Politics & Policy

Goon City — Part 3

Matthew (left) and Michael Pestronk
Two courageous developers may be game-changers in Philadelphia construction

Michael Pestronk rides a clanky red elevator to the top of his building. It’s a frigid winter day, and his glasses fog slightly as he steps outside and strolls over to the concrete ledge. From ten stories up, you see Philadelphia sprawling, with skyscrapers fading into suburbs. Michael isn’t enjoying the view much, though. When he looks straight down, he sees his antagonists.

The band of union protesters, clad in hoodies and Carhartt jackets, cluster outside the chain-link fence, a giant inflatable rat nearby. It’s 17 degrees out, and they look miserable, but they haven’t budged in hours. They are breaking a rare court injunction and standing much closer to the work-site boundaries than they’re supposed to.

#ad#From the very beginning of this project, Philadelphia’s powerful construction unions pressed Michael and his business partner and brother, Matthew Pestronk, to use union-only labor to build their slick downtown apartment complex — a decision that would have added around $15 million to the cost of the project, Michael says.

Once a women’s-shoes factory, the concrete structure on the corner of 12th and Wood used to be covered with scrawled graffiti, including giant letters spelling “OSAMA” — around town, it became known as “the Osama Building.” The Pestronk brothers are now transforming it into an environmentally friendly luxury apartment complex a stroll away from the trendy bars and shops of downtown Philadelphia.

It’s an ambitious project, and Post Brothers — the company derives its name from an anglicization of Pestronk — initially considered using union labor. But when the Pestronks tried to negotiate with the labor bosses, they found the unions’ demands overwhelming.

“We just have the money we have, and that’s it,” Michael says. “We can’t pay $2 for something that really only costs $1. . . . The project just wouldn’t have happened.”

The Pestronk brothers say they tried to hire union subcontractors for nearly half the project, but that wasn’t enough. Union officials forbade any unionized worker to participate in the project unless it went union-only — a decision the Pestronks say cost more than 100 union jobs. Post Brothers went with nonunion workers, paying them $35 to $45 an hour.

So began one of the nastiest labor disputes in Philadelphia’s recent history.

* * *

Philadelphia is a longstanding hub for organized labor; its first union was formed in 1792, and the labor movement has flourished there ever since. Yet there is a dark side to the city’s union past. Philadelphia’s unions are notorious for harassment, intimidation, vandalism, and violence. They have special sway over the city’s construction sector, and anyone who crosses them does so at his own peril — as the Pestronk brothers have discovered.

“We realized it was going to be a fight when I started getting followed around wherever I went, and after the third violent incident at work,” Michael says. “This was just happening every other day.”

Each day, protesters gather outside the work site. Michael says they’re mostly unemployed construction workers who believe their union will find them work faster if they man the picket line. They arrive at 6 a.m. and leave at 1 p.m., “like clockwork — or early,” Michael says. “It’s really funny.”

He tells me the unions protested outside another Post Brothers apartment complex, but members refused to show up outside of their 6-to-1 shift. Most of the apartment-seekers wanted to schedule viewings for evenings or weekends, outside union hours. The protesters and the prospective renters missed each other entirely.

“You cannot make a generalization about the work ethic of all union contractors or nonunion contractors,” Michael adds, smirking slightly, but “generally, the guys who are out of work, standing at the picket line, are out of work often for a good reason.”

The unions haven’t stopped picketing. The Pestronks say they’ve endured months of harassment, vandalism, and violence. But while most of Philadelphia’s developers and contractors suffer in silence or yield to union demands, Post Brothers has confronted the unions directly, meticulously documenting every incident — and these have been legion.

According to Michael Pestronk, an engineer was brutally assaulted; workers have been attacked with crowbars; a security guard was hit in the face; construction equipment has been vandalized; nails welded in the shape of jacks have been scattered across entrances; tires have been stabbed with ice picks and knives; oil has been dumped in front of entrances; a doctored photo of Matthew’s wife has been distributed around the site, featuring male genitalia and the slogan “Carrie Pestronk likes to get hard with it!” Several workers at the site told me the protesters frequently make racist or sexist remarks to them.

That did not go over well with Matthew, a former college wrestler with a pugnacious nose and a vocabulary laced with swear words. He and his brother decided to stand up to the unions in a way no Philadelphia developer has done in decades.

#page#“They’re f***ing organized criminals,” Matthew tells me. “They’re repulsive, they’re disgusting, and their tactics are intolerable. They just picked a fight with the wrong people. They wanted to make an example of us because we’re in our thirties, and we’re doing major projects; there’s a whole generation of people our age who are doing smaller projects, so they thought they’d teach us a lesson. They grossly underestimated us. . . . If they escalate it, we’re going to destroy them. We’re going to launch the most nasty, multifaceted legal defense that anyone has ever done. If they want escalate it, they’re going to lose, and they’re going to lose bad. We have substantial resources, just as they do, and we also have a major advantage: We’re in the right. And that’s worth a lot, when you’re actually right.”

* * *

It has been 40 years since anyone has stood up to the unions like Michael and Matthew Pestronk. Then also it was explosive, literally as well as figuratively.

#ad#In the early 1970s, a young contractor named J. Leon Altemose began building a hotel-and-movie-theater complex near Valley Forge. As they have done with the Pestronk brothers, the unions insisted that Altemose hire only union workers. Altemose tried to compromise, offering to hire up to 60 percent union workers, but the labor leaders wouldn’t budge. But neither would Altemose, to the unions’ fury.

The situation escalated, and on June 5, 1972, the unions carried out what Harper’s Magazine later called “virtually a military assault.” Hundreds of men arrived at the site in buses chartered by the Building Trades Council, a labor organization that works with various construction-trades-union affiliates. The men rushed the site, igniting firebombs and vandalizing vehicles and other equipment. Overall, they destroyed as much as $400,000 worth of property, and, according to a circuit-court judge, “violence was prevented only through the combined efforts of state and local police.” Though an estimated 1,000 men participated in the attack, only 16 were convicted, and only 11 of those spent time behind bars.

Nor were the unions finished with Altemose. He and his employees began carrying weapons, concerned for their safety — a justified fear, it would later prove. Meanwhile, unions began picketing his other sites. As the tense summer drew to a close, Altemose tried to photograph union protesters outside Philadelphia National Bank, which he was financing. The union members beat him.

The destruction at Valley Forge and the subsequent assault on Altemose made him famous. In 1973 the Engineering News-Record named him Man of the Year. He appeared on 60 Minutes and was lauded in Harper’s. And, for a time, his stand against unions emboldened other contractors and developers in the region. Altemose died in 2008, but in Philadelphia, he has become a sort of folk hero among the open-shop crowd. He is known as the only guy who took on the unions — and won.

* * *

So when people call the Pestronk brothers the new incarnation of J. Leon Altemose, it’s significant.

Rob Reeves, the contractor for the Quaker meetinghouse discussed in part 1 of this article, tells me he thinks the Pestronks’ stand is a potential game-changer for the Philadelphia construction industry.

“The unions have bullied people for years, and they feel that’s a legitimate tactic in getting what they want,” he says. “Why do they feel like they can do it? Because pretty much, they’ve gotten away with it. . . . Post Brothers [is] doing something significant. . . . Fear is one of the biggest motivators. You have to overcome it, and I’ll give them a lot of credit for it.”

So far, the Pestronk brothers have spent $1 million on lawyers and an expensive security system, including 24-hour video surveillance of the site. They post video and photo evidence to their website regularly, a move that has had a major impact on public opinion in Philadelphia, Michael says.

“My thought was, this is an incredibly obvious thing to do,” Michael tells me. “Our stuff is getting vandalized, so we put up security cameras. Our guy gets beat up. We’ve got it on camera; of course we’re going to post that on YouTube.”

The unions have countered with a campaign of their own. Pat Gillespie, business manager of the Building Trades Council, tells me that “more than acrimony has occurred.”

Gillespie says the videos the Pestronks post to YouTube are “only convenient video — and I know this sounds crazy, but I’ve heard they go antagonize people, and then people react to that antagonism on camera.” And he claims the Pestronks have hired people to intimidate him, “guys with a lot of tattoos and that stuff.”

#page#Gillespie tells me that conflict between the union members and the Pestronks’ workers “doesn’t amount to anything more than pushing and shoving matches. [The Pestronks] don’t like to be called out for what they are: a couple of bottom-feeders who are trying to profiteer at the expense of people who work for their money.”

Gillespie says that unions have “a blemish, an indelible mark on our record here, with the developer out in the Valley Forge area.”

But Altemose “was a crusader, too,” Gillespie adds: “He went around and antagonized, too. . . . He came into town and was very aggressive to some people. Someone punched him in the nose, punched him in the eye, he had a black eye. You could see the makeup ring they put under his eye to make it stand out. . . . The developer became a national hero for the right wing.”

#ad#Gillespie adds that he hopes Matthew and Michael Pestronk don’t follow in Altemose’s footsteps.

The Pestronks’ stand is being regarded with interest even outside the open-shop community. Anthony Wigglesworth, the executive director of the Philadelphia Area Labor-Management Committee, works with unions, developers, and others in the construction sector. Basically, he’s a peacekeeper in the best of times.

What has happened at the Pestronks’ apartment complex and the Quaker meetinghouse reflects that “we’ve all failed in upholding our community standards,” Wigglesworth says.

“It’s bad for union construction, it’s bad for the unions involved, it’s bad for construction [in general], and it’s just as bad for the owners,” Wigglesworth adds. “On the management side . . . I’ve seen a loss of respect for the labor movement, which to some extent, unions were complicit in. . . . We’ve lost that kind of literacy around unions. . . . [My advice would be to] tone down the temperature on the union side. They become so strident as a result of feeling embattled that it feels like they’re screaming.”

The Pestronks insist that they’re not anti-union. Both say they’ve tried hard to work with the unions and compromise, and that it’s the intransigence of the labor leaders that has created the current conflict.

“It is a shame that they’re calling it unions,” Michael says. “It has nothing to do with labor unions or the fair treatment of workers. It’s just organized crime. They’re a criminal syndicate. . . . It’s just an organized-crime ring that’s racketeering and controlling the market.”

As for the Pestronk brothers, “we’re not on some ideological mission,” Michael says. “We don’t want to be known for our labor issues. We just want to be known for having the nicest apartments.”

* * *

Unions’ ill-gotten power has threatened both personal rights and property rights in Philadelphia. This is partially a legal failing; federal labor law and court precedent have created a situation where unions can use fear — backed with criminal activity — to control Philadelphia’s construction industry. And it’s also a political failing; Philadelphia’s leaders have relied on unions’ money and political support, and, in return, they have given unions preferential treatment, ignoring the rights of others whom they are supposed to represent.

When law and politics don’t suffice to protect rights, the last defense falls to private citizens with personal courage and a sense of moral duty. The Pestronks can’t change the law shielding unions. But they are shifting public opinion; the YouTube videos they claim show unions perpetrating vandalism and violence have garnered thousands of views. And if public opinion changes, so might politics. Perhaps even more important, the Pestronks are inspiring others in the construction sector to take a stand against illegal union activity.

Whether Michael and Matthew Pestronk intended it or not, their actions may change Philadelphia’s construction industry. That’s monumental.

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow of the Franklin Center for Government and Public Integrity. This is the final installment of a three-part article.

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