Businesses Scrambling as Strike Cripples UPS

Fortune 500 companies, small businesses and inconvenienced consumers found themselves in the same predicament Monday as they scurried to find other ways to ship millions of packages on the first day of a nationwide strike by United Parcel Service of America workers.

“We’ll use whatever is necessary to get our products there the next day,” said Sharon Baer, chief executive of Daisy Wheel Ribbon Co., an Ontario-based provider of computer supplies. “If we have to take them on our hands and knees, we will.”

Conditions were more inconvenient than chaotic; many companies promptly switched to alternate shippers they had lined up in advance. But shippers and customers alike sounded warnings that U.S. parcel delivery could seriously bog down if the strike isn’t settled soon.

“There’s no way anyone can pick up this kind of slack. Companies are going to have to start rationing what they send,” said Ingram Micro President Jeffrey Rodek, who was an executive at UPS competitor Federal Express Corp. from 1978 to 1994.

Staffers at Santa Ana-based Ingram Micro Inc. stopped using UPS last Wednesday and began rolling all of their deliveries to Federal Express and other overnight carriers.

At UPS, more than 20,000 managers were sorting and delivering parcels after members of the International Brotherhood of Teamsters, which represents 185,000 of UPS’ 302,000 U.S. employees, struck that Atlanta-based concern after contract talks failed. The firm is owned by its managers and some employees.

But the company--which is by far the largest player in the parcel-shipping industry--still expects to deliver only 10% to 15% of the 12 million packages it typically moves each day, UPS chief negotiator Dave Murray told a news conference in Washington.

As a result, other delivery firms such as Federal Express, Airborne Freight Corp. and the U.S. Postal Service were swamped with additional orders. UPS normally handles an estimated 70% of the nation’s daily parcel-shipping traffic.

Economic damage from the walkout’s first day was minimized because the shipping industry and customers had several days to make emergency plans. The strike, first set for last Friday, was delayed while negotiators continued talking through the weekend.

“We should have gone out on Thursday when it could hurt them more,” said a driver picketing a UPS distribution center in Anaheim, who gave only his first name, Jim. “They knew this contract was coming up.”

“We were anticipating that this would happen,” said Bobbie Bryson, spokeswoman for catalog retailer Lillian Vernon Corp., which is currently shipping 18,000 packages a week. The New Rochelle, N.Y.-based company has shifted its UPS business to the Postal Service, “and so far it’s working fine.”

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But companies were nearly unanimous in predicting that bottlenecks and business costs will mount rapidly if the strike lasts more than a few days.

For now, “it’s not disastrous,” said Michael Sawitz, chief executive of AIM Mail Center, a Lake Forest-based chain of mailbox and office service stores.

“At a week, it starts to be a different scenario,” he said. “Things will start to back up if it goes on more than a week.”

Allergan Inc., an Irvine-based drug maker, must pay 60% to 70% more to make shipments via Federal Express rather than UPS, said Doug Ogura, Allergan’s manager of administrative services.

“This is a big deal for the simple reason that UPS is the most low-cost provider for group transportation of packages and shipments,” he said.

Small businesses are especially vulnerable, some observers said.

“Companies like FedEx are going to serve their biggest customers first, which puts small businesses in a tough spot,” said Todd McCracken, president of National Small Business United, an advocacy group in Washington. “UPS really is their shipping department. So a typical small business out there doesn’t have a lot of options.”

Lu Cindia Dolly, who works at Judy Green Music in Los Angeles, was among the customers stopping Monday at a Hollywood post office. “UPS picks up at my job. I had to walk this over,” she said. “If we get a lot of orders today, we’re in a world of trouble.”

Corporate size was clearly an asset at Fullerton’s Beckman Instruments Inc., which pays UPS nearly $2.1 million a year to ship medical products. Beckman spokeswoman Jeanie Herbert said other carriers agreed to handle that business--and match UPS’ rates, which are normally lower than theirs.

“Yeah, we have leverage!” Herbert said.

Another big UPS customer, Rockwell International Corp. in Seal Beach, benefited from the advance notice. “We were able to line up alternate couriers,” spokesman Terry Francisco said. “There will be little or no impact corporate-wide.”

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The strike forced others to immediately work harder. Federal Express driver Rodrigo Sanchez said he was four to five times busier than normal, shuttling parcels between downtown Los Angeles and Los Angeles International Airport.

Overall, it was difficult to gauge the immediate effect of the strike--the first national walkout in the 90-year history of UPS--although the company said just the threat of the strike already had cost it 1 million packages Friday--about 8% of its daily business.

No new talks were immediately scheduled in the dispute, which centers around pension benefits, full-time job opportunities and UPS’ use of outside contractors for certain services. Murray said UPS had no plans to sweeten its last offer.

Teamsters President Ron Carey, who walked out of the federally mediated talks Sunday night, said UPS forced the strike by refusing to resolve such concerns as the large number--about 60%--of UPS unionized jobs that are part-time.

President Clinton told reporters Monday that, although UPS is “very important” to the country, he would not get involved in the dispute. “I hope they’ll go back to the table, but at this time I don’t think any further action by me is appropriate,” he said.

There were scattered arrests of striking UPS workers. Six workers near Boston and four in Chicago were charged with disorderly conduct, police said. Only a few thousand Teamsters defied the union and crossed picket lines, the company said.

There were no arrests in Southern California, but pickets outside some UPS distribution centers disrupted efforts to put a limited number of delivery trucks on the streets. In California, two people were injured in incidents when trucks tried to cross picket lines to enter UPS plants.

At an Aliso Viejo facility where 250 trucks usually are dispatched daily, one-tenth that number had an extremely tough time maneuvering through the milling demonstrators.

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“It took a long time because they didn’t want them to leave,” said Laura Benz, the center’s human resources manager. “It took an hour to get 20 or 25 vehicles out of here.”

About 100 strikers also picketed UPS’ Van Nuys hub. “It’s going good and it’s costing them a lot of money,” said one, maintenance worker Gary Diaz.

The strikers, some of whom said they were 30-year veterans of UPS, complained about inadequate raises, pensions and health care benefits. UPS says its full-time drivers earn between $40,000 and $50,000 a year, and its part-time help earns an average of $11 an hour.

At an Anaheim distribution center, 25 pickets circled a driveway as another 75 to 100 sat beneath trees and awnings, escaping the sun while awaiting their turn to walk.

Most of the part-timers on the picket line had worked for UPS for more than three years, including 10-year veteran Julia Moore, a customer clerk.

“They said I had a good chance of getting on full-time in a few years,” Moore said. She never got full-time status with the extra pay and benefits, but she did get full-time hours.

Now, she’s worried that the increasing number of contract employees could cut into her schedule. The Teamsters contract only guarantees her three hours a day.

The Postal Service is limiting customers to four packages per visit. But Mail Boxes Etc., the big chain of postal-service centers that counts itself among UPS’ biggest customers, said it will accept more--even though it ends up routing many of the parcels through the Postal Service.

Contributing to this report were Times staff writers Barbara Marsh, John O’Dell, Marla Dickerson and P.J. Huffstutter in Orange County; Dina Bass in Washington; Carla Hall and Jennifer Oldham in Los Angeles, and Jose Cardenas in Van Nuys; correspondents Jack Leonard in Los Angeles and Melinda Fulmer in Orange County; and Times wire services.

* LABOR’S STRENGTH

The UPS strike is an exception, not a sign of more to come. A12

* VOLUME CONTROL

Competitors make adjustments to handle the added load. D1