Teamsters Postpone UPS Strike

By JAMES F. PELTZ and STUART SILVERSTEIN

Aug. 1, 1997 12 AM PT

TIMES STAFF WRITERS

A potentially crippling strike against United Parcel Service of America Inc., which could have severely disrupted package deliveries nationwide, was postponed late Thursday.

The International Brotherhood of Teamsters union, which represents more than 185,000 employees at the nation’s largest shipping company, called off a threatened midnight EDT walkout “until further notice” as talks continued under the guidance of a federal mediator.

Consumers, businesses and rival shipping companies had braced for chaos, as many companies scrambled to make contingency plans and reassure their customers amid the strike threat.

Those businesses are expected to continue to prepare today for possible disruptions, given that a strike is still a real possibility.

But customers’ options are limited because Atlanta-based UPS dominates the package-shipment industry, handling nearly 12 million parcels a day, or roughly 70% of the nation’s total. Even if they wanted to, UPS’ competitors couldn’t possibly pick up all of UPS’ business if a strike occurs.

“It’s just too much volume,” said Roy Liljebeck, spokesman for Airborne Freight Corp., which said it would accept extra packages only from its existing customers in the event of a strike.

Other delivery services, such as Pittsburgh-based RPS Inc., likewise said it won’t take new customers or are limiting the number of packages each client can ship because it simply doesn’t have the capacity.

“We have decided to protect our existing customer base,” said Kurt Chase, an RPS account executive in Los Angeles.

Indeed, “this is one of the few threatened strikes where even the potential beneficiaries [UPS’ rivals] are hoping there’s no strike,” said Brian Routledge, a transportation analyst at Prudential Securities Inc.

Matt Witt, the Teamster’s communications director in Washington, announced the postponement Thursday night. “We’re continuing to negotiate,” he said.

“There’s no time limit” on the postponement, Witt said, although he added that “we’re not at a point where we can say with any optimism that an agreement will be reached.”

UPS spokeswoman Gina Ellrich echoed the union statement, saying, “Our negotiators have confirmed that any job action has been postponed, there is no time limit and talks are continuing.”

Earlier Thursday, UPS spokeswoman Kristi Wolfgang had declined to outline UPS plans if a strike occurs, except to say “contingency plans are in place.” UPS managers presumably would step in to handle as many shipments as possible.

Regardless, UPS customers have been forced to seek other couriers and to calm their own customers’ fears of late deliveries. Fears of a possible strike had already resulted in a significant loss in revenue for UPS.

“If the strike takes place, we’ll switch to the U.S. Postal Service,” said Michael Beard, manager of Raven Maps & Images, a Medford, Ore., firm that sells geographic wall maps via catalog. “But anything we’ve shipped in the last couple of days potentially could be sitting in a [UPS] truck somewhere for a while.”

Lands’ End, the Dodgeville, Wis.-based apparel concern, has warned customers of delays because it ships most of its goods via UPS. A strike “would have a huge impact” on its operations, said spokeswoman Charlotte LaComb.

Boyds Wheels Inc., a Stanton, Calif., maker of custom auto wheels that also mostly relies on UPS, hadn’t yet made other arrangements but was telling customers about the possibility that their products would arrive late, said shipping manager David Hancock.

A strike also could hurt the railroad industry, which counts on UPS for 10% of its total “intermodal” shipments--that is, shipments in containers that are carried first on railroad cars and then by truck, according to Salomon Bros. analyst James Valentine. But other truckers could get a boost, he said.

The Teamsters--which are seeking more full-time job opportunities, better pensions and limits on outside subcontracting by UPS--rejected the company’s “last, best and final” offer Thursday, when their previous four-year contract expired.

UPS, which moves more than 3 billion packages annually, said its offer for a new five-year pact would keep its union members “the highest paid workers in the industry.”

White House aide Bruce Lindsey has been monitoring the situation for President Clinton, the administration confirmed. But administration sources said Clinton had not planned to immediately step into the dispute if a strike had begun this morning, as he did in February when he effectively ended a pilots’ strike against American Airlines only minutes after it began.

UPS, known as “Big Brown” for its familiar brown trucks and worker uniforms, earned a $1.2-billion profit last year on revenue of $22.4 billion--making it twice again as large as its nearest rival, Federal Express Corp.

Founded 90 years ago by failed gold prospector James E. Casey, UPS today operates more than 156,000 trucks and 500 aircraft, and has about 1.4 million customers that rely on the firm for daily pickup service.

UPS is mostly owned by its managers and other employees, and it’s renowned for demanding a strict work ethic from its employees in exchange for full-time driver salaries that average between $40,000 and $50,000 a year and benefits that include profit-sharing. Yet 57% of UPS’ employees work part-time, and earn an average of more than $11 an hour, according to the company.

UPS also has never been hit with a nationwide strike despite its workers’ long-time representation by the Teamsters.

But with Federal Express and others nipping at its heels, UPS--despite being a model of corporate efficiency, and doubling its annual profit since 1992--has implemented new tactics in recent years to boost its productivity.

Those changes, such as doubling the weight limit for packages its workers carry and requiring workers to carry more parcels, have run into heavy resistance among UPS employees.

The UPS dispute also comes as the Teamsters leadership is embroiled in a union election controversy and amid continuing deep divisions in the union’s rank and file.

Among other problems facing the union’s officials, a federal grand jury is looking into allegations of corruption in connection with the reelection of Teamsters President Ron Carey in December.

Times correspondent Melinda Fulmer in Orange County and Times wire services contributed to this story.

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