AFL-CIO to Help Fund Teamsters in UPS Walkout

In a sign of rising stakes for organized labor in the strike against United Parcel Service, the AFL-CIO on Tuesday gave the Teamsters a virtual blank check, offering to help the union provide $10 million weekly in strike benefits.

The company, meanwhile, warned that the loss of business caused by the strike will force it to lay off 15,000 workers by the end of the week. UPS is carrying only 10% of its regular volume of 12 million packages daily.

The dispute between the Teamsters and the UPS, which normally provides 80% of the nation’s package delivery service, is on its way to becoming the biggest, and most costly, strike in a generation.

“Before the week is out we will have enough loan commitments from other unions, large and small, to finance the worker side of this confrontation for a long strike if that’s what it takes,” AFL-CIO President John Sweeney said Tuesday, joining Teamsters President Ron Carey in a news conference at the union’s headquarters.

The Teamsters are paying $55 a week to the 185,000 package loaders, sorters and delivery drivers who began their strike Aug. 4. AFL-CIO unions will help the Teamsters pay their striking members for “many, many weeks at $10 million a week,” Sweeney said.

“Because their fight is our fight, we are making this strike our strike,” said the AFL-CIO president, who pledged unlimited financial aid after conferring by telephone with many presidents of the AFL-CIO’s 78 member unions.

The financial pledge from the AFL-CIO represents a judgment by the top leadership of the union movement that the stakes are high enough--and the chances of victory sufficient--to place millions of dollars in labor union money at risk. The AFL-CIO often gives strikers verbal support, but this kind of massive financial backing is unusual.

Unions have a declining share of the work force, and victorious stikes have been very rare in recent years.

UPS warned that the strike is threatening the livelihood of the workers and the future of the highly profitable company. “And the longer it goes on, the fewer jobs we’ll have, so this is about destroying jobs at UPS,” James Kelly, the UPS chief executive officer, said on NBC’s “Today” show.

The rhetoric from both sides is becoming more strident with each day, and there seems scant chance that bargaining will resume soon.

The UPS strike is probably the most economically significant since a 110-day walkout by 160,000 coal miners in 1978. There have been major strikes since then, including strikes against American Telephone & Telegraph in 1983 and 1986, but they had little impact on service because the phone system is highly automated.

For both impact and duration, the Teamsters strike against UPS seems likely to become “the biggest strike in our nation in a quarter-century,” said John Calhoun Wells, director of the Federal Mediation and Conciliation Service.

The unions regard UPS as a symbol of greedy management, and feel a victory in this strike could revitalize labor’s strength and its effort to organize more workers.

“This struggle is over the basic issues faced by every worker in our economy,” Sweeney said. “It’s about part-time jobs and half-time pay. It’s about increased out-sourcing and decreased retirement security.”

For UPS, the stakes are equally significant. The well-run company, with profits of $1 billion a year and the lion’s share of a booming business, sees its market disappearing, and its loyal customers crippled by the strike.

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“There’s been a lot of pain in the strike,” said Lea Soupata, UPS’ senior vice president of human resources. “We care about our people and the pain they are going through and the pain of our customers,” she said.

The promised loss of 15,000 jobs by week’s end is real and not a negotiating ploy, insisted UPS spokeswoman Gina Ellrich. “We see a permanent loss of packages,” she said. “This is not a scare tactic--this is reality.”

The credit-rating agency Standard & Poor’s Corp. said it was maintaining its current triple-A rating on UPS’ debt, but had cut its “rating outlook” for UPS to “negative” from “stable” because of concerns about the strike’s long-term impact.

Because UPS dominates its market, the company “will recapture most business when the strike ends, (but) some permanent diversion of freight volume is possible,” S&P; analyst Philip Baggaley wrote in announcing the change. UPS, with revenues of $22.4 billion last year, has about $2.5 billion in long-term debt.

Meanwhile, the strike’s impact was spreading rapidly.

In Southern California, the walkout has delayed deliveries of hospital and pharmaceutical supplies, UPS spokeswoman Candice Traeger told a news conference in Beverly Hills. She also warned that crucial repair and replacement components for computers at the Jet Propulsion Laboratory and NASA facilities might not be delivered on a timely basis.

Hardest hit by the labor dispute were small businesses heavily dependent on UPS to move their merchandise.

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“Most of our members are upset, concerned and frustrated because it is having an economic impact on them,” said Angela Jones, spokeswoman for National Federation of Independent Business. “When a small business goes through something like this, and they’re operating very marginally anyway, it’s very difficult for them to recover.”

In Lebanon, Ore., Research Mannikins, a company that produces taxidermy supplies, has laid off 30 employees, half of its work force, because it cannot ship its goods.

Electro Mechanical Technologies, a Cleveland company that manufactures switches used in hydraulic machinery, has dismissed five of its 10 workers. “Unfortunately, we’ve been using UPS as our one shipper. We’ve never used anybody else,” Michael Estlick, a co-founder, told the Associated Press. “If you call another delivery organization, right now they won’t take your business.”

The strike has been marked by some cases of vandalism. Tires were slashed and brake lines were cut on 11 trucks at the United Parcel Service distribution hub in Baldwin Park Tuesday, a Baldwin Park police spokesman said.

In duelling press conferences Tuesday, the Teamsters and UPS offered dramatically different versions of the key issues in the dispute.

The union talked about part-time workers who, it said, should be given full-time jobs. UPS uses many workers for four-hour shifts between the hours of midnight and 8 a.m. But during busy seasons, some of those part-time loaders and sorters work more than one shift a day.

“There are many weeks that I have been at UPS that I have worked 60 and 65 hours a week but UPS calls me a part-timer and pays me part-time wages,” said Rachel Howard, who delivers next-day packages from the major UPS hub in Burtonsville, Md.

“I am now in my eighth year and still waiting for a full-time job,” Howard told the news conference at Teamster headquarters. Part-time workers get approximately $9 an hour in wages, compared with about $20 an hour for those classified as full-time under the union contract.

At the UPS news conference, the emphasis was on the company proposal for a new pension plan offering big boosts in retirement benefits.

“The Teamsters’ leadership should not stand between their members and a rock-solid retirement,” said Soupata, the UPS official. The UPS plan would offer workers up to $3,500 a month after 35 years of service to the company, as much as $3,000 a month after 30 years and $2,000 to $2,500 after 25 years. It would offer big gains compared with the current system, she said.

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For example, retirees under the current central states Teamster plan get $2,500 after 30 years, $500 less than the new proposal. UPS and other companies where Teamsters work pay into multi-employer funds, which provide the pensions. UPS wants to withdraw from the funds and set up a new pension plan restricted to UPS workers.

But the Teamsters say this proposal would give the company a chance to divert any surplus in the pension funds for its own corporate purposes.

The Clinton administration continued its hands-off stance Tuesday, with Labor Secretary Alexis Herman expressing hope for cooperation.

“I’m encouraged in that I believe that both sides expressed a willingness to be more flexible in looking at their own differences,” Herman told reporters on Air Force One. She accompanied President Clinton on a trip to St. Louis where he discussed programs to put welfare recipients to work.

The administration refuses to consider the strike a threat to the national health and safety, the legal standard required by the Taft-Hartley law for the president to seek a court order to send the strikers back to work.

“In any labor dispute like this it’s not wise for the administration to side with one party or another as we try to encourage them to adjudicate their differences,” said White House press secretary Mike McCurry. “What they need to do is settle their differences and go back to work,” he added. “That’s in the interests both of the company and of the workers.”

Times staff writers Joe Mozingo and James Peltz in Los Angeles and Elizabeth Shogren in St. Louis contributed to this story.