It is back to the drawing board—or, more accurately, the bargaining table—for UPS and Teamsters negotiators.
 
The company was dealt an historic rebuke when the largest union contract in North America covering 235,000 full- and part-time Teamsters at UPS’s parcel division rejected 18 side agreements known as supplemental agreements. The master parcel contract was passed by a narrow 53-47 margin.
 
The contract was due to expire on July 31. UPS officials had opened bargaining last year in hopes of an early agreement. What they have now is basically half a deal—five-year agreement on $3.90 per hour wage hikes on top of its current $31.34 hourly base rate—but no deal on many supplemental deals covering such thorny issues as health care costs and fringe benefits.
 
UPS officials went out of their way to downplay the importance of the rebuke of the supplemental agreements. John McDevitt, senior vice president of UPS, issued a statement saying it remains “business as usual while UPS and the IBT (Teamsters) resolve remaining issues and Teamster-represented employees ratify new agreements.”
 
That may take a while. The Teamsters members rejected 18 regional and local contract agreements, which all need to be renegotiated, re-voted, and approved by members before the national agreement can go into effect. That means that 63 percent of UPS Teamsters covered by supplements or riders were rejected.
 
Ken Paff, organizer for the dissident Teamsters for a Democratic Union, says the rejection is “a very embarrassing” blow to the union and Ken Hall, its chief negotiator for the parcel division.
 
Although UPS earned $4.5 billion last year, it is calling for increases in out-of-pocket health care costs for UPS workers, who previously enjoyed free dental coverage (now with proposed $1,500 annual limits), low co-pays and no deductibles (now $400 per person) in the rejected supplements.
 
Paff is predicting a “long slog” in the renegotiations. “They are moving at a glacial pace,” Paff told LM. “They’re going to try and wear down, scare down and beat down the members. Who knows when it will end?”
 
Separately, there is also more negotiating work to be done at UPS Freight, the former Overnite LTL company, where the national contract was rejected by a 2-to-1 margin covering 12,000 drivers and dock workers at UPS’s heavy freight division.
 
Those workers were offered wage increases totaling $2.50 an hour – 50 cents an hour rising each of the contract’s five years—but that was rejected soundly. As with the parcel contract, there are controversies over health care coverage, pension and retirement benefits, and other fringes.
 
This was just the second national agreement ever negotiated at UPS Freight, which rebranded Overnite after buying the company for $1.2 billion in 2005. Once mostly a non-union company, Overnite was founded in 1935. It has undergone many changes in the interim, enduring an at-times violent three-year strike from 1999-2001 before remaining mostly non-union under former CEO Leo Suggs.
 
After UPS bought Overnite, it expanded union coverage for nearly all its 12,500 workers. Its first national contract was approved in 2008. That first contract was largely viewed as a “sweetheart” deal between UPS/Overnite and the IBT for card check agreement in return for letting the UPS Teamsters pay $6.1 billion to get out of the underfunded Central States Pension Fund, where UPS faced potentially tens of billions of potential withdrawal liability.
 
But this latest rejection marks the first time a large national transport contract was turned down by a union since the Independent Pilots Association rejected a deal in 1967.
 
As with the parcel contract, the UPS Freight renegotiation is proceeding slowly and out of the public eye.  TDU’s Paff called UPS’s negotiating strategy “the sounds of silence,” referring not just to the media blackout but the company’s behind-the-scenes strategy of apparently waiting out the rank-and-file.
 
Sources within the Teamsters union say they want several issues resolved at UPS Freight, including:
• Banning subcontracting of Teamster work.
• Pension improvements.
• No premiums for health insurance:
• Raises of $1 per hour each year—same as the UPS package workers’ raises.

The UPS parcel contract probably would have been rejected had it not been for large “Yes” majorities in three regions: the Southern, the Atlantic Seaboard, and New England.

The rest of the country, a large majority rejected the deal, including some of the larger and more important UPS facilities.
 
At UPS’s main air hub in Louisville, Ky., where 10,000 workers are employed, Paff said the contract was rejected by an 8-to-1 ratio—even though the company was offering a $1,000 signing bonus to all workers (including part-timers who start at $8.50 an hour).
 
IBT Local 89 in Louisville (whose motto is “A tough union for tough times”), issued strong opposition to the contract extension, calling the action “deplorable” and accused chief negotiatior Hall of a “sell-out” to UPS.
 
“The International Union has essentially given away the members’ right to strike,” the local said in a statement. “This seriously degrades the leverage needed to force UPS to finally agree to a fair contract that addresses the concerns of its workers.
 
“We strongly condemn this move by the IBT/UPS. Ken Hall and the IBT’s sell-out actions are beyond deplorable. Through these actions, Ken Hall and UPS are working to destroy the livelihoods of Teamster workers and their families.
 
“This seriously degrades the leverage needed to force UPS to finally agree to a fair contract that addresses the concerns of its workers,” the local said.
 
At UPS’s main West Coast air hub in Ontario, Calif., the package contract was rejected by a 2-to-1 ratio, according to Paff. In Western Pennsylvania, it went down by a 5-to-1 ratio, he said.
 
“The members are fed up with UPS,” Paff said. TDU is circulating petitions among Teamsters that say: “We’ll Keep Voting No Until UPS Gets it Right.”
 
The big issue for UPS is its health care benefits. Faced with skyrocketing health care costs, UPS is trying to ameliorate those costs by making UPS Teamsters pay more in the form of higher deductibles, higher co-pays and annual limits on coverage. It has not gone down well among the rank and file, who still pay no upfront costs to join UPS’s plan.
 
“Anywhere the health care was changed, the contract was voted down by a large margin,” Paff said.
 
From a company earning more than $4.5 billion in a so-so economy, Paff concluded, “The contract is very mediocre.”