The UPS Pas de Deux

The UPS Pas de Deux

The UPS Pas de Deux

Moneybox
Commentary about business and finance.
July 13 1998 5:26 PM

The UPS Pas de Deux

With the UAW-GM strike metastasizing into the kind of showdown where both sides feel they've sunk so much into the walkout that they can't let it end without winning, United Parcel Service is quietly eating away at the gains won by the Teamsters during last year's 15-day strike. That strike, you'll remember, was widely interpreted as a sign that the American labor movement was back. The surprising outpouring of public support for the strikers, due in part to the Teamsters' insistence that the walkout was mainly about UPS' overreliance on part-time workers, suggested that workplace clout was not a dead letter for industrial unions.

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As part of the five-year contract that came out of that strike, UPS agreed to hire 2,000 new full-time workers by the end of July 1998. But the contract contained an out for the company. If UPS' package volume did not return to pre-strike levels and if the company were laying off workers, the full-time positions would not be created. UPS insists that its package volume is 4 percent below its year-ago levels, and that it has officially laid off "several thousand" drivers, although it insists that it doesn't have concrete numbers. As a result, those 2,000 jobs will not be created.

The Teamsters are taking the case to arbitration, arguing that whatever reduction in volume has occurred is the result of a decision to eliminate less-profitable routes. Moreover, the union argues, the company has made up the workload of laid-off workers--of which the union says there are only a couple of hundred--by demanding more overtime.

The truth is that the contractual provisions were curious to begin with, since the provision about layoffs essentially allowed UPS to control the terms of the debate. And while UPS argues that it has no incentive to hold down the volume of its packages, it would be quite sensible from a business point of view to slash the volume of low-margin deliveries if doing so allowed the company to avoid hiring 2,000 new full-time workers with benefits. (Sensible, though hardly equitable.) In addition, like many U.S. corporations, UPS is a firm believer in the virtues of heavy overtime and part-time work, which often make it possible to do the same amount of work for less money. It's a nickel-and-dime approach to labor relations that reflects badly on a company, but it's certainly not some dramatic innovation.

More important than all this, of course, is the fact that UPS must feel that the constant turmoil within the Teamsters (in the wake of Ron Carey's resignation as head of the union) has left the union far weaker than it was a year ago and far less savory in the eyes of the public. The great big yawn with which the UAW strike has been greeted also sent a message that no one would be too scandalized if UPS reneged. Absent constant attention, the company almost always holds the high cards. We'll see more of these give-with-one-hand, take-with-the-other pas de deux in the future.