Some may recall, during the Teamsters' Las Vegas convention last summer that Teamster Boss Jimmy Hoffa announced amid much fanfare that he and his fellow comrades negotiated a "historic card-check agreement" with UPS for UPS Freight, the former company known as Overnite Transportation.
The timing was perfect for Hoffa who, at the time was facing a re-election bid against Teamsters for a Democratic Union activist Tom Leedham. Leedham's campaign to oust Hoffa ultimately failed.
However, the Teamsters' garnering of card-check recognition for Overnite Transportation (UPS Freight) seemed to be a significant victory for Hoffa, which left many in the labor relations community wondering: What did UPS management get in exchange for selling the rights of 15,000 workers to a secret-ballot NLRB-conducted election?
Bottom-line is this: A company as large as UPS does not willingly give up its rights and the rights of its workers unless it's going to get something in exchange for it acquiescence.
Without delving into the extraordinarily lengthy history of the Teamsters' battle with the former Virginia-based carrier, suffice it to say that the three-year strike that the union conducted against Overnite was one of the biggest labor debacles in modern labor relations.
On October 24, 1999, after a long battle to unionize Virginia-based Overnite Transportation, the Teamsters union--once the most powerful union in the free world--called a "nationwide" strike against the trucking company. The strike, which the Teamsters' leadership thought would be short, quickly became a symbol of union impotence, as the besieged company chose to operate its business using replacement worker. What the Teamster bosses thought was only going to take three weeks turned into three years.
On the third anniversary of the strike, after numerous incidences of violence, vandalism and outright hooliganism, the Teamsters threw in the towel...No contract, just egg on their collective faces and a settlement agreement with the National Labor Relations Board that the Teamsters were required to post.
In 2005, just a few short years after the Teamsters ended their strike against Overnite Transportation, shipping giant United Parcel Service bought the carrier for $1.25 billion.
Many speculated that Overnite's union-free status would be leveraged against the Teamsters in 2008, when the Teamsters' contract with UPS expires.
Therefore, when Hoffa made his announcement that UPS had agreed to card-check in June 2006, many were stunned. The lingering question was: Why?...What did UPS gain?
Well, nearly a year later, the answer seems to have been given:
On May 10th, the Teamsters announced that the union was in discussions to allow UPS to pull its employees out of the Teamsters' Central States Pension Fund. In their statement, the Teamsters stated:
What will capture the headlines is an offer to create a new, joint Teamsters-Company pension plan to cover full-time UPS employees who currently obtain their pension benefits from the Central States Fund....
The current proposal would create a plan jointly administered by UPS and the International Brotherhood of Teamsters with an equal number of Teamster-appointed and Company trustees....
The Company proposes to pay in a lump sum the withdrawal liability owed to the Central States pension fund, an amount subject to negotiation between the Company and that Fund. The Company contends that depositing a large amount of money into the Fund will improve its stability and protect the Fund from some of the requirements of the Pension Protection Act of 2006, which will go into effect in 2008.
Alas, the question is answered.
The trade-off of giving card-check at UPS Freight (formerly Overnite) to the Teamsters seems to be the union's willingness to let UPS out of the Central States Pension Fund, which is around $15 to &16 billion underfunded.
Since much of the liabilities comes from the fact that so many unionized trucking companies have gone out of business, for its part, UPS has offered to pay $4 billion to get its people out of the plan.
Such a move would be a boon to both UPS and its Teamster-represented workers, but it could spell disaster for the Teamsters who remain in the CSPF....And, ultimately, it may prove to be a disaster to the American taxpayer if we all wind up bearing the brunt of another defunct pension plan.
Whether or not UPS does ultimately pull its workers out of the Teamsters' pension plan remains unknown. However, the mere fact that the Teamster brass are talking about it right now seems to be a clear sign of the pay-back UPS management got in exchange for giving up UPS Freight employees' rights.