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UPS deal sparks Overnite-Teamsters uncertainty

May 19, 2005
With the recent announcement that United Parcel Services Inc. (UPS) will acquire Overnite Transportation Co., some analysts are concerned about the prospect of a Teamsters drive to unionize Overnite

With the recent announcement that United Parcel Services Inc. (UPS) will acquire Overnite Transportation Co., some analysts are concerned about the prospect of a Teamsters drive to unionize Overnite.

See UPS to buy Overnite.

The purchase is expected to close this year. So far no formal deals have been set between UPS and Teamsters regarding Overnite. As far as friction with Teamsters over existing jobs, UPS, which intends to run Overnite as a separate operating company, assured the union there won’t be any.

“There is absolutely no [job] overlap,” Norman Black, UPS spokesperson told Fleet Owner, stressing that Overnite will be UPS’ first launch into LTL. “I say this with such confidence because [LTL] has nothing to do with any other of our operations. There’s a dramatic difference between our small package operations versus LTL freight.”

Teamsters on Monday put out a news release saying it will “closely monitor” the UPS-Overnite deal so that its membership jobs are protected. “If this purchase helps UPS to continue to successfully compete in the global marketplace in the long run, it will increase our members’ job security,” Ken Hall, Teamsters director of parcel and package division said in the release.

Teamsters was unavailable to comment on whether it will seek to represent Overnite workers after the deal. UPS indicated its intention to keep Overnite the way it is, adding it expects to keep the existing management in place-- management that had won a bitter struggle against the union lasting from 1999 to 2002.

See Overnite strike over.

UPS, by contrast, employs nearly all Teamsters drivers.

“Ultimately it’s the decision of the employees as to whether they want to elect any kind of third-party representation,” Black continued. “We have no intent on changing their business model and we won’t speculate what the employees may or may not decide in the future. But we have a very good relationship with [Teamsters].”

“We are hopeful that UPS’ long history as a company with Teamster representation will create new opportunities for Overnite workers to achieve their goals in the workplace,” said Teamsters general president Jim Hoffa in a news release.

“We’re acquiring a very successful company that built its position into the top five LTL carriers. [Overnite is] a survivor—they’ve done this at a time when the industry has undergone tremendous consolidation,” Black said. “They did this with a strong business model that stresses customer service. It’s a non-union model of flexibility— that’s how they survived and grown and flourished as one of the largest LTLs in the U.S.”

Satish Jindel, president of S.J. Consulting, told Fleet Owner he is cautiously optimistic about UPS’s ability to adapt to union developments.

“This is an area that is a valid area of concern for investors and customers,” Jindel said. “I suspect UPS has thought this through and must have a plan in place to allow them to manage the situation with or without the union. The question is how well they’d execute the plan.”

“UPS knows how to work with the union and [the company is] extremely profitable,” Chris Brady, president of Commercial Motor Vehicle Consulting told Fleet Owner. “They’ve dealt with the union for years and they could take that experience and work with the LTL side. If it were another company it might be a concern.”

About the Author

Terrence Nguyen

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