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Contract Terms
10/8/2007
Paul Page
Editor in Chief When
UPS announced its contract settlement with the International Brotherhood of Teamsters in 2002, the company headlined the agreement as the "best contract ever." It may not sound quite as catchy, but what UPS and the Teamsters agreed to last week may be the most far-reaching contract ever in the domestic shipping industry.
That is because this contract, more than perhaps any other labor agreement UPS has negotiated, sets the terms for business and labor management relations far beyond the borders of the company's own operations and will affect transportation workers well beyond the 240,000 or so UPS employees covered by the contract.
It's a historic agreement not because it extends an era of stability for the country's largest private transportation company, although it does do that, but because it provides the answer by one of the country's largest employers to questions over pensions and retirement planning at the forefront of workplace discussions today.
With the provision allowing for UPS to buy its way out of the Central States Pension Fund, the company is preparing to work with the Teamsters union on the pension planning for its workers. It comes with a $6.1 billion price tag, of course, which few companies outside of UPS could afford. But for the money, UPS at last will get to fully own a pension benefit that companies and workers increasingly see as nearly as central to employment as wages themselves.
That agreement allowing UPS to opt out of the multiemployer plan follows an agreement earlier in September between General Motors and the United Auto Workers that will restructure the pension plans for GM's 73,000 unionized employees and create a trust fund managed by the union and the automaker to oversee health care pension benefits.
The UPS plan will have a broader impact, however, as it triggers a potential restructuring of benefits at Central States and puts pressure on YRC Worldwide and ABF Freight System to take a hard look at their participation in the plan.
The UPS-Teamsters agreement also will reverberate across the competitive field perhaps more than even the hard-fought pact the two sides signed after the 1997 strike. In some ways, with its blockbuster pension provision and the suggestions of new workplace flexibility, the 2007 agreement may well be the one UPS wanted 10 years ago.
Details on that flexibility weren't public last week, but it's no secret UPS would like to shift some of the parcel traffic from Teamsters drivers onto the longer-haul lanes of UPS Freight. That, along with the potential for the Teamsters to step up organizing efforts at the largely nonunion LTL carrier, is just a piece of a larger operating puzzle UPS is putting together to meet changing demands in global supply chains.
Another operator doing that, of course, is FedEx, which may feel the impact of the UPS agreement in Memphis, and perhaps in Washington. The Teamsters may have struck a deal with UPS, but it's not going too far to say the company they want to reach is FedEx.
