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UPS, workers deliver pact
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August 19, 1997: 10:41 a.m. ET
Teamsters' bitter strike ends after 15 days as company's losses top $600M
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NEW YORK (CNNfn) - A tentative settlement between striking Teamsters and the United Parcel Service could give the U.S. labor movement a shot in the arm, but it won't breath any life into inflation, analysts said Tuesday.
That assessment came as the shipping giant said it likely will resume service to regular customers on Wednesday. One-time pickups will start a day later. The company has a backlog of less than 6 million packages.
"We have so many customers with merchandise sitting on loading docks," UPS spokeswoman Susan Rosenberg told CNNfn. "We think we've got a long way to restore trust in our customers."
The union, meanwhile, hailed the agreement as a major coup for American workers that addressed all of its concerns.
"This strike marks a new era," said Teamsters President Ron Carey. "This victory sends a signal that American workers are on the move again. After 15 years of taking it on the chin, working families are telling big companies that we will fight for the American dream."
Labor Secretary Alexis Herman helped break the logjam after the bitter, 15-day job action paralyzed the nation's largest shipping company. UPS dominates 80 percent of the industry, handling 12 million packages a day.
"I think it's a major victory for both parties," Herman said after 90 hours of wearying talks by the two sides. "That's what collective bargaining is all about."
Herman and President Clinton urged both sides to keep talking even when no resolution seemed in sight. (209K WAV) or (209K AIFF)
According to the pact, which requires union approval, UPS will convert 10,000 part-time jobs into full-time positions over five years. The company will also phase out over six months the use of subcontractors, another stumbling point in the talks.
Full-time workers will get a pay raise of $3.10 an hour over five years, a 15 percent hike, to $23 an hour. Part-timers will get $4 more an hour over the life of the contract, to $15 an hour.
The union won another key concession in retaining control of the pension fund. Pensions in certain cases will be 50 percent higher, so that a 30-year worker would get monthly benefits of $3,000.
President Clinton, vacationing on Martha's Vineyard, said the labor issues raised by the strike are vital to the country's economic strength.
"Today's agreement represents [the negotiators'] hard work and determination to reconcile their differences for the good of the company, its employees and the customers they serve," Clinton said.
But the strike had a high cost for both sides.
UPS said the job action cost the company at least $600 million. The privately-held company estimates it permanently lost 5 percent of its business, a staggering number considering it ships 3 billion packages a year and has annual revenue of $22.4 billion.
The company said it will have to lay off 15,000 of its 185,000-workforce as a result.
"There's no question [the resolution of the strike] came with a price," Rosenberg said. "But it allows us to maintain economic viability."
Peter Canelo, an analyst with Morgan Stanley Dean Witter, acknowledged the settlement would give the labor movement more muscle and encourage other unions to push for better benefits. (230K WAV) or (230K AIFF)
But Canelo also suggested the union didn't score a major success. "It's not a very big victory, but it is a symbolic victory," Canelo told CNNfn.
As for the strike's potential effects on the nation's economy, John Ryding, a senior economist with Bear Stearns, is not concerned. He doubts it will lead to an interest rate increase by the Federal Reserve on Tuesday. (186K WAV) or (186K AIFF)
"I don't think it is inflationary," Ryding said of the strike. 
-- Martine Costello
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UPS
Teamsters
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