UPS agrees on major labor deal, union chief rips FedEx
UPS announced late Sunday night that it has reached a tentative, five-year labor agreement with the International Brotherhood of Teamsters union 10 months before the current pact with its 240,000 truck drivers and package workers expires.
An early settlement is critical to UPS maintaining share in the U.S. package and freight markets. Major customers increasingly have begun to make contingency plans to shift business to competitors out of concern that a strike would disrupt shipment flows, as occurred in 1999 when workers walked out on the job for two weeks. UPS began negotiations with the Teamsters in September 2006 in an effort to head off any problems.
“This deal will allow us to remain competitive in a challenging marketplace,” said Michael Eskew, UPS’s chairman and chief executive, in a statement.
Under the contract, UPS would increase wages as well as contributions to health care and pension plans. The agreement also allows UPS to withdraw from the Central States multi-employer pension plan that covers workers at a number of trucking companies in return for a one-time, pre-tax payment of $6.1 billion to the plan. UPS will simultaneously establish a jointly administered single-employer plan for the 43,000 workers that participate in the Central States plan.
Ken Hall, chief negotiator for the Teamsters with UPS, was quoted by Reuters as saying that full-time union members were expected to enjoy a total increase in wages and benefits of $9 per hour over the course of the new five-year contract, compared to gains of $8.75 per hour in the last six-year contract.
The deal, if ratified by rank-and-file workers, would go into effect on Aug. 1, 2008.
UPS and the Teamsters were motivated to get a deal done early because of changes in pension laws that take effect Jan. 1 that would make it harder to modify pension arrangements. Pension considerations led the Teamsters to push for a tentative agreement by Oct. 1 to leave time for ratification proceedings.
In return for agreeing to the largest wage increase in the history of the contract, UPS likely won accommodations from the union on work rules that would allow it to streamline operations, Pittsburgh-based transportation analyst Satish Jindel said in an interview. Those types of details will probably not be disclosed until after the deal is finalized, he suggested.
“Those work rules will provide for greater efficiency in using their workers, which will go towards offsetting some of the increases that they may be getting in this,” Jindel said.
UPS is allowing drivers and dockworkers in its UPS Freight division, which was created by the acquisition two years ago of less-than-truckload carrier Overnite Corp., to become part of the Teamsters along with its parcel drivers and sorters.
So far only one terminal — in Indianapolis — has tentatively agreed to unionize. UPS is negotiating separately with the drivers rather than remain part of a trucking industry Master Freight Agreement because of the ability to set up beneficial work rule changes on its own, according to Jindel.
Ratification of a Teamster contract in Indianapolis could serve as a model for organizing other locations in the UPS Freight unit.
Jindel predicted that the Teamsters will concentrate next on getting a labor deal ratified with ABF Freight Systems rather than less-than-truckload giant YRC Worldwide (known for major brands such as Yellow Transportation and Roadway Express) because ABF has expressed interest in pulling out of the Central States agreement as well. An agreement is possible within the next month in order to beat the Jan. 1 pension rule deadline, he said.
Such an outcome would mean that ABF and UPS have the same pension arrangements, which would put UPS in the best position to acquire Fort Smith, Ark.-based ABF, and merge it with the UPS Freight, Jindel said.
Quick settlement of a labor deal by UPS would demonstrate “that you can participate in the collective bargaining process and reach collective bargaining agreements” without undermining competitive strength, Ed Wytkind, president of the AFL-CIO’s Transportation Trades Department, told a luncheon gathering of transportation professionals on Friday.
Wytkind used the opportunity to rip package and freight carrier FedEx for hiding behind labor laws to remain non-unionized in ground transportation and maintain a wage advantage over its rivals.
FedEx has successfully argued to government regulators that its trucking operations should be covered under the decades-old Railway Labor Act rather than the National Labor Relations Act. The RLA is designed to cover workers in the aviation and railroad industries. The RLA makes it harder for workers to organize because requires them to coordinate and win a company-wide union vote across the nation rather than by individual location.
FedEx and UPS pilots, for example, are covered by the RLA, but FedEx Express has also classified its truck drivers, mechanics and others as aviation employees. FedEx Ground is non-union because its drivers operate as independent contractors.
An amendment authored by Rep. James Oberstar, chairman of the Transportation and Infrastructure Committee, that would end FedEx’s exemption from the NRLA was included in the Federal Aviation Administration reauthorization bill passed by the House two weeks ago. The bill must still be debated in the Senate, where Wytkind predicted FedEx will use its clout to try to derail efforts to open up union rights at the company.
“FedEx is the most notoriously anti-union employer in Washington. They spend millions in this town keeping themselves union-free and I think the fatigue of their heavy-handed approach is starting to grow on Capitol Hill, and that’s why I think you’re seeing more and more Democrats and Republicans saying enough is enough,” he said.
The AFL-CIO, an umbrella organization for various labor unions, is pushing hard to end FedEx’s exemption.
“This is going to be one of those fights that we’re gonna wage to the very end because it seems to me that there couldn’t be a worse perversion of our labor laws than allowing a single employer to get special treatment and use our laws as a shield against the workers who otherwise have a right to freely choose a union representative,” Wytkind said.
“There is a huge aspect of their operation that has nothing to do with being an airline and everything to do with being a competitor of UPS and every other major trucking company in the United States.”