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Amazon says no to UPS. Costs are too high.Union Reality BitesThe Wall Street Journal comments
Two years ago Teamsters boss Sean O’Brien touted a “historic” labor agreement with United Parcel Service. Now comes the rest of the story, and it isn’t pretty. UPS shares plunged Thursday 14.1% after it announced workforce and delivery reductions. Workers who lose their jobs can thank Mr. O’Brien.
Recent earnings reports have been mostly upbeat with many companies announcing new investments. Not UPS. The carrier on Thursday announced a “network reconfiguration” that “could result in the closure of up to 10% of our buildings, a reduction in the size of our vehicle and aircraft fleets, and a decrease in the size of our workforce.”
It will also cut half of its delivery business with Amazon, its largest customer. UPS’s rising labor costs have made many Amazon deliveries less lucrative and perhaps unprofitable. Amazon will now use its own network to deliver more of its own packages, which it can do at lower cost than UPS because most of its drivers aren’t unionized.
The Teamsters have found little success trying to organize Amazon workers, so it’s ironic that their labor contract with UPS is making the retail giant bigger. The 2023 UPS agreement increased average compensation for full-time drivers over five years to $170,000 from $145,000. Teamsters at UPS get up to seven weeks of vacation and don’t pay healthcare premiums.
“Teamsters have set a new standard and raised the bar for pay, benefits, and working conditions in the package delivery industry,” Mr. O’Brien declared. “This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon better pay attention.” No doubt they are.
UPS’s travails are a warning to other companies and workers. Last January UPS said it would cut 12,000 jobs, mostly in management, owing to falling package volumes and rising labor costs from its Teamsters agreement. A couple months later UPS said it would close some 200 sorting centers, which spurred thousands of layoffs.
Last month UPS said it plans to dismiss 404 workers in Commerce City, Colo., to automate a processing facility and 304 in Oklahoma City as part of another facility “modernizing.” Congratulations to Mr. O’Brien for pricing his members out of jobs. When labor costs rise above what the market will bear, it becomes more efficient to employ robots—who won’t go on strike.
Meanwhile, the Teamsters chief has been threatening a strike at Costco stores on the West and East Coasts if the retailer doesn’t agree to an “industry-leading contract” by midnight Friday. Mr. O’Brien has a long record of making labor demands that boomerang on workers.
When floundering trucking firm Yellow Corp. sought financial concessions from its Teamsters in 2023, Mr. O’Brien refused and tweeted the image of a gravestone in a cemetery with “Yellow” on it. Yellow filed for bankruptcy, costing some 22,000 Teamsters their jobs.
Am I the only one who thinks driving a truck and making deliveries is not worth $170,000?But that is the contract, forced by the idea of “collective bargaining”.There are about 330,000 UPS driving jobs are represented by the International Brotherhood of Teamsters.There are about 335 million people in the US who pay more for deliveries than they should.As one of the 335 million, I endorse Amazon’s decision exit business and do their own deliveries.Trump Sucks Up to UnionsAt least Amazon can do something about things. Shippers are held hostage.On December 12, 2024
President-elect Donald Trump threw his support behind a dockworker’s union locked in contentious labor talks with port employers.
Harold Daggett, the head of the International Longshoremen’s Association that represents tens of thousands of dockworkers at East Coast and Gulf Coast ports, met with Trump at his Mar-a-Lago estate in Florida on Thursday, according to a union spokesman.
Shipping industry leaders, under pressure from administration officials, offered dockworkers a tentative 62% pay increase over six years contingent on a wider deal being reached by mid-January.
Shipping industry officials say they need to make greater use of technology to push growing volumes of cargo through seaports. The union opposes expanded use of autonomous equipment, such as cranes, because it threatens jobs.
No More AutomationThat was the preposterous demand of the Longshoremen’s Association, and its been ongoing.As a result, the US has the least automated and highest priced docks in the world.Meet the Union Boss Who Shut Down U.S. PortsOn October 2, the Wall Street Journal commented
If you haven’t heard of Harold Daggett, by all means you should. He’s the head of the International Longshoremen’s Association (ILA) who has shut down a good chunk of American commerce by leading his workers on strike and closing East and Gulf Coast ports.
The Justice Department has brought civil and criminal charges against Mr. Daggett for conspiring with mob bosses. While he won both cases, the ILA’s port stranglehold is a racket. Workers earn $39 an hour, often for doing little. This is one reason U.S. ports rank among the least efficient in the world. Mr. Daggett is demanding $69 an hour. In 2010 he said longshoremen should make more than $400,000. Some now do with overtime.
Containerization and automation have reduced port jobs, but the union’s contract entitles longshoremen to what is effectively a guaranteed income of tens of thousands of dollars regardless of whether they work. Some local union chiefs make hundreds of thousands of dollars for doing nothing. Most U.S. workers no doubt wish they could get paid for not working.
Mr. Trump could be blaming Mr. Biden for refusing to invoke the Taft-Hartley Act to end the strike with an 80-day cooling off period. That’s what George W. Bush did to end a West Coast work stoppage in 2002.
One reason Congress passed Taft-Hartley in 1947 was to reduce the extortionary power that union chiefs held over the American economy. Mr. Daggett wants to return to those days, and Mr. Biden wants to help him. [And so does Trump]
As with PATCO air traffic controllers and the teacher’s unions, the Longshoremen’s Association has an effective monopoly on ports, arguably a genuine national security threat.Instead of doing something about that, Trump cozied up to the union.So, expect higher prices as a result. The same applies to steel.Biden’s Block of Nippon Steel Merger Makes the United States Less SecureIt’s a steel monopoly that is the national security risk, not the Nippon merger.On December 14, I commented
What to Expect
Currently, Trump and Biden both say they are against the deal despite the wishes of U.S. steel workers, the UAW, and common sense.
It’s a case of politics over genuine US interests.
On January 4, I wrote
Biden blocked the Nippon purchase of U.S. Steel. Trump would have too. It’s union pandering that makes the US less secure.
Trump called the deal a threat to US security. That’s preposterous. Actually, a Cleveland Cliffs takeover would create a monopoly, raise prices, and make the US less secure.As with the Longshoremen, the Cleveland Cliffs Earnings Statement says “We like higher prices. That’s the best thing for our companies, the best thing for our employees, the best thing for our shareholders. So, that’s why we push prices up. We go until we can’t go no more.”Trump Announces New Tariffs on Computer Chips and SemiconductorsOn January 29, I noted
Taiwan will not pay a dime of tariffs. US consumers will.
And it’s not like we can get advanced chips anywhere else. Thus, US customers will pay more than anyone else in the world for chips, and computers too.
How exactly is that supposed to help the US?
Job Openings Drop By 556,000 In December, Quits Show Job Finding StressChina Retaliates Against Tariffs, Will Trump Escalate the Trade War?Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
