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Wisconsin contractor heads west to expand

Minnesota state Rep. Pat Garofalo, R-Farmington, is inviting Wisconsin contractors to relocate to Minnesota in light of Wisconsin’s new “right-to-work” law. (File photo: Bill Klotz)

Minnesota state Rep. Pat Garofalo, R-Farmington, is inviting Wisconsin contractors to relocate to Minnesota in light of Wisconsin’s new “right-to-work” law. (File photo: Bill Klotz)

As Wisconsin becomes the nation’s latest “right-to-work” state, Minnesota Rep. Pat Garofalo is rolling out the red carpet to road builders in that state — and at least one prominent highway contractor is interested.

Jim Hoffman, owner of Black River Falls, Wisconsin-based Hoffman Construction, told Finance & Commerce on Monday that he intends to expand his company’s Minnesota operations in part because of concerns about the Wisconsin’s new right-to-work law.

The company, incorporated in 1927, already has a regional office in Lakeville. But Hoffman said he plans to “accelerate our investment” in Minnesota based on business and policy trends he sees in the two states.

“I feel like a migrant worker crossing the river to find work,” he said.

Right-to-work laws ban labor contracts from requiring workers to pay union dues. Supporters say right-to-work laws promote economic growth; critics say they destroy unions and result in lower wages for workers.

Hoffman’s comments came the same day Wisconsin Gov. Scott Walker signed the legislation into law and days after Hoffman received a letter from Rep. Garofalo, R-Farmington, and chair of the House Job Growth and Energy Affordability Committee. Garofalo offered his “assistance in relocating your headquarters to Minnesota.”

Hoffman testified against Wisconsin’s right-to-work legislation. Another company that expressed concern, Janesville, Wisconsin-based Rock Road Companies, received a similar letter.

Bill Kennedy, president of Rock Road, said he spoke to Garofalo on the phone on March 2 and received Garofalo’s letter by email the same day, according to the Daily Reporter in Milwaukee, a sister newspaper to Finance & Commerce. (Both papers are owned by The Dolan Company.)

Kennedy said it would take a lot to get him to consider moving his company to Minnesota, but setting up shop across the state line is not entirely outside the realm of possibility.

A lot will depend, Kennedy said, on what Wisconsin lawmakers do with the state’s prevailing-wage law. Republican legislators last month introduced a bill that would eliminate the requirement that state-set prevailing wages be paid on many state and local projects.

“I reserve the right to make decisions that I think are in my company’s best interest,” Kennedy said.

Rock Road, a family-run company that has been in business for more than 100 years, is one of more than 400 construction companies making up the Wisconsin Contractor Coalition, a group formed to fight right-to-work and changes to the state’s prevailing-wage law.

Garofalo told the Daily Reporter that he will gladly send out similar inquiries to any Wisconsin company whose executives are concerned about how right-to-work will affect their businesses.

“Anyone who is damaged, I will be recruiting to bring those jobs to Minnesota,” he said.

Wisconsin is now the 25th state to approve right-to-work legislation. All of Minnesota’s neighbors are right-to-work states.

In 2012, some Minnesota Republicans wanted to put a right-to-work constitutional amendment on the ballot.

Proponents such as Rep. Steve Drazkowski, R-Mazeppa, said at the time that the amendment would create jobs and “allow the people of Minnesota to decide whether or not they want freedom of employment in the workplace.”

But the proposal didn’t go anywhere and Minnesota isn’t expected to go the right-to-work route anytime soon.

Phil Raines, vice president of public affairs for the Associated Builders and Contractors of Minnesota and North Dakota, said Garofalo’s letter doesn’t represent the views of Minnesota’s construction industry.

If anything, the new law in Wisconsin will make that state more attractive to businesses rather than the other way around, Raines predicted.

Raines said contractors can continue to maintain their relationships with unions if they choose to do so — with or without right-to-work laws on the books.

“If the union provides value for them and provides value for their company, they have nothing to fear from right-to-work legislation,” Raines said.

Aaron Sojourner, an assistant professor with the Center for Human Resources & Labor Studies at the University of Minnesota’s Carlson School of Management, said right-to-work backers often make the case that such laws create jobs.

“But I think it’s also clearly targeted at undermining labor organizations and weakening organized labor,” he said.

Glen Johnson, business manager for the International Union of Operating Engineers Local 49 in Minneapolis, said right-to-work laws undermine unions by allowing “free riders” to take advantage of union benefits without having to pay union dues.

“The union has to represent everyone in the bargaining unit, whether or not they pay dues,” Johnson said.

Hoffman said he opposes Wisconsin’s right-to-work law because he believes it will restrict his ability to find qualified workers and erode funding sources that unions use to train workers.

But he also cited other factors in his decision to expand in Minnesota, including Minnesota’s greater willingness to consider long-term transportation funding, and his concerns about a proposal to ban prevailing wage requirements in Wisconsin.

Another factor: Wisconsin has a “personal property tax” for construction equipment and Minnesota doesn’t, he said.

Wisconsin’s governor also has been in the national spotlight as a potential GOP candidate for president in 2016.

But Hoffman said his interest in Minnesota is strictly a business decision.

“It makes good business sense for me, regardless of the politics,” he said. “I am going to invest where I see future growth.”

Hoffman Construction has been working on Minnesota projects for about 10 years. Hoffman and St. Michael-based PCI Roads recently submitted the winning proposal for a $36 million Interstate 90 improvement project in southern Minnesota.

About 15 percent of the company’s work is in Minnesota, but Hoffman said he looks to double that to 30 percent.

Hoffman said he now has two salaried employees and 10 hourly workers in Lakeville. He plans to double the head count this year and grow from there. He will continue to pursue work in both states.

The fourth-generation family-owned business has 350 employees overall, including seasonal workers.

Hoffman said Monday that he hadn’t spoken directly to Garofalo yet, but that he planned to contact him.

In his letter, Garofalo made a free-market case for opposing right-to-work legislation.

He wrote that many Republicans in the Minnesota Legislature “understand that ‘right-to-work’ significantly interferes with your right to set the terms and conditions of employment in your workplace.”

“This voluntary, privately managed system has worked well for all parties for generations. Here in Minnesota, we consider this business model in no need of ‘fixing.’ In fact, I consider Minnesota’s construction industry to be the most efficient and productive in the nation. I hope you will consider joining us in Minnesota!”

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