UPS cuts union jobs as shippers divert
United Parcel Service has laid off thousands of Teamsters as customers divert shipments to other carriers ahead of a possible strike at the end of the month, a UPS official said Wednesday.
“Our customers are very anxious and very concerned,” said Chris Mahoney, senior vice president for global transportation and labor relations. “The closer we get [to the July 31 contract deadline] the more customers are going to divert to non-union carriers.”
Mahoney warned of additional layoffs if UPS loses more traffic in the coming weeks. The present contract covers 230,000 full-time and part-time workers.
“Our network is so highly integrated that we’re able to adjust on a day-to-day basis. Layoffs are only going to grow (if there’s more diversion),” he said.
Domestic package volume was down 4 percent in June, compared with 2 percent declines in April and May. UPS did not provide data on international package volume.
Shippers have been shifting business to FedEx Corp., the U.S. Postal Service, Airborne Express and other domestic carriers to avoid the same kind of problems that occurred when Teamsters walked out for 15 days in 1997. That was the first strike by the union in 80 years of representing UPS drivers, package sorters and other workers.
Mahoney said UPS remains hopeful that an agreement can be reached before the contract expires. He declined to detail the carrier’s contract offer, but said UPS drivers currently earn $23 an hour, about 17 percent more than its nearest competitor, and that this gap would only widen under the company’s proposed wage increase.
Teamsters spokesman Bret Caldwell acknowledged that traffic diversion has led to layoffs, although he questioned whether the total is in the thousands. But, he added, “we’re not going to settle short because they’re experiencing diversion. It’s a normal part of the process.”
The two sides began negotiating in late January, but most of the discussions for the first several months focused on local agreements and non-economic issues. Only in the last few weeks have negotiators turned to the nitty-gritty economic issues.
“We’re at a crossroads with regards to wages, pensions and healthcare,” Caldwell said.
Separately, UPS reaffirmed its previous earnings guidance for the second quarter of 50 cents to 55 cents per share. UPS will release its second quarter earnings on July 23.
In another action, ratings agency Standard & Poor’s said Tuesday that it will add UPS to its S&P 500 Index, effective with the close of trading on July 19.
