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Teamsters in strike accord
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June 2, 1999: 4:09 p.m. ET
Midnight walkout averted after car hauling firms back off demands
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NEW YORK (CNNfn) - The Teamsters union reached a handshake agreement with the nation's car hauling firms on a new four-year contract Wednesday, sparing the automotive industry from a potentially disruptive strike.
Teamsters President James Hoffa said the two sides reached a preliminary agreement early Wednesday morning ending a dispute over driver benefits, retirement age and pension plans that will maintain the flow of automobiles to American dealerships.
The deal also provides Hoffa instant credibility among the Teamsters rank and file, who elevated the son of famed Teamsters President Jimmy Hoffa to the organization's top post just two months ago after former president Ron Carey was expelled in a fund-raising scandal.
"Finally, we have the contract we want and basically it is non-concessionary," Hoffa said. "We had a united negotiating committee and the united membership behind us is and that was the difference in these negotiations."
A new union contract with 17 car haulers nationwide will keep drivers like this on the road
In a written statement, the National Automobile Transporters Labor Division, which represents the 17 car hauling companies negotiating with the Teamsters, said it was "especially pleased a strike had been averted and that a disruption of service has been avoided."
"As a result, our non-union competitors and rail carriers have been prevented from further encroaching upon our business," the statement said.
But the agreement clearly will further pinch the already strained bottom lines at those companies. Teamsters spokesman Chip Roth said the contract will raise the total cost to car hauling companies by 5 percent in the first year of the contract and 4 percent during each year thereafter.
That could potentially further erode profit margins already whittled down by the popularity of sport/utility vehicles, whose bulky frames reduce the number of automobiles that can be delivered on each hauling truck and therefore the cost that can be charged to dealers.
"It could've been a lot worse, but this is not a cost neutral situation," said Anthony P. Gallo, a transportation analyst with BT Alex. Brown in Baltimore. "It probably means higher costs down the road for the automobile manufacturers."
Scarcity of drivers aided Teamsters
But the combination of a tight labor market and a looming walkout of 12,200 Teamster drivers and 600 auto mechanics in what is projected to be a banner year for automobile sales clearly left the car haulers with little leverage during negotiations.
The Teamsters already had postponed a scheduled strike twice -- first at midnight Monday and then at midnight Tuesday -- after Hoffa reported substantial progress in the ongoing negotiations. The Tuesday strike was postponed until Wednesday at midnight pending a deal, which was reached around 2 a.m.
The union was fighting proposals that would have resulted in lower pay for entry-level workers, the hiring of part-time employees, and the use of less expensive Mexican drivers to deliver goods in the United States.
The auto transport companies contended that Teamster drivers already make, on average, $68,000 a year, and that labor costs are rising faster than what the companies can charge automakers.
But Teamsters drivers will deliver about 95 percent of the 16 million automobiles expected to be shipped this year, including those made by General Motors (GM), Ford Motor Co. (F) and DaimlerChrysler.
Truck hauling companies involved in the negotiations deferred comment to the Transporters Labor Division Wednesday morning until the deal was finalized.
"We just don't have enough information right now to make a comment," said Steve Wright, spokesman for Allied Holding, the nation's largest truck hauling firm.
Non-union trucking officials praised the accord, however, despite its potential to raise costs industry wide.
"We're very pleased they settled because we didn't want our customers to go through the issues related to a strike," said Edward Sheehan, CEO of United Road Services Inc., whose organization does not use union drivers. "The car industry is having a banner year right now and . . . they really need to move cars right now."
The stocks of the country's three largest automobile transport companies were little changed Wednesday after the agreement was announced. In mid-afternoon trading, Allied Holdings (AHI) was up 3/8 to 8, United Road Services (URSI) was down 1/16 to 7-1/2, while lightly traded Morgan Group (MG) was unchanged at 7-3/8.
Retire early, earn more
Hoffa said the deal will allow Teamster drivers to retire at any age after 25 years of service with a $2,000 a month pension. After age 55, the pension increases to $3,500 a month, an improvement of $1,000 and two years earlier than the most recent deal, and includes improved medical benefits. Those retiring after age 55 will receive a monthly pension of $3,000, an increase of $500.
For the first time, Teamster drivers will also receive prescription benefits when placed on Medicare after retirement for the first time.
The two sides also agreed to even out the Teamsters nationwide rate scale -- which is based on total mileage -- while the Teamsters agreed to some scheduling flexibility among its mechanics sought by the car hauling companies.
Earlier in the week, the Transporters Labor Division had backed off a proposal to permit more Mexican truckers to deliver goods in the United States under the North American Free Trade Agreement.
After a morning press conference to announce the preliminary agreements, Teamster and Labor Division officials adjourned once again behind closed doors to ratify the final proposal.
The deal will ultimately need to be approved by the Teamsters rank and file, most likely within the next month. But the agreement has undoubtedly helped solidify Hoffa's position as the undisputed leader of an organization that had become increasing fractured the past few years. 
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