By STEVEN GREENHOUSE

October 29, 1999

A construction company that was the target of a union protest rally that created havoc in midtown Manhattan 15 months ago has effectively signed a peace accord with the city's unions by agreeing yesterday to become a unionized operation.

Union leaders hailed the decision by the construction company, Roy Kay Inc., to use only union workers and to let the 200 workers it regularly uses join various building trades unions.

Roy Kay's $32.6 million contract to build a subway command center in midtown Manhattan had become a flash point for the city's labor unions, which were angry that many building contractors were relying on nonunion labor and were thus undercutting union contracts.

Labor leaders said Roy Kay, based in Freehold, N.J., agreed to become a unionized company and to sign two consecutive three-year collective bargaining agreements because it faced so many union protests and because unions were lobbying to bar it from receiving government contracts.

On June 30, 1998, more than 20,000 construction workers paralyzed traffic in midtown and clashed with police officers as they staged a protest against Roy Kay's role in building the subway control center for the Metropolitan Transportation Authority.

At a news conference yesterday, LeRoy Kay, the company's president, said, "We consider this resolution to be in the best interests of our company and its employees and believe this decision will allow us to pursue opportunities in the New York market."

He said he decided to turn his company into a unionized operation after many of his workers indicated their desire to join a union.

Anthony Silveri, a business manager of the Mason Tenders Council of Greater New York, which represents thousands of construction laborers, said a shortage of skilled construction workers also played a role in persuading Roy Kay to become unionized. Mr. Silveri said that many construction workers were reluctant to work for nonunion companies because of reduced benefits and often lower wages. "There's such a limited amount of skilled people, even for union contractors, that he had no option," Mr. Silveri said. "Nonunion contractors are at a real disadvantage now in keeping people on."

He said that Mr. Kay's son David said at a meeting yesterday that he looked forward to the day when the company could operate free of stigma and union protests.

For the last year, unions have urged state officials to disqualify Roy Kay from government contracts. Union leaders provided state officials with evidence showing that Roy Kay had committed safety violations and had failed to pay the prevailing wage to its workers, as is required in many government contracts.

Struggling not to be disqualified, Roy Kay officials said the company's safety and wage violations were minor and no worse than those of many other contractors.

As part of the agreement signed yesterday, Roy Kay agreed to drop several lawsuits against labor unions that sought millions of dollars and accused them of illegally interfering with its operations.