Editor’s Note: MPR typically interviews people with a direct link to Michigan privatization initiatives. However, given Mr. Fantauzzo’s status as a union leader and the importance to Michigan of organized labor, we felt compelled to share his fascinating story with MPR readers.

As you know, Indianapolis Mayor Steve Goldsmith campaigned for office on a highly visible, pro-privatization platform. What was the atmosphere at AFSCME Council 62 during a campaign that saw candidate Goldsmith promise to reduce city payroll by 25% in his first year as mayor?

I believe that the attitude of the union was predictable when faced with a candidate running on a privatization platform. We vigorously opposed his election. You don’t need to be a rocket scientist to see that if you’re going to cut payroll by 25%, without touching police or fire, the unions are going to lose 50% of their membership.

We had a choice to make. Either develop some consensus with the candidate where the union would cut its losses, or mount an aggressive campaign of opposition–and we chose the latter. We believed that it was better to fight and go down swinging than to not fight at all.


We had a choice to make. Either develop some consensus with the candidate where the union would cut its losses, or mount an aggressive campaign of opposition–and we chose the latter.


Describe the relationship between AFSCME Council 62 and the Goldsmith administration before and after AFSCME Council 62 began bidding and winning city contracts for such things as chuckhole repair?

When the mayor first took office, the relationship was a continuation of the animosity that existed in the campaign. The union was actively using the media to oppose the mayor’s initiative, and the mayor started his term by attempting to shut down the city’s fleet maintenance garage, a garage that has now, ironically, competed against the top names in the private sector and beat them in head-to-head competition.

Eventually, we developed some common ground with the mayor’s office and as a result, received an offer by the city to establish a level playing field, not only for city services, but for work that had been previously contracted out, in an effort to return some of that work to city services and provide the union with an opportunity for growth.

Did the mayor invite AFSCME Council 62 to bid on his Request for Proposals (RFP), or did the union demand an opportunity? What was the mechanism that allowed you to compete head-to-head with private firms?

The mayor’s director of transportation initiated the conversation about the union participating in the process. When we began to have those conversations, the union focused its energies on defining the parameters under which we thought fair competition could take place. In other words, we spent time reaching an agreement on what a level playing field would be, as opposed to preparing the first bid. We dealt with a number of issues including the treatment of overhead, training issues, and redesigning the work, as opposed to just looking at personnel costs.

How were your winning bids developed? Did you use a particular process for submitting RFPs?

We win approximately 80% of the bids in which we participate. Our success is not so much tied to a secret formula as it is to an empowerment of the worker, and a better understanding of the work process. Our success has also been related, honestly, to the union taking a step back and allowing the front-line employees to take a dominant position in the development of the bids, rather than assuming that we know any more about the work process than they do.

The other issue, of course, was the mayor’s willingness to eliminate many of the bureaucratic restrictions and structure that had prevented efficient public services in Indianapolis. He eliminated, at our request, eighteen to twenty of the middle managers who had helped engineer his election to office.

Describe the changes that took place as a result of your union’s new, business-like competitive environment? What have been the positive and/or negative effects of competing with private companies for contracts?

On the positive side, I think that the Indianapolis experiment has gone a long way toward eliminating two myths. One, that the private sector is always more efficient than the public sector, and two, that public employees are inherently lazy.

What we’ve demonstrated on a consistent basis is that we can win four out of every five bids, and in the process, allow employees to have greater control of their destiny. When you can do that, you can have a very big impact on government. I don’t think there is anyone in Council 62 who would tell you that government could not be more efficient.

Can you approximate the savings to the city of Indianapolis that are directly related to competition between the public employees and private firms for city contracts?

I’m not convinced that savings ought to be attributed to competition per se. We look at competition as a means to an end. The end is not competing, but developing an efficient and effective delivery system. There are a number of areas, for instance, where we demonstrated a level of efficiency–filling chuckholes, for example–where we win 90-plus percent of the bids.

There is actually a moratorium on bidding in a number of services, because we win so often. The value of the process is the ability to empower the employees and the line managers in identifying the work that they do well.

From the perspective of a public employee union representative, what advice would you give to municipal officials who wish to explore privatization as a management option? How can municipal leaders make privatization a win-win situation?

There is a dramatic difference in privatizing for the sake of privatizing and the competitive model that existed in Indianapolis. Allow me to address both of those issues.

First, if a public decision maker is moving forward with privatization on a philosophical basis, the union will oppose it. If you’re looking to develop a system that redesigns government in an effort to make it more consistent with private sector models, you have to look at the whole package.

If we look at the companies that have been most successful in turning themselves around, a consistent theme emerges: They ask the workers how to improve the processes inherent to their business. I think what we have done in Indianapolis is fashion a system that encourages and rewards initiatives that benefit the taxpayers in the city. Another one of the key ingredients in Indianapolis has been an open line of communication between the union and the mayor.

All of these may be hard choices to make for a politician, but they’re choices that must be made if we are to make government more efficient and effective for the people who pay its bills.