UPS has one week to reach a deal with the Teamsters. Here’s how a strong contract helps the company.

If you’ve been following the news, you know that contract negotiations between United Parcel Service and the Teamsters unexpectedly broke down in the wee hours after the July Fourth holiday. Both sides blamed the other and left the bargaining table without any agreed-on or announced plans to return.

This was an abrupt reversal for the company. After agreeing to nearly everything non-economic that the union was asking for, UPS was now balking at the Teamsters’ economic demands, claiming that it had nothing more to offer its unionized workforce.

That was two weeks ago. Since then, Teamsters General President Sean O’Brien has been appearing on news programs and at public rallies, making the case for a strong contract to anyone who’d listen. He’s also hosted a Zoom call where he provided updates to – and fielded questions directly from – rank-and-file members eager to know more.

Meanwhile, Teamster locals have been organizing ‘practice pickets’ at dozens of UPS facilities around the country. Grassroots activists have published and distributed flyers to answer members’ frequently asked questions about the contract deadline and a possible strike. They’ve also held a webinar explaining the ‘do’s and don’ts’ of walking a picket line.

During that time media coverage has mushroomed, and with it the public’s interest. Suddenly everyone everywhere is talking about UPS, with much of the conversation pivoting from will there be a strike? to how long will the strike last? and what will its impact be? on delivery customers and the industry and economy as a whole.

And then, the latest twist! In another about-face, last week UPS finally blinked, calling the Teamsters back to the table. Contract talks are now set to resume on Tuesday, July 25th, giving the two parties exactly one week to reach a deal.

Throughout the entire contract campaign, President O’Brien has repeatedly insisted that the only acceptable deal is one where all Teamsters’ economic demands are met. Anything short of that will result in a strike when the current contract expires at 12:01 am August 1st.

Despite the nail-biting brinkmanship, I stand by my earlier prediction that a strike won’t actually happen. I say this because it’s always been in UPS’s own business interest to avert a strike by delivering the strong contract that Sean O’Brien and the Teamsters’ national negotiating team have been holding out for all this time.

Consider:

• A strike will cost workers and the union dearly, but it will cost the company far more. One analysis estimated that a ten-day work stoppage would cost UPS Teamsters over $1.1 billion in lost wages, although these would be partially offset by picket pay from the union’s $350 million strike fund. But those same ten lost production days would cost UPS $816 million in net revenue loss. That’s roughly the same amount ($850 million) it would cost the company to give all their part-timers a five dollar per hour raise. I honestly don’t think the company would be so penny-wise but pound foolish, especially since…
  
• In terms of public relations, the company has already lost. UPS knew it couldn’t compete with its own employees for the public’s sympathy, so it never even tried. The fact that everyone loves their UPS driver gives the company an edge vis-a-vis other delivery companies, but it works against them in labor standoffs like this one. Whereas Sean O’Brien can testify fervidly to how UPS Teamsters are overworked and underpaid, UPS management is reduced to defending itself with tersely-worded, anonymously-written, anodyne statements. It has known from the outset that the majority of the public would blame the company, not the workers, for a strike, so it has endeavored not to protest too much.
  
• Strike replacements are just so many accidents waiting to happen. In ordinary times, UPS would never countenance putting thousands of untested workers into its labor pool. Yet here we are, with supervisors and staff being drafted into emergency service in the most adverse conditions possible. They’ll have to navigate hostile picketers and confused or frustrated customers – in the summer heat, no less. And this on top of all the normal rigors of moving packages for UPS! What could possibly go wrong? It seems to me that the company is exposing itself to significant unnecessary risk – from accident, injury, and who knows what else – which again could wipe out any gains made from holding the line against wage increases and other economic demands.
  
• Investing in its workforce will pay the company big dividends. Like any large, successful, forward-looking business, UPS routinely lays out large sums of capital for physical and technological resources, with the understanding that those expenses will pay off over the long run through increased productivity and enhanced performance. Why would investments in human resources be any different? Wage hikes pay for themselves through reduced turnover, increased morale and job satisfaction, and – frankly – raised performance expectations. Clearly UPS is already doing something right: its latest quarterly profit margins are more than double those of FedEx. I argue that that advantage is because of, and not in spite of, UPS’s more-expensive unionized workforce.
  
• A win for UPS Teamsters fortifies the company’s strong industry position going forward. Think about everything that’s happened in the last five years. Pandemic. Inflation. War. Political turmoil. Social unrest. Supply chain headaches. Artificial intelligence. Climate crisis. Yet during that same five-year period UPS revenue, profits, and share price all rose steadily. Experts attributed much of that persisting success to the certainty and predictability of the five-year labor contract. Odds are the next five years will bring even more volatility, not less, so the next contract may yield even greater advantages for the company.

Yes, a strike is a ‘nuclear option,’ but it’s the only thing that brings a larger, richer, more powerful adversary to the table – and keeps them there.

Sean O’Brien understands that if the threat of a strike isn’t credible enough, it’s game over for the 340,000 Teamsters at UPS. His one task this entire time has been to convince the company of its credibility by persuading enough rank-and-file members to take on the costs of organizing and mobilizing that threat. He’s our leader, but the fight is ours.

On July 5th the company wasn’t fully convinced. We’ll see if they are now.