November 4, 2004: A non-union operator seems to be taking over the ABF cartage operation in Charlotte, N.C.
Millenium Express, a non-union cartage company, now actually rents part of the ABF dock. They use ABF’s pallet jacks and forklifts, load ABF freight onto six non-union trucks, and make deliveries and pick-ups. This has been going on for eight months and is expanding!
The excuse is “overflow freight.” Eight months of sudden overflow?
ABF is apparently exploiting Article 40, Section 4, of the Carolina Supplement to the NMFA, and the fact that Local 71 seems to allow union freight jobs to go non-union.
There are too many Teamster jobs contracted out in the freight industry. It’s time for our union, at the highest level, to just say no and enforce the contract.
November 4, 2004: Gate Gourmet, whose 10,500 employees provide food services to airlines and railroads, is trying to break our union. The current contract expired June 1. Management is demanding big wage and benefit cuts that they know workers will not accept.
Under the company proposal, wages would be cut by as much as $5.02 an hour. Members’ pension and 401(k) would be eliminated. The company contribution to members’ health insurance would be capped at $100 a month. High seniority workers would lose two weeks of vacation a year.
Gate Gourmet workers are jointly represented nationwide by the Teamsters and another union, UNITE HERE. IBT Western Region Warehouse Director Steve Vairma has led negotiations.
Gate Gourmet tried to weaken workers’ bargaining position earlier this year by creating a spin-off company, Gate Serve. They voluntarily agreed to recognize the IBT and UNITE HERE.
The unions, in turn, agreed to a contract with much lower wages and benefits than Gate Gourmet.
Demands Were Predicted
When our union made this bad deal, TDU predicted that management would demand these same concessions from Gate Gourmet Teamsters. Now they are. The concessionary contract Gate Gourmet is proposing is almost exactly the same as the one our union already agreed to at Gate Serve.
Concessions won’t stop a ruthless employer. The IBT and UNITE HERE need a coordinated plan to take on Gate Gourmet. Members are willing to fight.
“They are taking the food off of our families’ tables,” says Los Angeles Gate Gourmet worker Ana Miranda. “We need to stop them. Local 572 organized a rally here recently, and it’s a start. We need more action.”
November 4, 2004: Hundreds of Teamsters attended the 29th annual TDU Convention in Cleveland last month to chart the course of the reform movement for the coming year.
Speakers blasted James Hoffa for the decline of Teamster power on his watch. TDU members have their eye on the 2006 IBT election, but our convention voted to put the focus for the coming year on strengthening our movement at the grassroots—to build at the bottom so we can win at the top.
The convention adopted a resolution to “Save Our Union.” The piorities it defined include: developing new rank-and-file leaders, building model local unions, electing more reform leaders to local union office, and continuing to lead the fight to defend our benefits from attacks by employers—and even by our union trustees.
Activists with the Central States Pension Improvement Committee held a special meeting at the convention and defined an action plan to win more accountability and fight to reverse the pension cuts. (See page 6 for a report.)
The convention also looked ahead to 2006. Members resolved to run delegate slates in over one hundred local unions in the 2005 and 2006 elections, where members will choose their representatives to the 2006 IBT Convention.
Laying the Groundwork
To lay the groundwork for a challenge to Hoffa in the 2006 election, the convention resolved that, “TDU will support the formation of a broad committee of respected leaders who can start outreach, a search for slate members, and fundraising.”
“It’s too early to announce a full slate for 2006, but not too early to lay the groundwork for a campaign,” the resolution said.
With Teamster power declining and our union in jeopardy, it’s up to us—the rank and file, and concerned officers—to organize for change. TDU’s got the nationwide network that can redirect the future course of our union, but only if we all do our part. Get involved today.
November 4, 2004: On Nov. 9 federal judge Kathleen O’Malley issued a temporary restraining order against James Hoffa’s trusteeship of Cleveland Local 293.
Hoffa’s trustee was sent packing and the 1,700 members of Local 293 got their local back, with the elected officers back in office.
Hoffa placed the local into trusteeship on Sept. 20, alleging serious problems including that Local 293 had undermined a strike by Local 348 against a beer distributor. Members, including the officers, went to court and proved that the allegations were not only false, but were a pretext for Hoffa to take over the local.
Judge O’Malley stated in her decision that “The Court was surprised by the lack of any meaningful justification for the imposition of a trusteeship in this case.” The judge noted that there is a very high standard for the members to overturn a trusteeship less than 18 months old, but in this case Hoffa had no good-faith reason for the action, and in fact acted in bad faith.
James Hoffa has increasingly used political trusteeships (and threats of trusteeship) and his power to overturn local elections any time he doesn’t like the results. This court decision shows that there are limits to just how much he can abuse his powers.
November 4, 2004: The Independent Review Board (IRB) on Oct. 14 charged Joseph Bernstein with associating with Billy Hogan, who was banned from the Teamsters in May 2002.
Bernstein, the president of Chicago Local 781 and vice president of Joint Council 25, faces a hearing and likely removal from our union as well as the loss of his $218,441 salary.
Bernstein admitted under oath to having at least three meetings with Hogan, one of which was observed by a RISE investigator in October 2003. Seven days after that three-hour meeting, Hogan’s son Robert was nominated to be on the Joint Council 25 Executive Board.
Bernstein, however, claimed that in their three hours together the two men didn’t discuss union business, and he didn’t even know what Hogan’s occupation was at that time.
The IRB suspended Bernstein from office once before. In 1992 he was found to have used over $50,000 in union dues money to pay his country club golf fees, and had to repay the union when he was caught.
Hogan, formerly the top Teamster in Chicago and Hoffa’s initial choice as running mate, was removed from the Teamsters in 2002 for attempting to make a sweetheart deal in the Las Vegas convention industry. The deal would have benefited a company owned in part by Hogan’s brother.
The IRB report credits Ed Stier’s RISE program with doing some of the investigation leading to this charge against a powerful Chicago official. It is the first IRB charge brought since May, when Stier turned over to the IRB a 300-page report on Teamster corruption. Stier and the entire RISE staff resigned at that time, blaming Hoffa for blocking investigations and covering for corrupt officials, especially in Chicago.
Yet for nearly half a million union members who are expecting the fund to pay for their retirement, those may have been the good old days.
Since 1982, under a consent decree with the federal government, the fund has been run by prominent Wall Street firms and monitored by a federal court and the Labor Department. There have been no more shadowy investments, no more loans to crime bosses. Yet in these expert hands, the aging fund has fallen into greater financial peril than when James R. Hoffa, who built the Teamsters into a national power, used it as a slush fund.
The unfolding situation holds a hard lesson for others with responsibility for retirement money. What may appear as a sensible, conventional approach to investing - seeking a diversified mix of growth and income investments for the long term - can wreak havoc when applied to a pension fund, especially one in a dying industry with older members who are about to make demands of it.
But the kinds of investments that make sense for such a fund - like long-term bonds that will mature as members enter retirement - are not attractive to most money managers, because they generate few fees. Consequently, very few pension funds use such strategies today.
At the end of 2002, the pension fund had 60 cents for every dollar owed to present and future retirees - a dangerous level. In a rough comparison, the pension fund for US Airways' pilots had 74 cents for every dollar it owed in December 2002, just before it defaulted. During the bear market after the technology bubble burst, Central States' assets lost value as its obligations to retirees ballooned, causing a mismatch so severe that the fund had to reduce benefits last winter for the first time in its 49-year history.
"There never were benefit cuts in the 1970's," said Wayne Seale, 52, a long-haul driver from Houston and one of about 460,000 Teamsters participating in the fund. "We were happy. We were being taken care of."
If the pension fund fails, it will be taken over by a government insurance program. In that case, some Teamsters would lose benefits.
Hoffa and his successors had put an extraordinary 80 percent of Central States' money into real estate. Instead of hotels, casinos and resorts, its new managers - first Morgan Stanley and later Bankers Trust, Goldman Sachs and J. P. Morgan - invested the money mostly in stocks, and to a lesser extent, in bonds. At the end of 2002, about 54 percent of the fund's assets were in stocks, somewhat less than the average corporate pension fund, which had about 74 percent of assets in stocks that year, according to Greenwich Associates, a research and consulting firm.
Federal law calls for fiduciaries to invest pension assets the way a "prudent man" would, and the strategy used for Central States would certainly be familiar to wealthy individuals, philanthropic trusts, university endowments and other pension funds. The fund's investment results in recent years closely track median annual returns for corporate pension funds, according to Mercer Investment Consulting.
The assets lost 4.5 percent of their value in 2001 and 10.9 percent in 2002, but gained 25.5 percent in 2003, according to the fund's executive director and general counsel, Thomas C. Nyhan.
Morgan Stanley and J. P. Morgan declined to comment. Goldman Sachs defended its record, pointing out that it had exceeded its benchmarks in a very tough market.
But the Central States situation shows that using stocks or other volatile assets to secure the obligations of a mature pension fund greatly increases the risk of getting caught short-handed in a down market. If that happens it can be nearly impossible to bring the ailing pension fund back. This is what has happened recently to pension funds at United Airlines and US Airways.
"Stocks are not a hedge against long-term fixed liabilities," said Zvi Bodie, a finance professor at BostonUniversity who has long challenged conventional pension investment strategies. "For many, many years, right down to the present day, the dominant belief among pension investment people is fundamentally wrong. Now that's a big problem."
The record of a second big Teamsters' pension fund, covering members in the West, bolsters Mr. Bodie's arguments. The Western Conference of Teamsters fund has long shunned stocks and uses a totally different investment approach, a portfolio of 20- and 30-year Treasury bonds and other high-grade fixed-income securities that are scheduled to make payments when its retirees will be claiming their money. The Western Conference pension fund was not perceptibly hurt by the bear market.
If the Central States were a younger pension fund, it could wait for the stock market to improve and bolster its value. But it already has more than 200,000 retirees collecting benefits of more than $2 billion a year.
The companies that employ its members currently put in about $1 billion a year. Its trustees, made up of union officials and company representatives in equal numbers, have contemplated raising employer contributions, but the unionized trucking sector has financial problems, and for many companies a higher contribution would be a hardship. The biggest and wealthiest participating company, United Parcel Service, has been trying to leave the pension fund altogether.
The unionized trucking industry was more stable before deregulation in 1979, and so was the Central States pension fund. In the 1970's, the fund's assets grew by as much as 10 percent a year, according to some media reports from that period. Luck played a big part in that success, because the decade was a bad one for stocks and bonds. Thus, the fund made better returns on its unorthodox real estate portfolio than it would have on a conventional mix of investments. The unionized trucking sector was younger, too. And it was growing, so there was more money available from employees and fewer pensions coming due.
Starting in the early 1960's, the fund loaned tens of millions of dollars for investments in Las Vegas casinos, including the Desert Inn, CaesarsPalace, Stardust, Circus Circus, the Landmark Hotel and the Aladdin Hotel, according to a history by Edwin H. Stier, a former federal prosecutor hired by the union as part of its efforts to clean house.
The loans in those days typically involved a front man who signed the papers and a crime family raking off cash behind the scenes. The loan approval process involved kickbacks, threats and, in at least one case, a kidnapping. By the time Hoffa disappeared in 1975, the Central States pension fund had loaned an estimated $600 million to people connected with organized crime, according to Mr. Stier, who resigned his union appointment in April after questioning the union's ongoing commitment to rooting out corruption.
But many of the loans did serve their intended purpose, making money to pay for Teamsters' retirement benefits. The hotels, casinos and other real estate projects, not all of which were connected to organized crime, were generally profitable, according to Mr. Stier, and before his disappearance Hoffa saw to it that his loans were repaid.
By 1977, after years of indictments, prosecutions, Congressional hearings and murders, federal regulators pressured the Central States trustees to resign and turn over the fund's assets to an independent money manager. The 1982 consent decree reduced the trustees' powers permanently, requiring the pension fund to choose an outside fiduciary from America's largest 20 banks, insurance companies and investment advisory firms.
The first to be named fiduciary was Morgan Stanley. Its duties were to pick money managers, to allocate the assets among them and to advise the new board of trustees on investment objectives and strategies.
As it happened, Morgan Stanley got the Central States mandate at a time of explosive growth in the money-management business. A landmark pension reform law had been passed in 1974, requiring all companies to set aside enough money to make good on their pension promises. With assets piling up in trust funds as a result, money managers were competing fiercely for a piece of the business.
Money managers promised pension funds big returns, and to get the big returns they began to add riskier assets to pension portfolios than pension funds had used before. Sleepy bond portfolios were livened up with stocks. Venture capital, junk bonds, securities of companies in developing countries and other exotica began to appear in pension funds.
These investments could be risky, but the industry argued that losses, even big losses, in one year did not matter because a pension fund was a long-term proposition; over time, the losses would be recouped by even bigger gains. Buoyant markets reinforced this thinking in the 1990's, even though by then unionized trucking was in deep decline, and the Central States' ratio of active workers to pensioners was shifting perilously.
Records for the Central States pension fund are not complete, but they indicate that Morgan Stanley kept pace with industry trends, shifting the fund into stocks, particularly international stocks.
By 1997, more than one-third of the pension fund's assets were invested abroad, records show, far more than the norm for such funds. Greenwich Associates surveyed union pension funds in 2003 and found that international equities made up less than 3 percent of their total assets.
A spokesman for Morgan Stanley declined to comment on the Central States investments, citing a policy of not discussing relationships with past clients. He pointed out, however, that international stocks did relatively well in the late 1990's.
Morgan Stanley was replaced as fiduciary by Goldman Sachs and J. P. Morgan in 1999 and 2000. (Bankers Trust served as fiduciary very briefly.) A spokesman for Goldman Sachs noted that his company inherited many of Morgan Stanley's investments and added, "Over the five years we have managed the fund, our performance has exceeded the relevant benchmarks." A spokeswoman for J. P. Morgan cited a policy of not discussing clients' business.
When the stock market crashed in 2000, the Central States pension fund had big bets on technology and telecommunication stocks, energy trading companies and foreign stocks. Some of these stocks became nearly worthless. But the resulting carnage was not apparent to many rank-and-file Teamsters until last winter, when plan officials announced that benefits would have to be curtailed.
Meanwhile, drivers were making their retirement plans.
Tommy Burke, a U.P.S. driver in Fayetteville, N.C., had been planning to retire in 2005, when he would turn 60, and go into the restaurant business. But when the pension fund reduced benefit accruals, it also began enforcing a rule that pensioners could not re-enter the work force, under penalty of having their pensions stopped. Mr. Burke, frustrated, began to research the pension fund on his own, trying to learn just what had happened. In an annual report for the plan, he was shocked to see a reference to a $77 million uncollectible loan.
"How in the world can you have an unsecured loan in the amount of $77 million?" he asked.
When an official of the pension fund visited his union local hall this year, Mr. Burke put that question to him, but the answer only upset Mr. Burke more.
"He said it wasn't a loan at all," Mr. Burke recalled. "It was shares of stock in a bank in Russia, and it went belly up." Mr. Burke said he didn't understand why pension money had been used to buy something so risky, if the Labor Department and federal court officials were monitoring the pension fund.
The Labor Department does not generally regulate investment strategy, however. It was watching for signs of self-dealing, racketeering or other flagrant abuse. From that perspective, the fund was progressing well.
Some Teamsters say more complete answers lie in the official progress reports for the pension fund, maintained for the federal courts as required by the consent decree. But those are secret. The New York Times and the Teamsters for a Democratic Union, a reform group within the union, have filed motions with the federal district court in Chicago to make the documents public.
The International Brotherhood of Teamsters, which is legally separate from the pension fund, commissioned independent investment and actuarial analyses of the pension fund in November 2002.
But the study's findings have not been released to the membership.
Many rank-and-file Teamsters complain that their questions about the pension fund have been met with bromides about unforeseeable market forces, and about an unusual convergence of stock market losses and low interest rates that is always described as "the perfect storm." They are unconvinced.
"If this was all about the stock market and this 'perfect storm,' why weren't all these funds affected the same way?" asked Pete Landon, a truck driver from Detroit who participates in the pension fund.
The best clues may lie in the Western Conference of Teamsters pension fund. In the 1980's, when the Central States plan was shifting from real estate into stocks, the Western Conference trustees, acting on actuarial projections of future pension benefits, put together its conservative portfolio of high-quality bonds and other fixed-income securities. The bonds were held until they matured.
Such an investment portfolio requires little stock research or trading and consequently generates little fee revenue for money managers, but it has served the Western Conference of Teamsters well. From 2000 to the end of 2002, when the Central States fund lost $2.8 billion, the Western Conference fund gained $834 million.
"I think the most prudent, most basic pension funding theory would be: You put aside assets today to most precisely meet your obligations in the future," said Edward A. H. Siedle, a Florida lawyer who specializes in pension fund audits. "You do not try to beat the market. You do not try to maximize returns. But in this country, the plan sponsor doesn't want to do that. The corporation wants to put the minimum aside today, and invest it with maximum efficiency. That's the trouble."
November 4, 2004: For the second time in a year the Members United Slate has been elected the officers of Washington, D.C., Local 639. Their election victory on October 27 put an end to one of Hoffa’s more desperate attempts to undermine a local union election.
Members United won their first election last fall, beating out IBT Trustee John Steger and his Concerned Members slate.
While Local 639 members got on with the job of strengthening their union, Steger and Hoffa maneuvered in the background to have the election overturned. This was after the ballots were counted, and later tampered with, while in the Steger group’s custody.
Hoffa ordered a rerun of the Local 639 election and gave Steger another leg up by imposing a temporary trusteeship and reinstalling the old officers.
It didn’t work. When the votes were counted the 10,000 members of Local 639 elected all fifteen officers and business representatives of the Members United Slate. They expect to be installed and working for the members by mid-November.
Newly elected Local 639 Business Agent Anthony Smith, of the Members United Slate, spoke to the TDU Convention on October 23 a few days before his slate’s victory in the Local 639 rerun election. Here are excerpts from his remarks:
I bring greetings from Washington D.C. slate members, 15 strong officers, agents, and trustees—the duly elected officers, agents, and trustees of Local 639. Another story of ‘Vote Till You Get it Right.’
We’re the second largest local in the East with over 10,000 members. Four of the incumbent BA’s split off to form a coalition slate. We came from diverse backgrounds within the union: some leaning Hoffa, some TDU sympathizers, others less familiar with International politics.
As a group, our slate was not running to become a reform local in the Teamsters, in the broader picture of the Teamsters. We were just looking to reform the local, to make the local better for the members.
[Incumbent President] John Steger is on the International General Executive Board. He’s one of the people we beat.
Steger commented on a number of occasions that they would be invincible because after they merged-in Local 246, the local would be too large for anybody to be able to take them on.
But a funny thing happened on the way to the dance—members took a look at their date and rejected them.
As you heard we’re doing ‘Vote Till You Get it Right.’ We ran a stronger, less conservative campaign the second time around, even more face-to-face, out there in the streets, meeting the people. We’re quite confident that we’ve won again.
TDU has earned great respect in our local and I was told to bring thanks from some of those people who would not have even talked to TDU in the past.There will be no support in 639 for Hoffa in this next campaign, there’s no doubt about that anymore.
November 4, 2004: When the votes were counted on October 16 in 12,000-member Chicago Local 743, TDUer Richard Berg of the New Leadership Slate had upset incumbent President Robert Walston by seven votes. There were 188 unresolved challenged ballots, but many of them came from workers at Silver Capital, a shop that was solidly behind New Leadership, so the outcome looked clear.
On October 18, the day before the challenges were to be resolved, local officials sprang their trick: They suddenly decided the election was flawed, and ordered a new one just as the final votes were to be tallied.
“We had filed numerous protests,” Berg told us, “but they dismissed all of them. But when we won despite all their violations, they decided to grant one of our protests and order a new election.”
James Hoffa upheld the “vote till you get it right” trick. Hoffa has used this dirty trick often, but so far it has failed every time; members react against having their democratic vote tampered with. This is a new version of the undemocratic move, actually stopping the vote count to prevent a challenger from winning.
It will be up to the members of Local 743 to make sure that democracy prevails. They are up against wealthy incumbents who are spending tens of thousands of dollars and are experienced at dirty tricks. The ballots in the second election will be counted on Dec. 4.
November 4, 2004: I am a long-time Menlo/Emery Teamster, and on first hearing of the UPS purchase of our company I thought about the potential positive aspects. The prospect of UPS management possibly being able to make the company grow is reason for celebration.
But on reflection, what will the relationship be?
On one hand, some of the hard times experienced by Menlo Teamsters could actually be an opportunity for the IBT. Many locations, including the Dayton hub, are non-union and could be ripe organizing targets. On the other hand, UPS has purchased a company that has downsized and also subcontracted to non-union labor in many areas.
For example, at one time Purolator (later bought by Emery, which then became Menlo) employed over a hundred drivers in Milwaukee. After management’s consistent efforts to shrink to profitability over the last decade, Menlo Worldwide Forwarding now employs 14 drivers for the Milwaukee area.
At least some of the following questions on behalf of Menlo and UPS Teamsters need to be answered, and soon:
- Menlo Worldwide is coming in as part of UPS Supply Chain Solutions, which is a non-union arm of UPS. We have been assured that they will honor current contracts, which is good, but what work will we be doing? Supply Chain Solutions and Fritz, which UPS bought not long ago, already use non-union subcontractors to move a large amount of air freight. Do they intend to give that work to us?
- Does UPS plan to honor its current contract in the parcel division by bringing us into it? Menlo picks up freight at many of the UPS high-volume accounts. Will there be an effort to combine the work from the UPS side, or from the Supply Chain side? If from the Supply Chain side, will this amount to double breasting like our old friends at CF/CNF? Would Supply Chain subcontractors or Menlo union drivers be assigned to pick up (for instance) pallets of parcels to be delivered to UPS terminals, in addition to the heavy freight?
- Is there any aggressive counter strategy to prevent a repeat of the CF/CNF debacle? The parent company of CF bled it dry over the years and diverted work and resources to its non-union Con-Way division. UPS has growing non-union divisions, like UPS Logistics.
Menlo and UPS employees would like to hear answers to these and other questions. What about it IBT? Meanwhile, we need to build the rank and file network and TDU among Menlo Teamsters, to be prepared for whatever is ahead.
Local 344, Menlo
November 4, 2004: At the recent TDU Convention, UPS Teamsters met to discuss contract enforcement and survival strategies. In the coming months we will report on some ideas that came out of the meeting.
With the PAS/Smart Label system being put in place, UPS package car drivers are contending with several changes. Routes are being changed and stop counts are up. At the same time, the risk of injury is on the rise. Now more than ever we need to find ways to protect ourselves.
We should remember that UPS management frequently stresses the importance of safe work practices. You won’t be any good to the company if injured permanently. One thing we can do is follow those methods:
- Drive the speed limit.
- Don’t run.
- Use hand rails.
- Use the hand cart when it is needed.
- Use help for the over 70 pound packages.
Another approach to working safe and protecting jobs is to make sure that we take the time provided in the contract for lunch breaks. Safety experts long have pointed out that taking regular breaks helps prevent injuries, especially the repetitive strain injuries that UPS workers are susceptible to.
We can also protect ourselves by using these three areas of the contract:
The 9.5-hour workday. The Hours of Work section of the contract states that we have a right to file grievances if and when management forces us to work continuously over 9.5 hours per day. If you have had to work three or more days per week over 9.5 hours, file a grievance.
Optional days. Each supplement has a provision for optional days. Under the Central Supplement we have to request them in writing eight days in advance. The company has to respond within 24 hours.
You do not have to give a reason for taking the day. Make sure you use your optional days and encourage co-workers to do so as well.
Relieved after eight hours. The contract also states that a minimum of ten percent of drivers and full-time inside workers in a center have to be given 8-hour work days, if requested. Say you have 60 people in your center, that means at least 6 can be relieved from overtime on any given day.
Remember that these contract provisions cannot be invoked during peak season. Once peak is over, however, you can be ready to start making use of them. Also, be sure to check your contract for any variations in this language.
Be prepared for management to say, “we’ve got people injured,” or “we’re short-handed.” Remember, it is their job to take this into account. By using this provision in the contract we take a small but important step towards protecting ourselves and having healthier work lives.
By taking all of these steps we will experience fewer on-the-job injuries—a positive outcome for workers and management alike, given the many costs associated with workplace injury.
Steward, Local 90
Des Moines, Ia.