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Nationwide strike would deliver the pain to UPS

CBS News logo CBS News 6 days ago Jonathan Berr
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UPS workers threatening a nationwide strike hold some strong cards: An extended work stoppage could cost the delivery giant hundreds of millions of dollars, while also delaying shipments across the U.S.

The last major strike at UPS -- which came in 1997 when employees stopped working for 15 days -- resulted in a net loss for the company of $211 million.

And the financial hit could be even bigger. Atlanta-based UPS is a much larger company today than it was more than two decades ago, thanks largely to the growth of online shopping. Revenue at UPS has nearly tripled, from more than $22.4 billion in 1997 to roughly $66 billion. Over that period, UPS' unionized workforce grew more than 40 percent, from 185,000 to 280,000.

Another edge for UPS workers: Other shipping companies would struggle to pick up the slack in the event of a strike. UPS transports roughly 20 million packages and documents per year. In financial terms, that amounts to roughly 6 percent of U.S. gross domestic product, according to Cowen, an investment bank. 

"No one has the ability to pick up the volume," Cowen analyst Helen Becker told CBS MoneyWatch. "The USPS will try to handle the volume, but they aren't equipped to do so either. In the event of a nationwide Teamsters strike, packages will be delayed."

A strike could also disrupt business for retailers, including Amazon. Although the Postal Service is the e-commerce company's largest carrier, Amazon also depends on UPS to deliver goods shoppers.

"It would disrupt Amazon in a big way," said Kevin Sterling, an analyst with Seaport Global.

The potentially huge costs and chaos of a UPS strike is exactly why many observers expect employees and management to strike a over issues like pay and work schedules. 

By contrast, a stoppage likely wouldn't do much damage to the broader economy. Jim O'Sullivan of High-Frequency Economics notes that the 1997 strike only dented payrolls for one month, while economic growth continued to surge. 

For now, UPS is striking an optimistic note, noting in a statement that it remains confident in its ability to reach an agreement with the Teamsters. A spokesman for the Teamsters declined to comment.

But if talks reach an impasse, a strike could last a while, said Kate Bronfenbrenner, a senior lecturer at Cornell University's School of Industrial and Labor Relations.

"When they go on strike, they stay on strike," she said. "They get public support because UPS drivers are very popular people. They make people happy... The issues that they have are issues that everyone relates to."

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