Apple owes big, say labor, builder
$5.2 million lien over Union Square flagship
The structural steel has been erected for Apple’s new flagship store at 300 Post St., a sparkling glass box set to open next summer on Union Square.
But while the $50 million project, designed by the prestigious British firm Foster + Partners, has been touted as one of the most important additions to Union Square’s retail scene in decades, local building trades groups and contractors on the job say the world’s largest tech company has violated labor agreements and owes millions of dollars for work that was completed months ago.
On Friday, Build Group, which had a $7.5 million contract to do seismic work on the proj-
ect, filed a lien for $5.2 million, some of which the company says Apple has owed it for more than six months. While billing disputes are common on big construction projects, Build Group President and CEO Ross Edwards said his company has never been in a situation where a client refused to pay such a large amount of money when there has been no dispute over the scope or quality of the work completed.
‘Just not paying us’
“We finished our work in July and basically they are just not paying us anything — they just don’t care,” said Edwards, whose company is building major condominium projects like Jasper on Rincon Hill and Alta Laguna in Upper Market. “We feel like we are a local San Francisco business that did good work — everybody says we did amazing work — and the largest company in the world just won’t pay us. They keep blaming the other guy. We just don’t understand.”
A spokesman for Apple, which Tuesday had a market capitalization of $634 billion, said the company was working with Build Group to resolve billing issues as quickly as possible.
But the payment issue is not the only construction-related problem associated with the project, which has also angered local organized labor groups.
When it was first proposed in 2013, Apple’s flagship at Stockton and Post streets was controversial, as critics took issue with the 80-foot blank wall planned for Stockton Street and a decision to remove the fountain designed by the late artist Ruth Asawa that sits on the property, previously home to Levi’s signature store. In addition, the project was opposed by Service Employees International Union, which argued that Apple should commit to hiring union security guards.
But Apple managed to calm critics by coming back with a new design that spared the fountain and added an 8-footwide vein of glass to the metal cladding along Stockton. It also sought the endorsement of the city’s building trades groups, including Carpenters Local Union No. 22 and the Building Trades Council. Those groups predicated their support on an agreement that Apple would hire a general contractor that exclusively employs members of local craft unions.
“We were looking for a commitment, and they put it in writing,” said Jay Bradshaw, director of organizing for Local 22.
At first, Apple hired Pepper Construction Group, a general contractor that is signed on with building trades. But in March, Pepper was let go and replaced by Ledcor Construction Inc.., which has had longrunning disputes with the carpenters union over the company’s unwillingness to meet standard union pay scale on other jobs in the region, Bradshaw said.
Apple: all union workers
Ledcor didn’t return a call seeking comment. Apple emphasized that all the workers on the San Francisco store are union. The company is also using all union labor on its new campus in Cupertino, also designed by Norman Foster’s firm.
Bradshaw said that even if the Apple Store is being built by union members, picking Ledcor to run the job violates the agreement. Local 22 has been picketing Apple Stores and has published a website called the Ugly Half of Apple Inc.
“Our deal with Apple was on the general contractor level, not just on this project but all projects,” said Bradshaw. “Apple made that commitment. Pepper made that commitment. Ledcor has the opposite business model. They have subs that do not pay area standards.”
Meanwhile, Build Group — a subcontractor to Ledcor — is doing everything it can to recover the money. The company has given Apple more than 1,000 pages of documents detailing every minute of work performed and materials used. Edwards said typically when there are billing disputes the client will pay about 70 percent of the balance while the remaining 30 percent is hashed out among attorneys.
“It’s a lot of money to be owed. The cash in my business is typically about $20 million. A quarter of my business is wrapped up in that job,” he said.
Edwards said that as far back as April, Build Group threatened to stop work because of billing issues, but Apple officials told them that the issue would be settled.
“They said don’t worry, they assured us, so we made the decision to keep working,” he said.