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"Crucial Deadline Approaches for UPS Contract Negotiations with Teamsters Union: Potential Cost Increases on the Horizon"
United Parcel Services (UPS) and the Teamsters union are set to resume negotiations this week on a new collective bargaining agreement before the end of the month when a potential strike that could rattle the U.S. economy looms. The current contract between UPS and Teamsters, which covers about 340,000 UPS workers, is set to expire on July 31. In mid-June, 97% of UPS Teamsters in favor of authorizing a strike if negotiations fail to yield a satisfactory agreement between the two sides. If negotiations falter this week and a strike begins the following week, it would mark the largest strike against a single employer in U.S. history and would be the first UPS Teamsters walkout since 1997.
While a strike would take a toll on the economy at large, due to delayed shipments and deliveries for consumers and businesses alike across the country, making a deal will impact UPS' finances. The company enjoyed a record profit of $13.1 billion in 2022 but forecasted a slower 2023, and its first-quarter profit was down over 21% in the first three months of this year compared to the same period a year ago.
Other large employers engaged in union negotiations have seen costs soar. Amid American Airlines' ongoing negotiations with its pilots' union, the company upped its offer for pay and benefits by $1 billion to a total of $9 billion over a four-year contract after American's pilots balked at a previous offer following United Airlines' announcement of a more attractive deal for its pilots' union. American's decision to match United's contract offer shows the leverage unions can exert in negotiations, and a similar dynamic is playing out between UPS and the Teamsters.
A strike by the UPS Teamsters could be the most expensive strike in the U.S. in at least a century, according to the Anderson Economic Group, a Michigan-based think tank that specializes in the impact of labor strikes. The group's analysis puts the economic losses from a 10-day strike at more than $7 billion, including at least $4 billion in UPS customer losses and lost wages of more than $1 billion.
In its most recent annual report, UPS said it delivered 6.2 billion packages around the world in 2022. That amounts to an average of 24.3 million deliveries daily, which the economy's logistics system would struggle to cope with in the event of a strike.
Negotiations between the two sides have been touch-and-go, with agreements being reached in a number of areas like heat safety. But there was recently a two-week pause in negotiations after the Teamsters walked away, and unresolved issues like compensation for part-time workers linger as the deadline looms.
Under the current contract, pay for part-timers starts at $15.50 an hour and includes a pension, health benefits, and tuition reimbursement – although UPS has told FOX Business that it already raised its minimum wage to $16.20 an hour to comply with federal requirements for government contractors and said the average part-time pay is about $20 an hour.
UPS Teamsters have been practicing picketing around the country to gather support and demonstrate leverage in the negotiations. The Teamsters tweeted on Sunday, "Members in every state are keeping the pressure on UPS through extraordinary unity and visible, raucous solidarity. UPS must come back to the table and prove to 340,000 Teamsters that the company is finally prepared to respect and reward all members."
"We look forward to meeting the Teamsters at the negotiating table next week to resolve the few remaining open issues," UPS said in a statement Friday. "With
The ongoing negotiations between UPS and the Teamsters union regarding a new collective bargaining agreement and the potential strike that looms as the deadline approaches can have significant ramifications for various entities, including a newly formed business operating as an LLC.
One of the immediate impacts a strike could have on a newly formed business is the disruption in the supply chain. UPS plays a crucial role in the logistics system, delivering billions of packages annually. In the event of a strike, delayed shipments and deliveries could cause disruptions and hamper the ability of the newly formed business to receive necessary supplies, materials, and inventory. This can lead to operational setbacks and potential customer dissatisfaction.
Furthermore, the economic losses projected in the event of a strike, as estimated by the Anderson Economic Group, could have a ripple effect on the overall economy. A strike of this magnitude can result in billions of dollars in losses, including customer losses and lost wages. Such economic turbulence can create an uncertain environment for a newly formed business, affecting consumer spending patterns and market conditions.
Additionally, the outcome of the negotiations between UPS and the Teamsters union can set a precedent for future labor negotiations across different industries. If the union successfully negotiates better pay and benefits for its members, other unions may be emboldened to seek similar concessions. This can potentially increase labor costs across the board, impacting the bottom line of a newly formed business and possibly making it more challenging to maintain profitability.
In conclusion, the UPS-Teamsters negotiations and the potential strike pose significant challenges for various businesses, including newly formed businesses operating as LLCs. It is important for these businesses to closely monitor the developments and assess the potential impact on their supply chains, operations, and overall financial stability. Adapting contingency plans and staying informed about alternative logistics options may be prudent steps to mitigate potential disruptions and navigate the changing labor landscape.
Original Article First Published at: https://www.foxbusiness.com/economy/ups-contract-talks-teamsters-union-near-deadline-deal-could-hike-companys-costs