Las Vegas Sun

March 28, 2024

In construction, hard work followed by long wait for payday

M-Truss and Components Inc.

Steve Marcus

Cathy McBride, founder of M-Truss and Components Inc., and her husband Tom McBride, president, pose at the company’s facility by the Southern Desert Correctional Center in Indian Springs Wednesday, July 6, 2011. The company is owed $30,000 for work on the Cosmopolitan, said Cathy McBride.

M-Truss and Components Inc.

Inmate worker demonstrates truss building at the M-Truss and Components Inc. facility outside the Southern Desert Correctional Center in Indian Springs Wednesday, July 6, 2011. The company is owed $30,000 for work on the Cosmopolitan, said owner Cathy McBride. Launch slideshow »
Click to enlarge photo

J. Patrick Coolican

Here’s a story about how the little guy gets paid:

Last month I wrote a lengthy profile of the Cosmopolitan, rooting for this cool new Strip resort to succeed while questioning whether it actually will, considering its $4 billion price tag, its ownership by a massive German bank, and its failure, thus far, to attract enough gambling revenue.

A few days later, Cathy McBride sent me an email saying she had no sympathy for Cosmo because her small company was still owed nearly $30,000 for work it had done on the place.

McBride is the owner of M-Truss & Components. Her husband, Tom, is the president.

They manufacture steel structural supports for roofs of big projects, including the Cosmopolitan. Their work there was complete about a year ago, and they were merely awaiting their “closeout” money.

On big construction projects, it works like this: The customer holds on to 5 or 10 percent of the payment to make sure the work is done to specification and on time. Once all the work is approved, the money is released.

The other wrinkle is that it’s a “pay when paid system.” The McBrides don’t get paid until the subcontractor they work for — KHS&S in this case — gets paid. KHS&S, which is a big company with offices in eight states and Canada, doesn’t get paid until Perini Construction, the general contractor, gets paid.

Perini is a massive company familiar to people in Las Vegas, having built many projects, including CityCenter, a resort that cost $8.5 billion and the lives of six construction workers. Just this week, Perini got in a public dispute with CityCenter owner MGM Resorts International, which says the unfinished Harmon is unsafe and not repairable. Perini blames MGM’s design flaws.

Two workers died building Cosmopolitan. Independent reports and investigators for the Nevada Occupational Safety and Health Administration found troubling patterns of safety violations at CityCenter and Cosmopolitan.

But I’ve digressed.

Perini pays subcontractors after Cosmopolitan pays Perini. Cosmopolitan is owned by Deutsche Bank, a big German firm founded in 1870. With refreshing candor, the bank’s website notes that during the Third Reich, the firm “allowed itself to become a tool of the Nazi state.” (As it happens, Deutsche Bank represented Perini in the sale of $300 million worth of bonds last year, according to an October Securities and Exchange Commission document. We’re all friends here, apparently.)

I called the subcontractor KHS&S, and they said, yes, we owe M-Truss that money and will happily pay as soon as we get paid.

I called Perini. The company responded with a statement, saying 60 percent of the close-outs are complete and that they expect the remaining bills to be paid out in a timely fashion. Less than 2 percent of the total construction cost is owed to all the subcontractors, and the slow timing is not unusual for a project of this magnitude, Perini added.

For its part, a Cosmopolitan spokeswoman said, in a statement, that the project “has been and remains fully funded, and we are confident that our partners are conducting a timely and responsible settlement process for a project of this scale.”

All well and good, except that I was told by one of the project’s many subcontractors that there was foot dragging and millions still to be paid on the $4 billion project.

And, the McBrides have been out $30,000, which can be life or death for a small business during the worst construction recession since the Depression.

It’s worse than that, though. For one thing, the McBrides have already gone through this once before, with the Venetian. After years of litigation, they didn’t get much. (“The lawyers always get paid first,” Cathy McBride said ruefully.)

Plus, the McBrides operate just outside the walls at Southern Desert Correctional Center, where inmates who are close to release and deemed safe learn work and life skills, while getting paid minimum wage, to work for M-Truss. At the height of the boom, there were 25 inmates working for M-Truss. Now, there are six. M-Truss not getting paid isn’t just money out of the McBrides’ pocket, it’s fewer inmates released with the skills and the attitude to keep on the straight and narrow once released. (See my related column.)

So, you can see why I pressed Perini hard as to when the McBrides would get paid.

And lo and behold! After several days of back-and-forth, a Perini spokeswoman called me to say payment to the subcontractor had been approved, and the McBrides will likely get their money within days.

Wow. What a happy coincidence.

Glad we cleared that up.

It’s a good thing the McBrides are getting paid, too. Because otherwise, I was going to have to write an angry, hyperbolic column on the collapse of corporate citizenship in this country, a column about how companies routinely welsh on their debts, produce shoddy products, lay off thousands of workers, skate on their taxes and a few of them sometimes dump oil in our oceans.

Yes, I’m glad I didn’t have to write that column.

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