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UPS record profits mean more exploitation and automation

By Bill Aiman and Gage Lacharite |
March 5, 2019
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Highly automated UPS Atlanta Hub.
Highly automated UPS Atlanta Hub.

Tampa, FL - United Parcel Service released their fourth quarter earnings last month, beating Wall Street’s expectations with almost $5 billion in profit for 2018. Through a combination of opening new automated sorting facilities, purchasing more air cargo planes, and exploiting employees with low pay and long hours, UPS had an extremely profitable holiday season. The company is optimistic for profits in 2019 and moving into the future. For workers, however, the future does not look so bright.

In October 2018, UPS and the International Brotherhood of Teamsters (IBT) successfully pushed an incredibly unpopular contract onto workers. UPS Teamsters overwhelmingly rejected the contract because of its many concessions, however despite historic voter turnout and over 50% voting ‘no’, the IBT ratified the master agreement using the ‘2/3rds’ article in the constitution.

The IBT had a number of proposals going into negotiations that would have benefitted UPS workers, including: financial penalties for harassment, $15 per hour starting wage for part-timers with catch up raises for current employees, and limits on excessive overtime. Instead, UPS Teamsters discovered that a number of the contract proposals had been outright rejected and the union itself was proposing a new ‘22.4 Hybrid Driver’ position.

Hybrid drivers, when compared with regular full-time drivers, will be paid less, have no overtime protections, and be forced to work weekends, all while performing the same work as other drivers. Commonly known as a two-tier system, this tactic is used by companies looking to lower wages across the board. There is a current limit for the number of 22.4 jobs that can be created by the company, 25%, but it’s not hard to imagine UPS looking to increase that limit in future contract negotiations.

Another key issue for UPS Teamsters was part-time wages. The IBT’s proposed starting wage was $15 an hour for all new part-time hires and equal catch up raises for all existing part-timers. Instead, UPS part-time workers got $13 an hour for new hires and unequal raises for existing part-timers. Regardless of seniority, current part-time workers will receive a raise either bringing their wage up to $13 an hour or an extra $0.70, whichever results in a higher amount. UPS was again able to cut wages for a significant section of employees.

The contract’s weak language on overtime lets UPS get away with intentionally understaffing operations. By pushing drivers to deliver more packages and stay out later, the company is able to maximize its profit margins. Additionally, when there are not enough drivers to deliver packages the company will force members of management to work. With weak overtime contract language, UPS is able to weasel out of creating more jobs for Teamsters.

What will UPS do with the almost $5 billion they made in 2018? As the new contract has made clear, the company has no intention of sharing it with the Teamsters who did the work. Instead the company will continue spending money on developing technological systems like ORION, vehicles like package cars and airplanes, as well as automated sorting facilities like the one recently built in Atlanta. UPS has already spent $7 billion on capital investments, including automation, in 2018 alone, in previous years the company was spending about $1 billion annually. These capital investments will make it easier for the company to further exploit its workforce and eliminate jobs.

The Atlanta UPS SMART hub is totally automated. Packages are unloaded from trailers by employees, scanned by a six sided camera and then automatically routed to their destination where an employee then loads the package. The hub processes over 100,000 packages an hour without a human ever touching a box. By replacing Teamsters with automated equipment, UPS is able to make more money on each package delivered. UPS has plans to open similar facilities in Dallas-Fort Worth, Phoenix, Salt Lake City and Indianapolis.

Automation in the logistics industry is not just limited to inside the warehouse. UPS is currently developing and testing a new technology, known as platooning, which would allow driverless trucking. Platooning technology creates a link of three or more tractor trailers behind one another, which then follow a lead driver. If platooning was implemented at UPS, feeder driver jobs would be cut drastically. The IBT has released statements against this technology, but the new UPS contract does nothing to prohibit it. In fact, this year UPS attempted to begin testing the technology in Texas, but Local 767 stopped it for now.

As UPS continues to make more and more money, aided by a concessionary contract and investments in automation, conditions for UPS workers will only get worse. The only thing that will improve workers’ conditions is a fighting Teamsters union, one only needs to look at the 1997 UPS strike to see the gains that were made for working people.

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