UPS Strike

The UPS Strike ... The Illusion Of ‘Victory’

By Richard H. Wessels

The two week United Parcel Service strike ended in mid August with the general consensus that "the Teamsters won the strike." IBT President Ron Carey was quoted: "Our members will go back to work having achieved every major goal they had on full time jobs, pensions, subcontracting, wages and job safety."

Carey went on to comment in his post-settlement news conference: "Working people were on the run, but not any more! This strike marks a new era!"

It is inappropriate, however, to draw any sweeping conclusions from the UPS strike and its ultimate settlement. Similarly, it is not so easy to make broad generalizations about who won or who lost, or about "mistakes" made by either side.

In analyzing this very specific labor-management confrontation, there are, however, some fundamentals at work:

• UPS is generally regarded as a very good employer that offers high wages and benefits, good even for part-timers. They have had amicable relations with the Teamsters for decades.
  
• UPS must have been very concerned in the pre-negotiation planning stage about labor costs. UPS’ wage and benefits costs before the negotiations appear to be very much on the high side in comparison to its competition.
  
• With 185,000 members, UPS is the Teamsters’ largest single employer. The Teamsters must have clearly understood that a "spotlight" would be on these negotiations. More importantly, the bargaining with UPS would have major impact on the Teamsters’ National Master Freight negotiations with the trucking industry, which will be coming up in early 1998. The Teamsters could ill afford a "weak" settlement with UPS.
  
• Ron Carey had big political considerations with these negotiations.
  
• Because of a number of these perhaps irreconcilable differences, the UPS strike may have been a foregone conclusion with both sides being between "a rock and a hard place."
  
• UPS is a tough company to run during a strike because of the close integration of operations. It is far more "strike prone" than most other companies.
  
• Market share loss must have become a huge issue for UPS as the strike progressed. It appears that UPS made the ultimate decision to "cut their losses" and settle "sooner rather than later."
  
• UPS in the end appears to have settled for substantially more than the company could have settled for before the strike because of the urgency to get back to work to protect its market share. 

One often reads comments on the sports pages about trades between professional teams being "good for both sides." This strike was "bad for both sides." Perhaps it is only another episode in private sector unionism’s steady march downhill. The Teamsters maneuvered the union into a damaging strike with one of their best employers. While Teamsters leaders and members are congratulating themselves on what they perceive to be a "win" in the strike, the union is now faced with a major employer that has been placed in a weakened condition in the marketplace.

Hailing the UPS settlement as a "labor victory" or "watershed moment" assumes a model that does not exist today. Back in the 50’s and 60’s, when a handful of giant, lethargic companies ruled most U.S. industries, the Teamsters’ strategy made sense. No matter how expensive or inflexible a settlement might be, once concessions were wrung from reluctant managers, a company could pass the additional costs along to its customers. This was particularly true of the Hoffa era trucking industry.

In today’s economy, however, a company’s rivals will instantly exploit any disadvantage. If a labor contract pushes even a dominant company’s costs out of line, others will steal away business. Thus, gains in a new labor pact with UPS are likely to be short lived.

Factors were at work here that may have made the UPS strike inevitable. But, the Teamsters would have been far better off in the long run going after their best employer’s non- union competition. It is certainly, however, not without historical precedent for labor organizations to "kill the golden goose."