Wage Rules Twist Steel Company's Growth Plans In Washington state, a law designed to help contractors by setting an hourly wage for in-state projects is actually hurting Precision Iron Works, the company's president says. Steve Leighton says contractors like him can lose out on projects because out-of-state companies — which don't pay the rates — can outbid them.

Wage Rules Twist Steel Company's Growth Plans

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There Precision Iron Works fabricates steel used in construction projects. Despite the weak economy, Precision is hoping to expand, but as NPR's Wendy Kaufman reports, government rules and regulations are making that more difficult.

WENDY KAUFMAN: Steve Leighton, a large and outgoing guy, has been the head of Precision Iron Works since the company was founded 20 years ago. His presidential office - a modest space upstairs above the factory - is filled with blueprints and construction drawings.

STEVE LEIGHTON: So if you think about having a drawing that would show how bits and pieces go together. We actually fabricate the pieces: the columns, beams, bracing. If you think about a skeleton of a building, that's what we produce.

KAUFMAN: We head out the door and down the stairs to production area. About 35 workers cut huge sheets of metal into somewhat smaller pieces. They weld and they paint, and then use giant forklifts to transfer finished products to trucks and barge trailers for shipping to project sites.

LEIGHTON: How many pieces do we have for that barge then? Is that the last one?

TONY OWENS: That's the last one, and I also have a stair load going out tomorrow.

KAUFMAN: Tony Owens is the shop foreman.

OWENS: We've got probably one of the best groups I've even been around. Good workers, good guys in general, makes the job a lot easier.

KAUFMAN: So staff is key?

OWENS: Big time.

KAUFMAN: One of those staffers is Mitch Mercill.

MITCH MERC: I've been doing this since I was in high school, and I am in my 50s now. And I don't - I wouldn't mind doing it until the day I could retire.

KAUFMAN: A state law that's been on the books for well over half a century that on state-funded projects, Washington companies have to pay their workers something called the prevailing wage. It's an hourly rate set by the government. But as Precision's president, Steve Leighton explains, companies in states like Idaho and Utah, which don't have prevailing wage laws, can pay their workers less.

LEIGHTON: It puts us at such a disadvantage. There could be a project right out on our backdoor out here that I can't get because a company in Utah gets such a competitive advantage by not having to pay these rates.

KAUFMAN: Leighton says that's what happened a few months ago when he bid on large middle school project in a nearby county.

LEIGHTON: It was about a 10 or 12 thousand man-hour project - one that was right up our alley. We beat out all the other of our competitors in this state - felt that we had a good number, and we got beat out by three out-of-state companies.

KAUFMAN: State Senator Steve Conway agrees, the rules can make it difficult for companies like Precision to compete against out-of-state companies.

STEVE CONWAY: It does have unintended consequences, you know, we need to figure out a solution to this.

KAUFMAN: There are other rules and regulatory hurdles too. Washington's Secretary of Commerce, Rogers Weed says things environmental standards can be harder on small companies than large ones.

ROGERS WEED: Complying with regulations is something that adds burden to small businesses, and they can't, if you will, amortize that cost across a larger base of business and employees.

KAUFMAN: But more than anything else, the biggest factor in Precision Ironwork's success and potential for growth is the economy. If it doesn't pick up, there will be even fewer projects and the profit margins that have already slid from about 20 percent to five percent, could fall even further. Still, company president Steve Leighton is hopeful.

LEIGHTON: I don't think it's scary - I don't think I'd be doing this if it was scary. If I was looking through the rear view window, I think I would just pack it up and go. But I guess I believe in what we are doing here.

KAUFMAN: Wendy Kaufman, NPR News.

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