UPS aircraft mechanics and other maintenance workers have asked a federal agency to be released from contract negotiations, bringing the parties closer to a strike, which, a union leader said, could happen during the busy holiday season.
A company spokesman said the union’s claims of a bargaining impasse is “factually baseless” and that UPS remains confident that the parties will reach an agreement.
Whether the parties will be released from negotiations — or sent back to the bargaining table — will be decided by the National Mediation Board, which promotes the flow of interstate commerce in the U.S. airline and railroad industries. A decision could come in a matter of days.
The NMB could not be immediately reached Thursday.
Tim Boyle, president of Teamsters Local 2727, which represents 1,300 employees, including about 550 in Louisville, told Insider Thursday that the parties remained at an impasse, especially over health benefits, and that contract talks in late August ended a day earlier than planned.
“It didn’t go well at all,” Boyle said.
The parties have negotiated for more than three years, and Boyle said proposed changes to health benefits for current employees and retirees remained the major sticking point.
Boyle said some of the mechanics, after working 25 years around aircraft, suffered significant injuries from repeated lifting of tires to the point that their shoulders, backs and other joints left them unable to continue to work. Others suffered hearing loss because of the noise around planes, he said.
When those union members retire early, they need insurance to help pay for their health care until age 65, when they become eligible for Medicare, the government health insurance for older Americans. Union members have had that health insurance bridge benefit since 1988 and have made concessions over the years to keep it, Boyle said.
Today, that insurance benefit costs a union member and his dependents about $3,700 per year, Boyle said. The company wants to raise the price to an annual $19,401. That price will make the benefit unaffordable, he said. In addition, the company wants to make changes to health benefits for current workers, too, he said.
Boyle says the company essentially wants to establish a ceiling for how much it pays for the benefit — regardless of how much the employees incur in health costs.
Boyle said the company’s offer had gotten worse in the last few months, and that negotiations were “regressing.” The parties have not made any progress since March of last year, he said.
In a news release, the union said that UPS “isn’t taking the negotiations seriously” and that union members have “grown frustrated.”
Boyle said that months ago he had asked UPS CEO David Abney, who recently visited Louisville, to put before the union a final offer so that union leaders could decide whether to take that offer to the members. Company leaders won’t take that step, Boyle said, because they know it would lead to a strike.
In the release, the union also said that UPS is calling for “devastating” health benefit cuts while it “crushed earnings estimates” in the second quarter. The logistics giant posted a profit last year of $3.4 billion — though, that was down from $4.8 billion in 2015.
UPS spokesman Mike Mangeot told Insider via email that the union’s claim of a bargaining impasse is “factually baseless.”
The parties “have agreed on virtually all non-economic issues and have moved closer on several economic issues within the framework of a total contract package,” he said.
“UPS continues to negotiate in good faith for a mutually agreeable contract with Teamsters Local 2727. The Company has made several generous offers that include industry-leading wage rates, pension and 401(k) programs, and the option of premium-free healthcare or remaining in their current plan with minimal cost-sharing,” Mangeot said.
“The total compensation and benefits offer is industry-leading, generous and fair,” he said
Mangeot previously has said that UPS mechanics earn more than $105,000 per year, plus benefits.
“Our mechanics are good people who do a great job of taking care of our airplanes,” Mangeot said. “UPS, in turn, has done a great job of taking care of them.”
Boyle has said UPS workers make about $5 less per hour than their colleagues at FedEx, even though UPS employees handle more work, with some putting in 36-hour shifts or working two weeks straight on 16-hour shifts.
The union had authorized a strike late last year and made a counter offer to the company’s proposal early this year, which the company essentially ignored, Boyle said. The union already had asked the NMB in April to be released from negotiations. However, the board at that time told the parties to continue to work out their differences.
If the NMB releases the parties from negotiations, an arbitration panel could make a decision over what contract offer is put before the union members — though, both the union and the company can reject that the matter goes to arbitration.
Boyle said that the union is unlikely to agree to arbitration, which would pave the way for a strike, which he believes could happen as early as December, in the midst of the busy holiday shopping season.
“I think it’s a real possibility,” he said.
Mangeot previously has said that contract negotiations in the airline industry often take many years because of the complexity of the Railway Labor Act, the federal law that governs airline contract talks.
“We remain confident that the NMB’s mediation process will result in an agreement that’s good for UPS, our mechanics and our stakeholders,” he said.