arisen, but he would not provide a figure.
The project has been billed as having major upside potential for job-creation even though the number of permanent positions at the plant is projected at about 1,400.
The state committed during the Pataki administration to the biggest incentive package in state history. The plan has been to give the company $650 million in cash and about the same sum in tax breaks. The state sweetened the pot with another $15 million to appease GlobalFoundries in recent weeks as it dealt with unions complaining that the legislation allowing for the public incentives should have specified that union wages must be paid.
"It's a great day for the State of New York," said Sen. Neil Breslin, D-Bethlehem. "This is a project of enormous significance with five and a half million hours of good, honest work to protect our working families." He said the deal means there won't be strikes or interruptions in getting the project off the ground.
Senate Labor Committee Chairman George Onorato, D-Queens, said he was unaware of the extra money for the company but said "it is well worth it" because of the project will attract more businesses to New York. "We don't want New York to become an anti-business community," he said.
Sen. Roy McDonald, R-Wilton, said the company should not have been in the position to pay low construction rates that would attract crews from outside New York. "It should be an all-New York project," he said.
Malloy said the deal includes a cap on salary increases during the life of the project; he pegged the figure at 4 percent. A person familiar with the terms said no raise could be more than 3 percent. Also, about 17 percent of the project will be set up for entities not under collective bargaining. Up to 7 percent of the job could go to specialty contractors when union labor is unable to perform tasks.
The labor agreement will be between the Greater Capital District Building and Construction Trades Council AFL-CIO and M+W Zander, the firm that won the contract to develop the plant.
The construction work will last at least two years with another 18 months to fit the plant for operation. The semiconductor manufacturing jobs should pay an average of $60,000 per year. The project may break ground this summer, Malloy said.
James M. Odato can be reached at 454-5083 or jodato@timesuion.com
What happened: The state during the Pataki administration agreed to support a huge computer chip facility for Advanced Micro Devices.
What's new: A deal promising labor peace was reached with the Paterson administration, construction unions and the partnership now in charge of the project, GlobalFoundries.
What's ahead: Construction beginning as soon as this summer to take two years to build a 1.2 million square-foot fabrication plant in Malta.
