New Threats and Opportunities

UPS purchase of nonunion Overnite Transportation for $1.25 billion marks a new era of industry consolidation and poses a grave threat to UPS and freight Teamsters, and to the security of our pensions. But the purchase also presents the best opportunity in a long time for the Teamsters to reassert ourselves as a major force in the transportation industry. We need to seize that opportunity.

The New Trucking Industry

The UPS-Overnite combination is the face of the new trucking industry. The boundaries are blurring between the small parcel, freight, and logistics sectors. The future belongs to integrated transportation companies that are players in all aspects of the market and can offer shippers a variety of options on a one-stop-shopping basis. That’s why FedEx already has successfully integrated a less-than-truckload carrier, American Freight, and built it into a $3 billion a year company—twice as large as Overnite.

Now UPS has acquired Overnite as part of its transformation from a parcel delivery company to an integrated shipping and logistics operation with global reach.

Industry experts predict further consolidations. Many say the next company to acquire a less-than-truckload freight operation will be DHL, the third largest parcel and air freight shipper in the U.S., and a subsidiary of the German post office, Deutsche Post.

All Teamsters need to understand what lies ahead in the new trucking industry—both the threats and the opportunities.

Threats

UPS’ acquisition of Overnite poses a threat to UPSers, freight Teamsters, and to the retirement security of all members covered by Teamster benefit plans.

The Threat to UPS Teamster Jobs: UPS reportedly told the IBT that its acquisition of Overnite won’t affect Teamster jobs. But management is telling investors a different story—namely that the company will be looking to integrate products and operations. UPS Chief Financial Officer Scott Davis told Traffic World that UPS “…will be looking for bundled solutions.” In the past, UPS tried to get shippers to break down shipments into small parcels rather than combining them into palletized loads. Soon the UPS sales force will be promoting the exact opposite, which will divert business from UPS operations into its nonunion Overnite division.

The Threat to Freight Teamsters: Overnite, a vicious union buster and our number one organizing target in freight, is now backed by the deepest pockets in the transportation industry. UPS will look to double Overnite in size, and will have the power to undercut unionized freight companies in the process.

The Threat to Our Teamster Pension Funds: UPS already got the Hoffa administration to play ball and cut benefits in our union’s largest funds. Now management is aiming to break out of our pension plans altogether in 2008. Our union needs to have the opposite goal of drawing UPS 10,000 new Overnite employees into union benefit funds. The outcome of this battle will be key to the pension security for hundreds of thousands of Teamsters.

Opportunities

These threats are very real. But the UPS-Overnite combination also presents the Teamsters with the opportunity to reassert ourselves as a major force in the transportation industry.

At one time, the Teamsters moved America with two million members, most of them in freight, warehousing and at UPS. A Teamster strike then had the potential of stopping the flow of goods and paralyzing the economy. That power is how we won the wages and benefits we enjoy today.

Deregulation changed the rules of the game. Nonunion companies flourished, especially in the truckload sector of freight. Our union membership declined.

Now, consolidation is the watchword of the new trucking industry. And with it, the pendulum can swing back in our union’s direction if we act decisively.

Within a few years, the trucking industry will be dominated by a small number of huge, integrated companies all competing for market share. With the exception of FedEx, our union already has a presence in each of these trucking giants: Yellow-Roadway, DHL and UPS.

But it will not be enough to represent a fraction of the employees at these integrated trucking giants. Our ability to maintain our wages and benefits—and win new gains—will depend on our union’s power to organize these companies wall to wall.

To have leverage at the bargaining table, our union must have the power to shut down a company’s operations—not a fraction of their operations.

That is why our union’s actions at UPS-Overnite are so critical. Our power to tackle this challenge will never be greater than it is right now. Our union represents more than 200,000 UPS Teamsters. The Overnite division has just 10,000 employees. UPS Logistics coupled with Overnite already diminish the power of a strike weapon. But the threat they represent is nothing compared to what they will become if they are allowed to expand as nonunion entities inside UPS. We need to act decisively now.

Organizing Overnite will protect UPS and freight Teamsters from nonunion competition, and protect our retirement security by bringing 10,000 to 20,000 new Teamsters into our pension plans. And it will do more.

Organizing Overnite will demonstrate that the Teamsters can and will organize integrated transportation companies wall to wall. Organizing the nonunion divisions of Yellow-Roadway and DHL is also critical.

UPS management understands the stakes. In conference calls, UPS’ chief financial officer referred to any possible union at the Overnite subsidiary as “third-party representation”—union busters’ favorite code for unions.

‘Hopeful’?

In response, the Hoffa administration issued a limp statement saying, “We are hopeful that UPS’ long history as a company with Teamster representation will create new opportunities for Overnite workers to achieve their goals in the workplace.”

Sunny press releases won’t diminish the challenges we face. They won’t organize Overnite. And they won’t position the Teamsters to reestablish ourselves as a major force in the new trucking industry.

If the IBT leadership takes a wait-and-see attitude, the changes in the industry will pass us by and further undermine our union’s power and the wages and benefits of Teamsters in our core industries.

We can’t let that happen. Teamsters need to demand that our leadership rise to the occasion with a plan to organize, grow and win. “Teamster Power” is not a label for our union’s past. It can be our future if we’re bold enough to fight for it.

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