United Parcel Service workers have allowed their union, Brotherhood International, to call a strike as soon as August 1, after the current contract expires, the union announced Friday.
The Teamsters represent more than 325,000 UPS employees in the United States, with the company employing approximately 450,000 employees overall. Union said 97 percent voted in favor Permission to strike.
Many unions have such votes to create leverage at the negotiating table, but far fewer end up following through. “The results do not mean that a strike is imminent and does not affect our current business operations in any way,” UPS said in a statement, adding that it was “confident we will reach an agreement.”
The UPS strike could have major economic repercussions. The company handles about a quarter of the tens of millions of packages shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index. And while UPS competition has grown in recent years, competitors will be hard-pressed to quickly replace that lost capacity, leaving some customers in the lurch and others facing higher costs.
“What happens when you try to get 25 percent food into a stomach that’s 90 percent full?” said Alan Amling, a fellow at the University of Tennessee’s Global Supply Chain Institute and former UPS CEO.
The two sides have reached tentative agreements on a number of issues since they began negotiating a national contract in April, most recently on thermal safety, including condition of air conditioning In new trucks beginning in January, additional fans and venting for existing trucks.
But negotiators have not yet dealt with pay increases, which the Teamsters say are overdue amid the company’s strong pandemic-era performance. The company’s adjusted net income rose more than 70 percent from 2019 to last year.
The union has also focused on reconsidering pay differentials for a class of drivers who usually work on weekends.
UPS CEO Carol Twomey, who started in the position in 2020, said in a recent report: Earnings call that UPS was compliant with the union on “several key issues”. She added that outsiders should not put so much equity into “a great deal of noise” that was likely to arise during the negotiations.
Looming over the talks is the political stance of Teamsters leader Sean O’Brien, who, during his campaign for union presidency in 2021, repeatedly accused his predecessor, James P. Hoffa, of being overly conciliatory toward employers.
Mr. O’Brien complained that Mr. Hoffa essentially forced a concession contract on UPS workers in 2018 after union members voted against the deal. He criticized his opponent for the presidency, a candidate allied with Hoffa, as being unlikely to strike.
Mr. O’Brien said at a conference Discuss the candidates.
Mr. O’Brien has largely maintained his aggressive stance toward UPS since taking over as president last year. Speaking in October to campaigners with Teamsters for a Democratic Union, a reform group that supported his candidacy, Mr O’Brien vowed that “this UPS agreement will be the defining moment in organized labor”.
Compensation for UPS drivers is generally higher than that of the company’s competitors. UPS said the average full-time delivery driver with four years of experience earns $42 an hour, and part-time workers who sort packages earn an average of $20 an hour after 30 days.
The groups receive the same benefits package, which includes health care and pension contributions and is worth about $50,000 annually for full-time drivers, the company says.
Along with overall pay levels, the union said it wanted to eliminate the driver category created under the 2018 contract.
The company said the category is for hybrid workers who perform jobs such as sorting packages on some days while driving on others, especially Saturdays, to meet rising weekend delivery demand.
But the Teamsters said those workers never followed the hybrid arrangement and drove full-time from Tuesday to Saturday, for less pay than other full-time drivers. The company says weekend drivers make about 87 percent of the base salary of full-time regular drivers, and that some employees have worked under a hybrid arrangement.
In the event of a strike, deliveries to consumers, such as e-commerce orders, are likely to be among the first to fail. But experts said the supply chain could suffer, too. Some suppliers will struggle to quickly ship goods such as auto parts to manufacturers, which can cause a slowdown in production.
Even a short hit can negatively affect the UPS. Many clients had long relied on the company exclusively, but that began to change after the Teamsters last struck in 1997, Mr. Amling said. After this strike, which lasted just over two weeks, more customers began working with multiple carriers. The consequences were masked by the gains from the rise of e-commerce and the lack of competitors to choose from, but the company may not be so lucky today.
Neeraj Chukchi Contribute to the preparation of reports.
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