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News > Companies
After the UPS settlement
August 19, 1997: 6:08 p.m. ET

Who gained, who lost, and what will the fallout be in the end?
From Correspondent Allan Dodds Frank
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NEW YORK (CNNfn) - The Teamsters strike against UPS was widely seen as one of the most important labor disputes of this decade, with impact far beyond UPS and the shipping business. UPS Chairman James Kelly says it will take a few days for deliveries to get back on schedule, and that's when he hopes to know how much business has been lost to the competition.
     The teamsters declared the tentative agreement a decisive win for labor.
     Teamsters President Ron Carey said, "This victory sends a signal that American workers are on the move again."
     Perhaps a symbolic victory for organized labor, but hardly a flat out defeat for the company either.
     The Teamsters won:
  • 7 percent annual raises for part-time workers.
  • A commitment for 20,000 new full-time jobs.
  • Continued control of workers' pension funds.

     The Teamsters conceded:
  • A five-year contract instead of the four years the union wanted.
  • The union still will have more part-timers at UPS than full-timers.
  • Full-time workers receive just 3 percent raises, one percentage point above the current low rate of inflation.

     "Remember, these concessions were made over a five-year period; that's very, very modest. And they had talked about hiring 10,000 new workers anyway -- full-time workers. So that really was not the issue," said Albert Gray, managing director for Cowen Investment Counselors.
     UPS took in $22.4 billion in revenue last year, earning profits of more than a billion dollars. The company says it can afford the settlement. However, UPS does acknowledge it was losing nearly $50 million a day during the strike.
     Financial analysts say the real question for the company isn't the cost of the new contract, but the cost of the strike. UPS said it may have lost as much as 5 percent of its business for good, and may have to lay off as many as 15,000 employees as a result.
     "It's hurt us. Hurt our employees. And it's hurt our customers. We have lost business. We've had customers who have told us they will not be back. We're gonna work as hard as we can to get every customer back," Kelly said.
     UPS is most vulnerable in the battle for overnight and second-day delivery, where it faced tough competition even before the strike.
     "They may end up losing some of the air business, because that's where the major competitors like Federal Express, Airborne, DHL and companies like that are. But when you get into the under-500 mile surface package business, there's almost no competition," said John Pincavage, transportation analyst for Dillon, Read.
     Analysts expect the company to gain back nearly all the small customers it lost to the U.S. postal service.
     Winning back corporate clients who rely on overnight service could be difficult, but UPS says it will telephone 1.6 million customers to reassure them. The company also promises it won't raise rates for the remainder of this year.Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.