In early August of 1997 the United Parcel Service (UPS) had a predicament on its hands, a teamsters strike. UPS, the worlds largest package distribution company was coming off a year [1996] in which they reported sales of $22. 4 billion. UPS Employed 75,000 management and non-union employees compared with 185,000 teamsters who are part of the AFL-CIO that were going on strike. The teamsters rejected a contract extension offer from the company leaving the fate of millions of packages carrying everything from lobsters to laser printers up in the air (Johnson).
Tensions between union supporters and management began mounting in the years preceding the strike. In April of 1994, the International Union led a three-week strike against major tracking companies in the freight hauling industry in attempts to stop management from creating $9 per hour part-time positions. This would only foreshadow battles to come between management and union. Later, in 1995, teamsters mounted an unprecedented national union campaign in attempts to defeat the labor-management cooperation scheme that UPS management tried to establish in order to weaken the union before contract talks (Witt, Wilson).
This strike was distinguished from other strikes of recent years in that it was an offensive strike, not a defensive one. It was a struggle in which the union was prepared, fought over issues which it defined, and one which relied overwhelmingly on the efforts of the members themselves (http://www. igc. org/dbacon/Strikes/07ups. htm). The teamsters campaign at UPS was unique in that there were many special circumstances surrounding it. UPS controlled 80% of the ground package delivery business, which ensured them that a strike would have a significant impact on the economy and pressure the company to settle.
The company was not a conglomerate that could withstand the walkout since it did not have other lines of business. Also, UPS delivers to every address in the U. S. , adding a hometown story in most cities and towns. The last circumstance was the fight was taking place during August when Congress is out of session, making it easier to gain national attention (Witt, Wilson). This strike was a battle over several issues. One factor that escalated the strike intensity was the pensions battle. Billons of dollars in pensions were on the line.
The Teamsters were reluctant to allow UPS to withdraw from the multi-employer teamsters-controlled pensions plans. UPS proposed a plan that would increase the monthly pension benefits for full and part-time employees an average of 50 percent. The current pension plan benefited thousands of teamsters retirees that never even worked for UPS . Basically, UPS wanted UPS dollars to go to UPS people (UPS vs Teamsters). Before the strike, in many regions UPS participated in multi-employer benefit plans in which several shipping employers jointly pay for employee benefits.
If one employer goes out of business or gets behind on payments, the other employers must compensate for the loss. This explains why it is said that UPS pays for the retirement and benefits of people that never worked for them (Business News New Jersey). Another issue in negotiations was full-time versus part-time positions. UPS employees argued that too many workers were working 35-45 hours a week, often at two different jobs, for part-time pay. Having about two-thirds of all teamsters being part-time this was a central issue.
They wanted these part-time positions to be converted into full-time positions. UPS claimed that it did not want to guarantee full-time positions because of fluctuations in work and wants flexibility for competitive reasons (UPS vs Teamsters). Along with full-time positions and the pension arguments, strikers wanted limits on giving work to subcontractors, and health and safety improvements. John Cortez, a warehouseman for UPS has been surviving for five years on the same part-time job he got when he was young and single.
Working 26-28 hours a week and no having a wife and kids Cortez claimed it is not enough hours to pay the bills. With a waiting line for a full-time job so long that it will be another five years before Cortez would achieve full-time status. Teamsters union strategists and the UPS bargaining committee took a look at the problem of part-timers like Cortez. Knowing that his future was up in the air, Cortez and others sharing his interests would unite and keep the union members on the picket line as long as necessary (http://www. c. org/dbacon/Strikes/07ups. htm). During the 15-day strike many businesses suffered. One business, Mail Boxes Etc. , saw its shipping volume drop by 75%. Commenting on the situation, they stated that they diverted as much as they can of their shipping to other carries but it is difficult for other carriers to absorb 80% of the shipping for the entire state [New Jersey]. All over New Jersey companies ranging from pharmaceutical giants to small bakery shops faced the impact of the strike.
With speculation surrounding government intervention in resolving the strike, UPS kept a skeleton operation going with management behind the wheels of the companys famous brown trucks. One company normally running with 150 local drivers moving 40,000 packages a day continued running with 80 drivers from the management staff (Business News New Jersey). Another industry affected by the strike was the movie business. One firm, Technicolor Entertainment Services, handles distribution for several major studios promised to hand carry film canisters on commercial airlines if necessary.
A distributor for studios such as Disney, MGM, Universal, and Miramax Technicolor used UPS for materials such as promotional displays for theater lobbies. Companies such as Technicolor typically already work against tight deadlines, with the strike it only made things worse (http://channel2000. com/news/stories/news-970805-191537. html). While customers attempted to find alternative ways of distribution other than UPS, the many competitors, the U. S. Postal Service, FedEx, Emery Worldwide, ETA Express, DHL Worldwide Express, and RPS Inc. were not nearly capable of handling the near 12 million packages that UPS shipped daily. FedEx was and remains the strongest and most competitive competitor. If nothing else, this strike alerted competitors to the profit opportunities in fight UPS for market share. (http://www. igc. org/dbacon/Strikes/07ups. htm). After a fifteen-day strike, Teamsters and UPS management came to an agreement on a tentative contract.
At the start of the strike the company offered to advance 10,000 part-time workers to full-time jobs as other full-timers retired or quit, while only agreeing to create 1,000 new full-time jobs. In the final agreement, 10,000 new full-time jobs are to be created over the next five years. Another incentive to the deal was that five out of every six full-time openings would be filled by part-time UPS workers. UPS originally wanted to subcontract out the jobs of feeder drivers, the people that drive big-rigs between terminals.
However, knowing that those jobs are promotions and typically held by the most senior drivers. Union officials fought against and defeated this. Existing full-time employees received wage increases totaling $3. 10 over five years and full-time, high-seniority workers won substantial increases in contributions to pension plans (http://www. igc. org/dbacon/Strikes/07ups. htm). The union got full-time work while management got their workers back to work. In determining who got the better end of the deal it could go either way.
The union did get the full-time jobs they wanted, however the union members not seeking full-time work lost out in the deal. Both management and union were hurt in regards to lost business resulting from the strike. While it appears the union did get most of the things they asked for, they were negotiating quickly knowing that any time a back-to-work order by President Bill Clinton was possible. I believe that this strike was clearly avoidable, however the union decided they wanted to make a statement and I feel they were for the majority successful in getting what they wanted.
UPS did not appear to gain a lot from the deal, along with losing market share in the process a feel it was a slight loss on their part. There did not have to be a strike, but in striking I feel that the union got their point across. Management should have examined the full-time/part-time issues more closely in attempts to satisfy more employees. If employees felt they were safe and secure with their work status I feel they probably would not have went on strike.
The significance of this confrontation is that it gives Teamsters hope that management can be overcome if the union power is strong enough and the cause is a viable one. In the days following the strike UPS stepped up efforts to maintain its current customer base without losing a significant market share. UPS officials stated that they felt they could gain back nearly all small customers lost while possibly losing a few corporate clients.
In efforts to reassure its customers in the days subsequent to the strike, UPS telephoned nearly 1. illion customers to reassure them along with promising not to raise rates for the remainder of the 1997 year (Frank). Who exactly won the strike? I feel that the Teamsters were the winners in this case. They got the majority of their requests while giving little ground to management. The teamsters gave a little ground when they agreed to a five-year contract instead of the two or three year deal they were looking for. The union got UPS to create 10,000 full-time jobs from existing part-time positions compared to 1,000 which was originally proposed by UPS.
Along with getting a slight increase in pay, the Teamsters got to keep their existing multi-employer pension plan UPS attempted to do away with, clearly another Teamster victory. While UPS may have suffered some from pressure brought on by President Clinton, they got the Teamsters back to work. All in all, the union got almost everything they wanted with a little longer contract than they were looking for, clearly a union victory. The following table, with information from Alan Dodds Frank, summarizes what the Teamsters won, and what they conceded.