A Second Contract Vote Fails: How UPS's Most Important Distribution Center Is at Risk


Photo: Wiki Commons

The Teamsters' Local 89 Union at United Parcel Services' (NYSE: UPS  ) famed Worldport Hub has once again voted down the proposed Louisville air supplement in a vote of 2804 against and 185 for the proposal. This marks the second time that the contract has been voted down, and it highlights the ongoing strain between UPS and one of the company's most important local unions.

Fred Zuckerman, president of the Local 89 Union, said that Local 89 is currently working on what options are available to negotiate, because the International Brotherhood of Teamsters, or IBT, has failed to file the necessary paperwork that would allow the union greater bargaining power and the option to strike if necessary. The IBT declined to comment on the matter.

This is confusing. What is Worldport? An air supplement? Why should I care?
To begin, if you have a vested interested in UPS you should certainly care because the Worldport package hub is its largest air center and serves as the main artery for its air operations. Almost every package shipped via UPS airplane goes through this center, and it's of the utmost importance for UPS to keep running smoothly so customers, such as Amazon.com, stay on board. 

The result of the voting shows that there are a lot of unhappy UPSers at Worldport, due primarily to contract negotiations. Periodically, UPS negotiates new contracts with it's unionized workforce that covers things like pay increases, new hires, benefits, and various other areas. 

Local 89 is unhappy with its new contract because it contains reduced health care benefits, new-hire previsions, shuttles, and other areas of contention. What's really interesting about this situation is that there appears to be a breakdown in communication between the IBT and Local 89. For example, Local 89 has repeatedly reached out to IBT for answers about the paperwork that needs to be filed for Local 89 to have more power in negotiations and the option to strike. So far they haven't received a full explanation of why this paperwork has not been filed by the union; they have received only one vague response in the last year stating that the paperwork was not filed due to "strategic" purposes.

What's the takeaway?
There seems to be a large amount of distrust at Worldport between Local 89, the IBT, and UPS, which is creating a politically charged and uncomfortable situation for the workers based there. It also appears that the local union is currently unsure if it has the option to strike and is worried that the IBT and UPS may be able to force the contract through. It's still too early for investors to tell what will come of this situation, but it is something to keep an eye on. This is an emotionally charged situation and only time will tell whether tempers flare or mediation prevails.

If you'd like a more in-depth look into these labor negotiations please watch the video below, in which I explain in detail the current happenings at UPS Worldport and what it means to investors.

3 stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 23, 2014, at 5:54 PM, TMFBos wrote:

    Looks like the contract has been ratified and pushed through without agreement from the three locales holding out. Be sure to check back tomorrow for an updated article.

    Cheers,

    Blake

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2923889, ~/Articles/ArticleHandler.aspx, 10/31/2014 11:59:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement