Teamsters Walkout Appears Likely
With less than a week before the current contract expires, the Teamsters union is threatening a nationwide strike against 17 trucking companies that deliver new vehicles to dealer showrooms.
A walkout by the International Brotherhood of Teamsters, which represents about 12,200 drivers, yard workers, mechanics and office workers, could disrupt booming auto sales and eventually slow the nation’s economy.
“We hope that a strike isn’t necessary,” said Teamsters President James P. Hoffa in an interview from Los Angeles, where he attended a rally of car haulers last weekend. “But we are ready to strike if we don’t get what we want.”
Hoffa, a Detroit labor lawyer and son of infamous Teamster leader Jimmy Hoffa, is promising to deliver a three-year contract that provides higher wages, improved pension and health benefits and better job security. He vows no concessions to employer demands for a two-tier wage system and more flexible work rules.
The current contract expires at midnight Monday. If an agreement is not reached, the Teamsters could continue to work without a contract or call an immediate strike.
The negotiations began in February and are the first for Hoffa, who recently took office as Teamsters president after a protracted power struggle highlighted by two disputed union elections conducted with federal oversight.
The talks are drawing unusual attention because they will set the tone for Hoffa’s leadership of the union, the nation’s second largest with 1.4 million members. The car-haul deal is the only national trucking contract Hoffa will negotiate during a three-year term that officially began May 1.
Labor experts consider chances of a strike to be high. The Teamsters car haulers have a history of walkouts and rejecting contracts that do not meet their expectations. In 1995, the Teamsters struck Ryder System Inc. for 32 days, disrupting the delivery of several hundred thousand vehicles.
And the 58-year-old Hoffa scrapped his way to the Teamsters helm on promises of greater militancy and restoring the union’s waning power.
“Hoffa has set very ambitious goals,” said Michael Belzer, a labor professor at the University of Michigan who specializes in the trucking industry. “This contract is a litmus test of his leadership.”
The car-haul companies view the talks with trepidation because of the political and economic environment in which they are being conducted. Hoffa, whose father brought the Teamsters into the middle class but left a legacy of corruption and mob ties, is taking charge of a divided union, and his opponents will closely scrutinize the contract for the slightest weakness.
The negotiations also come as the auto industry is enjoying a sustained boom the likes of which have not been seen since the early 1960s. New-vehicle sales are up 9% this year so far.
While the transporters acknowledge that profits are pouring in, they portray the unionized car-haul business as shrinking. The industry, with estimated annual revenues of $2 billion, is under pressure from auto makers to lower prices even as it faces increased competition from improving railroads and lower-cost nonunion carriers.
“We had some good times,” concedes R. Ian Hunter, executive director of the National Automobile Transporters Labor Division, which conducts negotiations for the unionized car-haul companies. “But the trends in our industry show a steady decline.”
The nation’s auto makers are watching the Teamsters negotiations warily even as they prepare for their own contract talks with the United Auto Workers, which begin June 14. The teamsters and the UAW have vowed to support each other and could even coordinate strike strategy, labor analysts said.
A prolonged car-haul strike clearly could derail the brisk sales pace of the last eight months. All the auto makers are developing contingency plans, which they will not discuss.
“Everyone would have a problem” in the event of a strike, said Ford Motor Co. President Jac Nasser last week.
The haulers transport passenger cars and light trucks on two-tier tractor-trailer rigs. The skeletal steel rigs are as big as 75 feet long and carry between seven and 13 vehicles. Car haulers make up a small but elite group within the Teamsters, earning about $19 an hour before overtime.
Until the 1960s, nearly all domestically produced vehicles were shipped from the assembly plants by unionized truckers. The business was regulated by the Interstate Commerce Commission. The set rates provided comfortable profits.
But deregulation heralded in a new era of increased competition and consolidation. Where there were 55 unionized car-haul companies in 1975, today there are just 25. One company, Allied Holdings Inc. of Decatur, Ga., controls 65% of the new-vehicle hauling business and services all the major domestic and foreign auto makers.
Much of the contraction has come at the hands of the railroads, which have grabbed an increasing share of the long-haul business transporting autos from factories to regional distribution depots. In 1985, the unionized haulers transported about 50% of vehicles directly from the factories; today their share is just 29%.
At the same time, nonunion haulers began making inroads. While the unionized companies still deliver 90% of new vehicles from the regional depots and railheads directly to dealers, nonunion carriers are posing a growing threat. Nonunion drivers are paid 15% to 20% less than Teamster car haulers.
These small transporters already dominate the used-car hauling business, which has become increasingly important with the rise of auto leasing and the growing number of late-model used vehicles sold at auctions.
All of these trends have taken their toll on the Teamsters’ ranks. In the last five years, the number of unionized car-haul workers has dropped by 14%, according to the companies. During the same period, their pay and benefit costs increased 33%; labor accounts for more than half of the car haulers’ total operating costs.
Hunter said the unionized companies expect to provide wage and benefit increases to current workers under the new master contract. But they seek concessions to offset these increases to stay competitive.
Specifically, the transporters want a two-tier wage structure that allows them to pay entry-level workers at lower rates. They also want flexibility to pay current workers at lower rates for new business in the used-car sector.
The companies are also seeking more flexible work rules that would permit them to run their operations 24 hours a day, seven days a week, to match nonunion operators.
Hoffa says operations are already sufficiently flexible to compete with railroads and nonunion truckers. He argues that two-tier wage structures undermine union power and have not worked elsewhere.
When it comes to job security, the union is seeking a contract provision that will prohibit the use of Mexican drivers to transport cars in the United States under the North American Free Trade Agreement. The union notes that Allied recently opened a Mexican subsidiary and believes the company has a long-range plan to use cheaper Mexican labor to transport cars under NAFTA after 2000; the company says there are no such plans.
The two sides remain far apart on key issues, some of which haven’t even been brought to the table for discussion. Given the differences and Hoffa’s strong rhetoric, some observers believe a strike is a certainty.
“At this point, no one would bet there would be a contract agreement,” said Ken Paff, national coordinator for the Teamsters for a Democratic Union, a dissident group that opposed Hoffa’s election. “He’s been making promises of a great contract, and he will be judged on this to some degree.”
For his part, Hoffa says he welcomes the challenge. Certainly, his tough talk evokes memories of his pugnacious father, who ran the union from 1957 to 1971. The elder Hoffa disappeared in 1975 and is presumed to have been killed by mobsters.
The younger Hoffa lost a close election in 1996 to Ron Carey, a so-called reformer who vowed to clean up the union. The outcome was overturned because of campaign finance irregularities, and Carey was expelled. In December, Hoffa defeated another reform candidate, Tom Leedham, in a close vote.
A strike will not necessarily ensue immediately. Four years ago, the Teamsters waited four months to strike, timing it to bypass the normal summer slowdown in the auto industry and to coincide with new-model introductions in the fall. But with auto sales so strong and expectations of high interest rates, Hoffa might choose to strike while the irons are hot.
It is also unclear whether the Teamsters will target Allied or hit all the companies at once. In 1995, the union targeted Ryder, then the largest operator, which has since sold its car-haul business to Allied.
Hoffa will not discuss strategy. He says that no one wants a strike but warns that if necessary, “we are going to shut this industry down.”
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Car-Haul Contract Issues
The Teamsters union is threatening to strike against 17 companies that deliver new cars to dealers showrooms. The contract expires at midnight Monday. Here are the major issues:
Teamster Want:
* Higher wages.
* Increased pension benefits, including improved health insurance coverage for workers who retire after 25 years’ service.
* Better job security, including provision prohibiting use of Mexican drivers to haul cars in the U.S. under NAFTA beginning in 2000.
* Improved health benefits for retirees.
*
Management Wants:
* Two-tier wage system that provides lower entry-level wages for new hires.
* Lower mileage rate for new business in used-car hauling sector.
* Relaxed work standards that allow 24-hour, seven-day-a-week operation.
Source: International Brotherhood of Teamsters, National Automobile Transporters Labor Division.
Car-Haulers Contract History
The Teamster car haulers, who transport about 90% of new vehicles to car dealerships, have a history of hard bargaining and walkouts. A look at the most recent contract negotiations:
1985: 23-day strike
1988: Members reject negotiated contract; sign sweetened contract without a strike.
1992: First new contract under Teamsters President Ron Carey; work without a new contract for a year but sign without a strike.
May 31, 1995: 32-day strike against Ryder Systems.
1999: First contract negotiated by Teamsters President James P. Hoffa; 96% of members authorize a strike if a contract is not reached by midnight Monday.
Source: International Brotherhood of Teamsters
