Most of us remember August 4th 1997 as a significant date in history when 187,000 UPS workers went on strike. To those in our industry it may have been as significant as the collapse of the dot-com bubble in 2000 or the Subprime Market Collapses of 2006/2007 was to most Americans. It was the first and only nationwide strike in UPS history. It lasted for 15 days and stopped the delivery of 80% of their shipments. UPS lost $780 million and the effects left a lasting concern amongst shippers that it could happen again. It was considered one of the most significant labor disputes in history.
Working for UPS at the time in our district office as a supervisor, I too recall how my life changed. I was asked to “brown-up” and assist with the cause as all management personal was expected to do. My role was to work from one of our extended (very remote) package centers to help process packages left in our system due to the shutdown. Once packages were sorted and loaded I would transport them via shuttle to our other remote package centers in Kentucky and Ohio. I remember driving through picket lines while picketing drivers and part-timers chanted and voiced their opinions. Some shouted comments of obscenities while others simply held their signs high. Our management team heard many stories of shenanigans including painted cars and even fist fights.
On my arrival, packages were unloaded, sorted and processed by other managers and supervisors for delivery. It was a yeoman’s effort but very apparent it wasn’t working as planned. Consider the fact that thousands of professional drivers and sorters abruptly stopped working and a skeleton crew, at best, with very rusty skills attempted to fill-in. Our goal was to clean-out as much package backlog as possible. The effort was evident but not close to the efficiency of our experienced people normally performing those tasks. The experience was not a pleasant one. The end result was that over 7 million packages remained in backlog at a loss of $780 million over the 15-day strike. At the time UPS said that it might have lost 5% of its business for good.
So what caused the shutdown in 1997? Both UPS and the Teamsters Union will say they had realistic settlements on the table well before the deadline in 1997. The failure to agree on two main issues resulted in the strike. The union wanted to maintain control of the pension fund and for UPS to create full-time positions from the part-time ones. After all was said and done, the union maintained control of the pension fund and “won” the war for part-time employees, vowing to create 10,000 full-time positions over a 5 year period. Experts point out however the union concessions which included: a five-year contract instead of four, there would still be more part-timers than full-timers, and the full-time workers received just a 3% pay raise.
With Big Brown and the Teamsters currently in the midst of another contract negotiation, some have concern about the potential for another strike. As was the case in 2002 and 2007, negotiations began early this time around. The Teamsters presented UPS with its initial proposals on September 27th, 2012, which is more than 10 months ahead of the July 31st, 2013 deadline. One contract covers approximately 250,000 workers in the small package operation (UPS), while the other covers nearly 13,000 LTL employees (UPS Freight).
So what are the major areas of contention this time around? First, the rising cost of healthcare premiums. While UPS wants an increase, the union wants no out-of-pocket for their membership. Second, harassment has been a long-standing issue. Union membership has accused UPS of harassing them over production levels and long hours with skeleton crews. So as volume numbers have increased, few new drivers have been hired to take up the slack. The result is longer workdays for the average driver and perceived harassment methods used to complete the work in a timely manner. Third is the wages for new part-time employees. Over the past 15 years, starting wage for part-timers has remained at $8.50 per hour. The union wants UPS to implement healthy increases for these employees. If a compromise is achieved in these three areas, any remaining issues shouldn’t be insurmountable.
Will another strike occur this time around? It certainly would not benefit either side to shut down again. The money lost this time around would be staggering, with UPS having well over twice as much in annual revenue in 2012 ($54 billion) as it did in 1997 ($23 Billion). To this day, UPS has lost package volume to FedEx due to the fear of any future strike. Many shippers use both carriers stating they “do not want to put all their eggs in one basket again.”
So the question remains, will Big Brown and the Teamsters, two giants in their own right, come to agreement before a work stoppage? Only time will tell. Considering the significant role shipping plays in today’s e-commerce, there is no doubt the court of public opinion will weigh heavy on UPS if negotiations stall. Just imagine all the marketing dollars spent on the “We Love Logistics” campaign. It’s catchy, but how believable is it? We will certainly find out.
Robert B. Raney is a Manager of Parcel Services for AFS. With 30 years of service and more than 175 employees, AFS constantly reduces shipping costs through freight and parcel audits, carrier contract optimization and the most advanced shipping analytics available. He can be contacted atrraney@afs.net.
Working for UPS at the time in our district office as a supervisor, I too recall how my life changed. I was asked to “brown-up” and assist with the cause as all management personal was expected to do. My role was to work from one of our extended (very remote) package centers to help process packages left in our system due to the shutdown. Once packages were sorted and loaded I would transport them via shuttle to our other remote package centers in Kentucky and Ohio. I remember driving through picket lines while picketing drivers and part-timers chanted and voiced their opinions. Some shouted comments of obscenities while others simply held their signs high. Our management team heard many stories of shenanigans including painted cars and even fist fights.
On my arrival, packages were unloaded, sorted and processed by other managers and supervisors for delivery. It was a yeoman’s effort but very apparent it wasn’t working as planned. Consider the fact that thousands of professional drivers and sorters abruptly stopped working and a skeleton crew, at best, with very rusty skills attempted to fill-in. Our goal was to clean-out as much package backlog as possible. The effort was evident but not close to the efficiency of our experienced people normally performing those tasks. The experience was not a pleasant one. The end result was that over 7 million packages remained in backlog at a loss of $780 million over the 15-day strike. At the time UPS said that it might have lost 5% of its business for good.
So what caused the shutdown in 1997? Both UPS and the Teamsters Union will say they had realistic settlements on the table well before the deadline in 1997. The failure to agree on two main issues resulted in the strike. The union wanted to maintain control of the pension fund and for UPS to create full-time positions from the part-time ones. After all was said and done, the union maintained control of the pension fund and “won” the war for part-time employees, vowing to create 10,000 full-time positions over a 5 year period. Experts point out however the union concessions which included: a five-year contract instead of four, there would still be more part-timers than full-timers, and the full-time workers received just a 3% pay raise.
With Big Brown and the Teamsters currently in the midst of another contract negotiation, some have concern about the potential for another strike. As was the case in 2002 and 2007, negotiations began early this time around. The Teamsters presented UPS with its initial proposals on September 27th, 2012, which is more than 10 months ahead of the July 31st, 2013 deadline. One contract covers approximately 250,000 workers in the small package operation (UPS), while the other covers nearly 13,000 LTL employees (UPS Freight).
So what are the major areas of contention this time around? First, the rising cost of healthcare premiums. While UPS wants an increase, the union wants no out-of-pocket for their membership. Second, harassment has been a long-standing issue. Union membership has accused UPS of harassing them over production levels and long hours with skeleton crews. So as volume numbers have increased, few new drivers have been hired to take up the slack. The result is longer workdays for the average driver and perceived harassment methods used to complete the work in a timely manner. Third is the wages for new part-time employees. Over the past 15 years, starting wage for part-timers has remained at $8.50 per hour. The union wants UPS to implement healthy increases for these employees. If a compromise is achieved in these three areas, any remaining issues shouldn’t be insurmountable.
Will another strike occur this time around? It certainly would not benefit either side to shut down again. The money lost this time around would be staggering, with UPS having well over twice as much in annual revenue in 2012 ($54 billion) as it did in 1997 ($23 Billion). To this day, UPS has lost package volume to FedEx due to the fear of any future strike. Many shippers use both carriers stating they “do not want to put all their eggs in one basket again.”
So the question remains, will Big Brown and the Teamsters, two giants in their own right, come to agreement before a work stoppage? Only time will tell. Considering the significant role shipping plays in today’s e-commerce, there is no doubt the court of public opinion will weigh heavy on UPS if negotiations stall. Just imagine all the marketing dollars spent on the “We Love Logistics” campaign. It’s catchy, but how believable is it? We will certainly find out.
Robert B. Raney is a Manager of Parcel Services for AFS. With 30 years of service and more than 175 employees, AFS constantly reduces shipping costs through freight and parcel audits, carrier contract optimization and the most advanced shipping analytics available. He can be contacted atrraney@afs.net.
