Studies of the just-concluded Teamsters Union strike against United Parcel Service of America will be required reading for years to come, labor-management experts predict.
“It will be in all the textbooks,” said Ray Hilgert, a professor of management and industrial relations at Washington University in St. Louis.
The actions by the management of privately held UPS in the 16-day strike, which ended Wednesday for most areas of the country and early Friday in Chicago, are a case study in how not to handle striking employees, experts said last week.
And there are important lessons to be learned from the strike, including why it’s so important to bring in reliable advisers at the beginning, they said.
From the strike’s very start shortly after midnight on Aug. 4, the Teamsters, led by President Ron Carey, had the upper hand and never let go, according to James B. Dworkin, associate dean of the Krannert Graduate School of Management at Purdue University and an expert on bargaining procedures.
While the Atlanta-based company had been struck numerous times in the late 1960s and ’70s, this was the first national strike that the shipping giant, which earned $1.2 billion on revenues of $22.4 billion in 1996, faced in its 90-year history.
Until 1979, the company, which now delivers about 12 million packages daily, or 80 percent of the total shipped nationally, negotiated contracts with Teamsters on a regional basis.
It’s virtually an axiom to never underestimate your enemy, but that’s exactly what UPS did with the Teamsters.
“They underestimated the will and the seriousness of the union,” said Dworkin, adding the company mistakenly believed that Carey wasn’t strong enough to lead a nationwide strike.
Granted, the company anticipated a strike. In fact, it reportedly obtained a $2.1 billion loan to finance its war chest.
“They were relying on Carey being unable to rally the troops because of his precarious political situation,” said Hilgert, a reference to Carey’s narrow re-election victory in December over James P. Hoffa.
Meanwhile, on Friday, just a few days after Carey secured the contract giving the Teamsters practically everything they wanted, a court-appointed election officer refused to certify his victory as president. The ruling forces a new election between him and Hoffa. The officer, Barbara Zack Quindel, cited $221,000 in improper campaign contributions as reason to overturn the election. While Carey himself was cleared of any personal wrongdoing at this time, Quindel said his campaign used a complicated scheme to circumvent rules against donations by companies and the union itself to the election.
A big factor in Carey’s success during the strike was his ability to persuade most workers not to cross the picket lines.
“The fact that 185,000 people were taken out on strike with few exceptions is quite an accomplishment,” Hilgert said.
UPS may have suffered from less-than-objective advice.
One of its advisers was Jeffrey Sonnenfeld, a professor at Emory University in Atlanta and director of the school’s Center for Leadership & Career Studies, which is funded in part by UPS.
Because of his ties with the company, Sonnenfeld frequently was a guest on talk shows, including ABC’s “Nightline,” during the strike.
In the early days of the strike, Sonnenfeld ridiculed the Teamster leadership, noting, “The whole 30-member management negotiating team were all former truck drivers and package handlers. On the Teamster side, only three drove a truck or delivered a package.
“This grandstanding is Carey’s only chance. What he didn’t understand” is that UPS would take such a strong stand, he said then.
But, in the end, it was UPS that caved in. The only thing it achieved in the negotiations was a five-year contract, something it deemed necessary to reassure customers that another strike wouldn’t recur soon.
As significant a role as advisers play in crisis situations, however, Dworkin said he believed the company’s undoing came because it didn’t understand how the part-time worker issue would resonate with the public.
“They didn’t anticipate the swing of the public mood or how the sentiment would favor the workers,” he said, noting the company repeatedly failed to capitalize on its being a leader in American industry in the treatment of a part-time work force.
Hilgert said the company was almost naive in the way it reacted.
“The company was sitting there saying: `We’re a great company, we pay our part-timers well and we pay our full-timers well,” Hilgert said. “They did not assess that this was an issue the union could capitalize upon. And they certainly never contemplated that the Teamsters would get that kind of public support.”
Within days of the strike’s start, polls showed the public was siding with the strikers.
As the days went by, the margins just widened until toward the end more than 55 percent of those contacted in a Gallup Poll said they supported the striking workers. The Washington University professor said most people probably weren’t necessarily supporting the Teamsters.
“I think it more reflected a lot of public sentiment against the downsizing, the outsourcing, huge executive salaries and that the worker always seems to be coming out on the short end of the economic stick,” he said.
In addition, the company was roundly criticized throughout the strike by insisting its July 30 offer was its “last, best and final offer.”
Union officials ridiculed the comment, while labor experts said it obviously was just a ploy aimed at workers who weren’t committed to the strike.
“That kind of statement is always a dubious proposition,” Hilgert said. “What happens is final offers get changed.”
That’s exactly what happened with UPS’ offer.
The union got everything the company offered and then some. Instead of raises of $1.50 an hour over five years, the raise is more than double that: $3.10 an hour. Instead of 1,000 new full-time jobs from existing part-time jobs, the company agreed to create the 10,000 the union wanted in addition to another 10,000 the company said will become available through normal turnover. And the company abandoned its insistence it take over management of the workers’ pension plan.
Hilgert said there’s a larger lesson to be learned from the strike.
“A lot of companies, especially large-scale corporate America, might want to reconsider what they have been doing in the last decade with layoffs and downsizing. This strike showed there is a very large segment of ill will that’s been generated against corporate management because the balance of power has swung so heavily for management and ownership,” he said.
