United Parcel Service (ups) Case Study

UPS Strike

In early August of 1997 the United Parcel Service (UPS) had a predicament on its hands, a teamsters strike. UPS, the world’s 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. Teamster’s 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.igc.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