Union Labor vs. Non-Union Labor in Infrastructure Services
Balancing productivity, cost, and workforce challenges in electrical, mechanical, and plumbing sectors
In an era of unprecedented investment in infrastructure, from grid modernization and water systems to transit and renewables, infrastructure service companies face mounting pressure to deliver complex projects on time and on budget. A central factor influencing project outcomes is workforce strategy: whether to rely on unionized labor or non-union (open shop) labor. Each model offers distinct advantages and trade-offs, and choosing between them has strategic implications for cost, quality, safety, and long-term workforce sustainability. Additionally, location can serve as driving force behind labor force decisions.
It’s important to understand the benefits and challenges when you are looking at these models from a buyer’s perspective. Making the best decisions with your exit strategy in mind should be a key consideration when you think through growth and opportunities. At the end of the day, your workforce isn’t an HR issue, it’s a deal issue!
What Union Labor Brings to the Table
- High Skill Levels and Standardized Training
- Productivity, Quality, and Predictability
- Safety and Workplace Stability
- Better Worker Retention and Lifecycle Support
Non-Labor Union Benefits
- Lower Direct Labor Costs and Flexibility
- Direct Workforce Management
- Opportunity to Innovate in Worker Development
Across the U.S., infrastructure service companies struggle to hire and retain qualified workers. This shortage affects both union and non-union shops but manifests differently in each model:
- Union shops benefit from established apprenticeship pipelines and ongoing training but must compete regionally for limited journeymen and sometimes face temporary shortages when locals cannot fill calls immediately.
- Non-union firms often find it harder to maintain a consistent pipeline of skilled labor without centralized training, leading to higher turnover and more reliance on temporary labor pools.
Union labor’s higher wage and benefit packages can make bids appear less competitive at first glance, even if total lifecycle costs are lower because of improved productivity. Conversely, the apparent cost savings of non-union labor can be eroded by project delays, higher turnover, and variable quality outcomes. Non-union shops that engage in highly specialized and complex projects can demand higher rates if they have a history of strong performance and ability to complete jobs on time and on budget.
Beyond a cost consideration, labor unions add administrative complexity and labor relations risk that open shops do not. Union work requires compliance with collective bargaining terms, benefit contribution systems, and reporting standards, increasing administrative workload, particularly for firms new to union contracts. Non-union employers may face challenges ensuring compliance with safety and labor regulations without union oversight, requiring robust internal HR and compliance functions to mitigate legal and reputation risks.
Unionized environments can carry the risk of strikes or work stoppages if negotiations with unions break down. These disruptions can delay project timelines and increase costs. Ensuring your labor union contracts have a no strike clause eliminates much of this risk for buyers. Non-union firms avoid this risk but can face different labor disputes without a formal grievance structure, which sometimes escalates into larger workforce problems.
For infrastructure service business owners, the choice between union and non-union labor is no longer just an operational preference: it is a strategic factor that directly influences how buyers assess risk, scalability, and long-term value. In today’s M&A environment, acquirers are paying premiums for companies that can demonstrate durable labor access, disciplined training, strong safety performance, and execution capability that extends beyond the owner. Whether your workforce is union, non-union, or a hybrid, the key question buyers will ask is simple: Can this business continue to perform and grow without you solving labor challenges every day? Owners who understand how their labor model impacts valuation, diligence, and buyer confidence are far better positioned to control the outcome of a sale. Gaining clarity on these issues early (before a transaction) can meaningfully increase both optionality and enterprise value when the time comes to explore a sale.
If you’re an infrastructure services business owner thinking about growth, succession, or a potential exit in the next few years, now is the time to assess how your labor model will be viewed through a buyer’s lens. Your workforce strategy shouldn’t be an afterthought in diligence. It should be a core pillar of your value story.
Preparing early can give you more options, stronger negotiating leverage, and greater confidence when the right opportunity arises.
