Teamsters, United Parcel Service reach agreement on new contract

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Posted 8:56PM on Tuesday, July 16, 2002

WASHINGTON, D.C. - Teamsters and United Parcel Service Inc. officials shook hands Tuesday on a new six-year contract valued at $9 billion that will give workers increases in wages and benefits and adds new union jobs. ``In an economic climate in which many workers are losing their retirement savings and having their health benefits slashed, this contract protects our UPS members and their families and sets a new standard for American workers,'' said Teamsters President James P. Hoffa. The deal was reached Monday night 16 days before the current, five-year contract was set to expire. ``We're back in business and nobody offers better service than UPS,'' said Michael Eskew, chief executive officer of UPS. Hoffa and Eskew announced details of the pact at a Washington hotel where they had negotiated for the last nine weeks. A two-week strike in 1997 cost UPS $750 million, and both sides said they wanted to avoid a repeat. The company, which controlled about 80 percent of the small package delivery market then, was virtually crippled when 185,000 Teamsters went on strike with the support of UPS's 2,000 unionized pilots. The previous five-year contract was valued at $4.2 billion and the average wage and benefit increase was 98 cents per year. In this tentative agreement, which covers six years, the average wage and benefit increase is $1.46 per year. The 1997 walkout revolved around the union's demand that more part-time workers be given full-time jobs. The union won 10,000 new full-time jobs after the strike. In this contract, an additional 10,000 new full-time jobs will be added on top of those already created. Also, about 10,000 nonunion jobs will become union jobs. Workers will get an average $5 per hour wage increase over six years. For example, the average package delivery driver makes $22.10 an hour. At the end of the six years, he will make $27.10 an hour. Additional increases are built in if inflation rises. Part-time workers will see a $6 per hour increase over six years. Part-time retirees will receive health insurance for the first time as part of the new deal. Also, long-term disability benefits were negotiated for the first time. Limits on excessive overtime also were set. Caldwell said he expects results from a union ratification vote on the proposed contract by mid-August. UPS customers, fearing another strike after the contract expired July 31, already had started defecting to rival companies. The Atlanta-based company said its second-quarter profits fell slightly. Package volume was down 2 percent in April and May from last year's levels, and fell 4 percent in June. The Teamsters now represent about 210,000 workers at UPS. It is the largest private-sector labor contract being negotiated this year and labor analysts say the outcome will set the tone for the strength of unions for years to come. The negotiations also represented Hoffa's biggest leadership test as he tried to win sizable concessions that topped the previous contract negotiated by his predecessor and bitter rival, Ron Carey.