Negotiation Analysis

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May 2, 2010

UPS/Teamsters negotiation in 1997

In 1997 united parcel service and the Teamsters were on table again after 1993’s contract negotiation. It was common since 1980’s that union sent signals to management about large concessions before every negotiation. Union made it clear before the 1997 negotiations started that "These negotiations are about only one thing and that is making improvements that will give our members the security, opportunities, safety, and standard of living that they deserve" (Witt, Wilson, 1999). In 1996 UPS reported $22.4 billion of sales. 80 percent of the ground package delivery business was under control of united parcel service. UPS had 185,000 Teamsters employees. Majority of these employees were part timers and other full timers. While reported being a profitable company UPS management said that to stay profitable and beat its competitors they need to negotiate the contract wisely and its employees need to cooperate with them. The emphasis on international business and expedited air shipments was driving the growth of the company. The air side of UPS operates virtually separately than the ground operations. This is where people worked odd hours and had to meet tight operational deadlines. The ground portion also consisted of majority of the part time workers (Budd, 1997). The Teamsters was part of the AFL-CIO. AFL-CIO was a federation consisted of 78 different national and international unions. Overall it had most than 13 million members. Teamster was a big in it as well. It was presenting 1.4 million members including about 400,000 pensioners both in United States and Canada. Union leaders told its members to be offensive in the negotiation to stay in power. Teamster had many part timers in their membership and these part timers made 57% of the total UPS employees. These part timers had big stakes in this negotiation and were looking forward to get heard in the negotiation. The subcontracting was a big issue for these part timers which also made a big part of the total Teamster labor membership (Bacon, 1997) & (Witt, Wilson, 1999).

At the time of 1997-contract negotiation, democrats were in power. Mr. Clinton was on the president seat. As democrats are seen historically in favor of the unions, teamster could expect government support for sure. The 1997 economy was doing great. It had the great combination of strong growth in domestic product, individual income and very low inflation rate. There was also very low unemployment rate at this time. Economy was expanding in year 1997 since 1991 (USDA, 1997). All this was favoring teamster, which was all ready for the negotiation with UPS. Solid economy meant that UPS was doing great in the business. UPS reported a great sale in year 1996, which was, suppose increase in 1997. Management had no reasons to lay back on employee demands. They were in a good position to be more generous and giving to their employees if they wanted. Low unemployment rates also put UPS in a difficult position. If Teamster wanted to go on strike UPS could have hard time filling all the vacancies. The situation was in great favor of the union side if they wanted to strike (Lecture notes).

Initial demands
Both sides came with their own plans and claimed their plans to be beneficial to the employees. Both UPS and teamsters saw advantage of controlling the pension funds. Management wanted withdrawal of its contribution to the pension funds. By pulling out of this plan company could be better off financially. It could cost UPS around $700 million in withdraw liability charges. To get out of 31 multiemployer plans. Instead UPS was willing to contribute $1 billion a year to a single-employer plan. UPS wanted the full control of the pension funds. UPS offered to provide a single benefit pension plan to both full and part time employees. Another offer that management made on the table was to...
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