UPI Tells Union to Accept Pay Cuts or Face Liquidation
United Press International on Monday told its 350 union employees that the money-losing news service will be liquidated later this month unless they accept 35% pay cuts for 90 days.
Management of the news service, which is a unit of New York-based Infotechnology Inc., said the cuts were needed to make UPI attractive to the six bidders that management says are considering purchasing the organization.
Pieter Vanbennekom, executive vice president of UPI, told employees in a memo that a “no” vote from the membership would mean the organization couldn’t meet the payroll or other obligations for two weeks. “Therefore, we will have to take the once-unthinkable step of putting UPI into liquidation,” he wrote.
Nonetheless, union leaders promptly announced that they would oppose the request, and it was not clear that the proposal would receive a warmer reception from the membership, which has made a series of contract concessions as UPI has changed hands three times in eight years.
“We have little doubt that UPI needs a lot of money, and needs it fast, but they’re coming to the wrong people,” said Chris Dahl, secretary-treasurer of the Wire Service Guild, which represents the employees. “People here can’t survive on a 35% pay cut. And once you give it away, I don’t think you’re going to see it back, even in the rosiest scenario.”
Union balloting on the question will be completed Nov. 16.
Milt Capps, a UPI spokesman, said the pay cuts were needed to “buy time to allow us to identify and negotiate with prospective buyers.” But he said there would be no guarantee that UPI would return salaries to their current levels after 90 days.
“We’ll have to review that, obviously, as we go along,” Capps said. “It’s far too early to call that.”
Guild employees with eight years’ experience earn $690 a week, while first-year reporters or photographers make $360 a week, said Dahl. He said UPI compensation has changed little in recent years; the current figures include a 3% raise added after negotiations earlier this year.
The 83-year-old news service was purchased in late 1989 by Infotechnology, which also owns 47% of Financial News Network; 58% of Comtex Scientific Corp., which distributes UPI’s electronic feed, and all or part of a number of other small companies.
Company officials won’t disclose UPI’s financial results, but sources close to the situation were told that the organization has been losing money at a rate of about $2.8 million a month.
Last week, UPI officials fired an undisclosed number of management employees to cut costs. As of Friday, the company stopped offering severance pay for non-union employees and said it no longer would give notice before laying off non-union employees.
The demand for a 35% pay cut came in an eight-hour negotiating session last Friday between the guild and management in Philadelphia. UPI management first told union leaders that they would begin a corporate liquidation Wednesday unless the union agreed to the cuts.
Later, however, management agreed to allow guild members to cast ballots according to their current rules.
UPI’s operations have been sharply scaled back in recent years. About 150 guild members have been laid off since August, Dahl said. As recently as 1987, the guild unit had 800 members.
UPI was subsidized for years by its founding parent, E. W. Scripps Co., and was last profitable in 1963.
The news service has struggled for several reasons, including the lack of financing from its original parent, the consolidation of the newspaper industry and the rise of supplemental news services, such as the Los Angeles Times-Washington Post and the New York Times services.
