UPS, Teamsters Return to Table
Parties Aim for Oct. 1 Contract
By Jonathan S. Reiskin, Associate News Editor
This story appears in the Sept. 10 print edition of Transport Topics.
UPS Inc. and the Teamsters union returned to the bargaining table Sept. 5 after an eight-week hiatus for what could be a sprint to a new labor contract by month’s end —10 months before the current six-year contract expires.
UPS, the largest corporation in North American trucking broke off talks July 11 so that it could gather information on how much it would cost to leave a large health-care and pension fund that provides benefits to current and retired union members (8-13, p. 1). With that task complete and the union campaigning under the slogan “Oct. 1 or We’re Done,” the two parties resumed their talks in Washington, D.C.
“Both we and the Teamsters have indicated previously that we want to negotiate an agreement as soon as possible,” said UPS spokesman Dan McMackin. “We will negotiate in good faith until we have a contract, but I don’t see a reason why we can’t negotiate a contract by Oct. 1.”
A spokesman for the Teamsters said because of the status of the talks he would not comment beyond the public statements already available, but those documents suggest a shift by President James Hoffa on the issue of UPS withdrawing from the Central States Health and Welfare and Pension Funds.
On Aug. 2, Hoffa told his membership via the Internet that he would “not accept a proposal for UPS to withdraw from Central States unless we are satisfied that it would be in the best interest of all Teamsters who are participants in the fund, not just the UPS employees.”
But in an online “Dear Sisters and Brothers” letter Aug. 31, Hoffa said he had reached the conclusion that “the only option that will dramatically increase the funding ratio [of assets to liabilities] of Central States and permit us to improve pension benefits for UPS employees during the term of the next contract is to reach a new collective bargaining agreement that permits UPS to withdraw from the fund and pay a significant amount of cash in exchange for being able to leave.”
Teamsters for a Democratic Union, a group that has often opposed Hoffa’s leadership, cautioned UPS Teamsters to scrutinize any proposed deal with great care, but also concluded in an
Aug. 31 statement that, “their [Hoffa’s] bulletin . . . makes it clear that our union will ink a tentative agreement with the company by the end of September.”
While the idea of UPS paying to leave the Central States fund — one of the 22 such funds to which the carrier contributes — has gained currency, the details of how much this would cost remain guarded.
An August report by J.P. Morgan Securities estimated the cost to UPS at $4 billion to $6 billion, but UPS said it would not comment on such speculation.
UPS’ McMackin said, “We’ve gotten enough information from Central States to continue our negotiations, but we do not yet have a final agreement with the fund or the Teamsters.”
UPS employs more than 200,000 Teamsters to deliver packages. If the two parties come together by month’s end, it would mark a substantial evolution in recent contract talks.
In 1997, the two sides did not reach an agreement until after slogging through a 15-day strike. In 2002, they averted a strike by announcing a deal 15 days before the old pact was to expire.
A major change driving this evolution has been the rise of UPS’ rival, FedEx Corp. In 1997, FedEx was still a year away from buying what would become FedEx Ground.
Bear, Stearns & Co. released its second-quarter survey of shippers Sept. 5 and analyst Edward Wolfe told the firm’s clients that a UPS-Teamsters settlement this early could be significant.
“Nearly 12% of our respondents plan to divert some of their UPS freight prior to the July 31, 2008, contract expiration [up from 10% last quarter]. However, while previous survey responses indicated that those shippers would likely divert a modest amount of their volume up to a year in advance, our recent survey indicates that those shippers will no longer begin diverting a full 12 months in advance of the expiration and that a smaller proportion will likely divert volumes within six to nine months,” Wolfe wrote.
This story appears in the Sept. 10 print edition of Transport Topics.
UPS Inc. and the Teamsters union returned to the bargaining table Sept. 5 after an eight-week hiatus for what could be a sprint to a new labor contract by month’s end —10 months before the current six-year contract expires.
UPS, the largest corporation in North American trucking broke off talks July 11 so that it could gather information on how much it would cost to leave a large health-care and pension fund that provides benefits to current and retired union members (8-13, p. 1). With that task complete and the union campaigning under the slogan “Oct. 1 or We’re Done,” the two parties resumed their talks in Washington, D.C.
“Both we and the Teamsters have indicated previously that we want to negotiate an agreement as soon as possible,” said UPS spokesman Dan McMackin. “We will negotiate in good faith until we have a contract, but I don’t see a reason why we can’t negotiate a contract by Oct. 1.”
A spokesman for the Teamsters said because of the status of the talks he would not comment beyond the public statements already available, but those documents suggest a shift by President James Hoffa on the issue of UPS withdrawing from the Central States Health and Welfare and Pension Funds.
On Aug. 2, Hoffa told his membership via the Internet that he would “not accept a proposal for UPS to withdraw from Central States unless we are satisfied that it would be in the best interest of all Teamsters who are participants in the fund, not just the UPS employees.”
But in an online “Dear Sisters and Brothers” letter Aug. 31, Hoffa said he had reached the conclusion that “the only option that will dramatically increase the funding ratio [of assets to liabilities] of Central States and permit us to improve pension benefits for UPS employees during the term of the next contract is to reach a new collective bargaining agreement that permits UPS to withdraw from the fund and pay a significant amount of cash in exchange for being able to leave.”
Teamsters for a Democratic Union, a group that has often opposed Hoffa’s leadership, cautioned UPS Teamsters to scrutinize any proposed deal with great care, but also concluded in an
Aug. 31 statement that, “their [Hoffa’s] bulletin . . . makes it clear that our union will ink a tentative agreement with the company by the end of September.”
While the idea of UPS paying to leave the Central States fund — one of the 22 such funds to which the carrier contributes — has gained currency, the details of how much this would cost remain guarded.
An August report by J.P. Morgan Securities estimated the cost to UPS at $4 billion to $6 billion, but UPS said it would not comment on such speculation.
UPS’ McMackin said, “We’ve gotten enough information from Central States to continue our negotiations, but we do not yet have a final agreement with the fund or the Teamsters.”
UPS employs more than 200,000 Teamsters to deliver packages. If the two parties come together by month’s end, it would mark a substantial evolution in recent contract talks.
In 1997, the two sides did not reach an agreement until after slogging through a 15-day strike. In 2002, they averted a strike by announcing a deal 15 days before the old pact was to expire.
A major change driving this evolution has been the rise of UPS’ rival, FedEx Corp. In 1997, FedEx was still a year away from buying what would become FedEx Ground.
Bear, Stearns & Co. released its second-quarter survey of shippers Sept. 5 and analyst Edward Wolfe told the firm’s clients that a UPS-Teamsters settlement this early could be significant.
“Nearly 12% of our respondents plan to divert some of their UPS freight prior to the July 31, 2008, contract expiration [up from 10% last quarter]. However, while previous survey responses indicated that those shippers would likely divert a modest amount of their volume up to a year in advance, our recent survey indicates that those shippers will no longer begin diverting a full 12 months in advance of the expiration and that a smaller proportion will likely divert volumes within six to nine months,” Wolfe wrote.
