A minor point re: the pension fund story - as I understand the press
reports, the employees UPS wants to strand in the pension fund are not
only from "less prosperous" firms, but also from those that are no longer
in business, and therefore not making contributions. These folks depend
(as you know, Doug) on the funds investment earnings, and on current
contributions from existing employers. This is how a multi-employer
joint trust is supposed to work. I have no independent info on how the
membership of the
fund breaks down, but my guess is that if UPS pulled out the remaining
members could be in seriously bad shape; and that, as Mike says, UPS is
more worried about control issues than about depriving their employees of
their just pension rewards, or possibly even than how much this is really
costing the the company.
By the way, on the issue of putting the strike to a vote: has UPS asked
its shareholders what they think? Do institutional investors still exist
out there?
On Tue, 12 Aug 1997, Michael Eisenscher wrote:
Doug,
I don't believe you've got it right. The company wants out of the joint
trust, but so far as I know has not offered any particular increase. What
they claim is that if they were freed from the drain created by less
prosperous firms' employees in the joint trust, their contribution would buy
a higher pension benefit than employees can now get from the trust. To the
extent that UPS contributes more to the trust than they would otherwise have
to if they were to fund only their own employees, this may be true. The UPS
claim that benefits could be raised by as much as 50% is highly doubtful,
however.
There are other issues, however, at stake that go beyond the IBT merely
seeking to protect an otherwise vulnerable trust fund. UPS seeks to
withdraw, not because they are so eager to increase employee pensions, but
because they recognize that only if they can control and administer their
own company fund will they have a chance to make significant changes in the
funding formula. The immediate payback is that they may be able to get by
with a smaller contribution to fund current benefit levels -- the amount of
savings dependent on actuarial calculations for the given census of current
employees and retirees. But the real gain would come down the road when
management demands that the fund shift from a defined benefit to a defined
contribution basis, and by raising the eligibility standards by, for
example, increasing the number of hours per year required before an employee
is eligible to participate. I'm sure there are others on the list who can
think of more creative ways UPS management would be able to secure rewards
once they are freed from the joint trust. Typically, in single employer
plans, management also has greater control over investment policies.
Carey was not responsible for raping the various Teamster pension trusts.
Clearly he has an interest in defending their integrity against further
erosion than has been suffered as a consequence of deregulation and
prior-administration looting. But I don't think that explanation is
adequate. Putting aside the history of corruption, the principle of a joint
trust is not unlike that of an insurance company, which seeks to spread risk
and protect investments in the interests of highest possible
returns/payouts. It is an act of class solidarity for UPS employees to
remain in the joint trust. There was a time when they benefitted from the
superior strength within the trust of the over-the-road trucking employer
contributions prior to deregulation. It's now their turn to step up to the
plate in defense of those drivers whose employers have folded in the wake of
deregulation. That form of class solidarity galls UPS management, and
clearly they will try to appeal to the narrow self-interest of their
employers, even if they have to inflate their claims in order to sway
opinion. I don't think they will succeed.
In the final analysis, there are many more issues at stake than just the
pension (see previous posts). The union has done a credible job of
preparing their members for this struggle. In my visit to the picketlines
and monitoring of internet traffic, I've found most union members to
recognize what the company is up to and they will resist it as long as they
can. If UPS is prepared to go the distance to impose its will, it may find
that when the smoke clears it will pay a heavy price regardless of the
outcome. Their 80% market share is at stake, as is the good will of their
employees and customers, which should not be underestimated. After all, to
the customer, the delivery driver is UPS, and one of the company's secrets
of success has been its ability to maintain employee loyalty and morale as a
means to holding onto its customer base. Angry, embittered returning
strikers (or untrained scabs) do not make very good embassadors.
In solidarity,
