UPS Inc. and Teamsters union leadership have work to do.
Although a final tally won't be available until later today, it is almost certain that workers in UPS' small-package unit will approve a five-year collective bargaining agreement covering 235,000 employees. But the projected 53-percent margin of approval is the narrowest in the history of UPS-Teamster contracts, which date back to the 1930s. In addition, the rank-and-file rejected 18 local and regional attachments to the national contract, known in labor lingo as "supplements" or "riders." That is believed to be the largest number rejected in any contract negotiated by the Teamsters in its 110-year existence.
The 12,000 or so workers at UPS Freight took a much harder line, rejecting their five-year contract proposal outright by an overwhelming vote of 4,244 to 1,897.
The outcomes are stinging blows to the Atlanta-based shipping and logistics giant, which sought to begin contract talks nearly a year earlier than normal in the hope of reaching an accord long before the July 31 deadline for both compacts. It is also a sharp rebuke to Teamster leadership, which negotiated the deals, and to leaders of union locals that blessed them before putting the ball in the rank-and-file's court.
The defeat of the UPS Freight contract sends the two sides back to the bargaining table. On the small-package side, the work will focus on convincing members in the areas covered by the 18 rejected supplements to change their votes. The national agreement can't be finalized until all supplements are ratified by the affected members. Should a supplement be rejected a second time, both sides resume negotiations. On a third go-round, a strike authorization vote can be taken.
No one expects either contract to be renegotiated from scratch.
Contract renegotiations will be complicated by fierce opposition in key regions. Local 89 in Louisville, Ky.—which represents about 9,300 small-package workers and is the largest Teamster local in the UPS system—rejected the master agreement by a 3,388-to-483 vote and the supplement 3,520 to 441. In Ohio, the master and supplemental agreement went down by about a two-to-one margins. Workers in the Southwest shot down both measures by a margin of roughly 2.5 to 1.
Given the amount of work ahead and the short time in which to do it, it appears unlikely the contracts will be ratified by the July 31 deadlines, according to Ken Paff, national organizer for Teamsters for a Democratic Union (TDU), a dissident group that often clashes with Teamster leadership.
In a statement yesterday, UPS said it is "committed to quickly resolving remaining issues on UPS Freight and supplemental agreements." The company said the developments of the past 24 hours are "part of the normal negotiating process" and said it was confident the issues would soon be resolved.
A separate statement from the Teamsters did not share the same optimistic tone. "While the National Master contract was approved, the union today informed the company that the agreement covering UPS Freight employees and some local agreements will require additional negotiation," according to the statement.
The biggest bone of contention in the small-package accord is language calling for 140,000 members to move from a company-sponsored health insurance plan to one falling under the joint trusteeship of employers like UPS and the Teamsters. Critics of the plan said that it will result in substantial benefit cuts and that the language is unclear as to how the transition would be executed. Small-package workers will not be required to make out-of-pocket contributions to their health insurance premiums.
Under the proposed agreement, full- and part-time workers in the parcel unit would get $3.90 per hour in wage increases over the contract's life. Hourly pay for UPS's starting part-time pre-loaders and sorters would rise to $11 from $8.50; all others would receive an increase to $10 an hour. The agreement requires UPS to create 2,350 full-time jobs over the next three years by combining part-time positions into full-time slots.
UPS Freight workers would receive $2.50 per hour in wage hikes over the five-year period. The gap between wage hikes at the two operations was a factor in UPS Freight workers rejecting the agreement.
One of the union's main grievances is the issue of driver subcontracting. UPS Freight subcontracts about half its driving work, according to union officials. Judging by the one-sided nature of the UPS Freight contract vote, the rank-and-file were not convinced that language in the new contract eliminates or reduces subcontracting.
In the contract, UPS Freight proposed the creation of a "line-haul driver" division designed to curb the practice. However, in a communiquÃ© last month to members, leaders of Local 89 in Louisville said the proposal falls short of its objective. In addition, new hires in the division would earn 20 cents less per mile than other members, local officials said.