Jeff Swiatek

jeff.swiatek@indystar.com

A lot has gone wrong for Indiana labor unions the past 10 years, from foreign outsourcing of unionized jobs to passage of a right-to-work law by the Indiana legislature.

You wouldn't guess it by looking at union bank accounts.

Total assets of the state's 700 or so labor union locals have nearly doubled since 2004, from $182 million to $335 million, according to union financial reports filed with the Department of Labor.

The 83 percent jump in assets happened even as membership at the 700 locals slipped 9.8 percent since 2004, to 420,924. (Most of that decline came from 2004 to 2009. Since the recession's end in 2009, membership has actually risen 5 percent.)

What's created much of the newfound union wealth is an unlikely combination of crude oil from the tar sands of Canada, a massive road-building plan by former two-term Republican Gov. Mitch Daniels, and a gusher of construction activity in the city of Indianapolis.

Union finances also were aided in recent years by stock market gains that fattened union investment portfolios and by rising commercial property values that increased the worth of union halls, training facilities and land holdings.

BP refinery windfall

The biggest single contributor to the coffers of Indiana unions, however, had nothing to do with politics: a $4 billion upgrade and expansion of the BP oil refinery in Whiting on the shores of Lake Michigan.

Done from 2008-2013, the expansion was the largest and costliest one-time construction project in the history of the state. BP undertook the upgrade in large part to handle the rising tide of crude oil imported to the U.S. from Canadian tar sand deposits using new extraction methods.

The BP construction project required 12,000 workers at its peak and brought tens of millions of dollars in new union dues income to Northwestern Indiana trade unions that got a piece of the BP pie.

"There's no project like that. It was so huge," said Pete Rimsans, executive director of the Indiana State Building & Construction Trades Council. "We had a lot of guys up there busting their butts for a long time and they made a lot of money doing it."

In 2008, just one Indiana union local boasted assets of more than $8 million. By 2013, five of them did —with three of those benefiting primarily from the BP project.

One of the three tops the list of Indiana's richest union locals. It's Laborers Local 41 of Munster, which shot to No. 1 from its 37th-place ranking in 2007. All thanks to the BP project.

The Munster local, with just 1,270 members, saw its assets soar from $1.6 million in 2007 to $12 million by the end of 2013.

"Very simple," said a Local 41 official, asked about the jump in assets. "We've had a $4 billion project at the BP refinery in Whiting."

The money that poured into Local 41's coffers came mostly from dues. Its members pay 3.75 percent of their gross wages, plus $10 to $25 a month in dues. A Local 41 laborer earning $60,000 a year, in other words, pays about $2,500 in union dues.

At least two other Indiana union locals also saw their assets leap from the BP project: Electrical Workers Local 697 of Merrillville, whose assets tripled since 2006 to $11.6 million, and Boilermakers Lodge 374 of Hammond, whose assets jumped 48 percent since 2007 to $8.6 million.

With big building projects, union locals also benefit from dues paid by journeymen from other jurisdictions. The BP project drew hundreds of union workers from outside Northwest Indiana, and under union rules, their dues went to the unions whose jurisdictions include the BP plant.

Major Moves bump

Unions throughout Indiana also have profited from Major Moves, a massive road-building program spurred by Daniels. He arranged to finance the program with $3.8 billion received from negotiating a long-term lease of the Indiana Toll Road to a private operator.

"It really helped the building trades," Rimsans said of Major Moves. "We were fortunate in Indiana to have some marquee projects done by both the governor (Daniels) and utilities, which kept us going."

A construction surge in the capital city also fueled demand for union hard hats and kept the dues dollars flowing. About 35 percent of Indiana's unions are construction trades that benefit directly from building projects.

Indianapolis has spent more than $3 billion since 2008 on big-dollar projects that come along only once in a generation. They included $1 billion on a new terminal, runway and other improvements at Indianapolis International Airport, the $750 million Eskenazi Hospital, the $720 million Lucas Oil Stadium, the $450 million Marriott Place hotel complex, and a $275 million expansion of the Indiana Convention Center.

Thanks to projects like those, Indiana's trade unions "are healthy and have been healthy. They have done very well," said Michael Hicks, director of Ball State University's Bureau of Business Research.

Trade unions have outperformed the state's industrial unions, like the auto workers, which "have just been clobbered" by job cutbacks and wage and benefit reductions at unionized factories, Hicks said.

A third union category, the public sector, made up of teachers and government unions, has seen mixed financial results in Indiana in the past decade.

The state's largest union by membership, the Indiana State Teachers Association, saw its assets jump from $6.3 million in 2009 to $11.4 million in 2011, before dipping to $10.9 million in 2012.

Where to spend it?

So how will Indiana's nouveau riche unions use their newfound wealth?

At Laborers 41 in Munster, an official wouldn't say. "Given the climate in the state politically, I prefer not to answer any more questions," he said in a brief phone call. Officials at IBEW 697 and Boilermakers Lodge 374, two other locals that benefited from the BP project, did not return calls for comment.

Financial reports divulge one thing Laborers 41 has spent its money on: a new union hall. It purchased its new home in Munster in 2010 for close to $1 million.

The 2013 report shows that Laborers 41 is playing it conservative with its investments. Most ($8.56 million) of its assets are invested in securities, with most of that money in a Vanguard bond index fund.

When it comes to spending, Laborers 41 seems typical.

As assets have risen at many unions, "in the last 10 years, we've had a lot of new union halls," said Rimsans. The new buildings have given unions a much-needed modern look, he said, by replacing union halls that often were embarrassingly worn. Many dated to the 1940s or earlier, he said.

Lke Laborers 41, other unions are also banking a big chunk of their growing assets. At local after local, union financial reports show millions of dollars being put into blue-chip stocks, bonds and investment funds.

"It's sort of like corporate America right now. Corporate America is hanging onto a lot of dollars," Rimsans said. Union leaders "are a little scared to do something with the money, until they see what direction the economy is going," he said.

New training center

One exception is Plumbers Local 440, which has more assets than any other union in the Indianapolis area. It plans to spend $1 million of its $8.2 million in assets to build a training center for its apprentices and journeymen. Members were reluctant to spend the money earlier, but they recently voted to go ahead with the two-story addition, said Business Manager James "Bubba" Johnson.

Local 440 has become one of the wealthiest unions in Indiana through four mergers with other locals and what turned out to be a shrewd move in 1974 to buy 32 acres to build its current union hall.

The local has held onto the land ever since (though six acres were sold to accommodate an interstate expansion). Over the years, the fenced site just south of Indianapolis International Airport was developed to hold a fishing lake, picnic pavilion and 25,000-square-foot training center that has a current class of 160 apprentices.

About $3.2 million of Plumbers Local 440's assets are now made up of building and land. Another $1.6 million is in three investment funds, with $3.4 million held as cash.

With so many big road, utility and other public-sector projects completed or winding down, Rimsans isn't sure whether Indiana's trade unions can keep growing their assets at the same pace they did the past 10 years.

"We don't have many marquee projects on the horizon. We are getting to the point where we need to cross our fingers and hope the economy rebounds."

Or that another mega-project like the BP refinery expansion comes around.

Star data journalist Haoyun Su contributed to this story.

Call Star reporter Jeff Swiatek at (317) 444-6483. Follow him on Twitter: @JeffSwiatek

Top 10 wealthiest Indiana union locals

(By 2013 total assets)

1. Laborers Local 41, Munster, $12 million.

2. IBEW Local 697, Merrillville, $11.6 million.

3. Operating Engineers Local 112, Anderson, $11.5 million.

4. Boilermakers Local 374, Hammond, $8.6 million.

5. Plumbers Local 440, Indianapolis, $8.2 million.

6. Operating Engineers Local 103, Fort Wayne, $7.8 million.

7. Iron Workers Local 395, Portage, $7.25 million.

8. Steelworkers Local 6787, Chesterton, $6.5 million.

9. Sheet Metal Workers Local 20, Indianapolis, $6.4 million.

10. IBEW Local 481, Indianapolis, $6.3 million.

Source: Annual union financial filings with the Department of Labor