Every one of UPS' millions of shippers should be aware of the time line of the talks, and the potential economic impact the settlement will have on their shipping costs.
Already, the foreshadowing has begun—even though the current contract does not expire until 12:01 a.m. on Aug. 1, 2013. Formal talks are set to open on Sept. 27 in Washington, D.C. The exact site has yet to be determined. The plan is to address non-economic issues this year, setting the stage to negotiate economic issues in 2013.
Further complicating this year's talks at UPS' package division, its largest, will be the expiration of the contract covering an additional 15,000 Teamsters at UPS Freight, its long-haul heavy freight division. That contract will be negotiated by separate management and labor teams even though both contracts expire at the same time.
A UPS spokesman refused to discuss the company's goals or disclose any negotiation details in the press. The spokesman only said that its overarching philosophy was to negotiate a deal that rewards its workers for what they do while allowing the company to remain competitive in a very competitive industry. He added that UPS wants a contract that is good for its employees, customers, and shareholders.
Currently, fully experienced UPS full-time workers earn about $31 an hour ($75,000 annually) before overtime and fringes. Counting benefits, each of UPS' 125,000 or so full-time employees costs the company around $100,000 in wages, health care, and pension.
But a sticking point for the union is the welfare of an additional 125,000 part-time UPS employees who start as low as $8.50 an hour. After decades of employment, those part-timers can top out at $19 an hour, which is a sore point for the Teamsters. The union wants UPS to create as many as 30,000 full-time jobs a year and is expected to press that in the upcoming talks.
UPS is the Teamsters' largest employer, by far. The 250,000 Teamsters at UPS dwarfs the 60,000 or so Teamsters in its freight division, mostly at YRC Worldwide and ABF Freight System. That contract expires next March 31, and will be negotiated separately from the UPS deals. No question, UPS is healthy. Headed into contract negotiations, UPS recently announced that it made $1.12 billion after-tax profit for the second quarter on $13.35 billion in revenue. Shareholders made $1.15 per share, a 7.5 percent improvement over last year.
UPS is on track to earn more than last year's $5 billion net income. Operating profit for U.S. domestic package jumped more than 12 percent, package volume is up 3.5 percent, Next Day Air and Second Day Air are up 5 and 8.6 percent respectively and average revenue per package increased 0.6 percent. Not only is UPS delivering more packages, it is making more money on every package it delivers.
At UPS, its domestic package unit is responsible for 63 percent of the company's profits. Ken Paff, organizer for Teamsters for a Democratic Union, says he wants Teamsters negotiators to keep those numbers in mind as our union heads into contract negotiations this year.
"It comes down to the members," Paff told Logistics Mangement. "The members have to be willing to say no. They have to be willing to hold the company's feet to the fire. The international (national bargaining unit) will settle low because they are in bed with the company. There has to be a big enough stink by the members so there is a danger of a no vote."
In addition to wages and more full-time jobs, Paff said protecting and improving the pensions will be a major negotiating hurdle. About five years ago, UPS paid $6.1 billion to exit the financially troubled Central States plan.