UPS and the Independent Pilots Association will meet in Washington next week after their latest mediated contract negotiations yielded controversy and acrimony but no agreement.
For the next round, the National Mediation Board moved the negotiations to its headquarters in Washington. The change of venue may suggest a sense of urgency on the part of the mediator to push the sides toward an agreement after two-and-a-half years of talks.
They will address the full slate of issues including scope, compensation, benefits and pensions. Even as talks drag on, UPS's competitive position has been largely unaffected since FedEx is locked in its own pilot negotiations, which are now more than a year old.
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Immediately after concluding on May 26, the talks sparked controversy when the IPA was forced to retract statements referring to the upcoming session as "the final round of negotiations."
The union remained unbowed, however. The retraction was made to ensure that NMB maintained its "public appearance neutrality," said IPA President Tom Nicholson. UPS arrived at the negotiations "unprepared" to discuss pension issues and used stalling tactics to "slow roll the negotiating process." he said.
The company was "very pleased with the progress that was made in the recent round of talks," said UPS spokeswoman Patti Hobbs. The talks produced "significant advancements on major issues" including the critical issue of scope, she said.
The scope provision, covering operations outside the United States, "is a big issue for both sides," said Lee Clair, a partner in Norbridge, a Deerfield, Ill.-based consulting firm. UPS wants the flexibility to outsource some of its operations in smaller international markets. "From the union's perspective, those are jobs and they want the jobs," said Clair.
"Scope is the number one issue" for the pilots, said UPS spokesman Brian Gaudet. However, differences over pension issues came to the fore in the last round.
Pension issues are critical especially considering the recent efforts by companies to degrade and eliminate their pension plans, said Nicholson.
The NMB instructed accountants from the union and company to work together to help resolve differences in their proposals, according to Hobbs.
As far as compensation is concerned, the two sides remain at odds even on the average salary pilots are now paid. UPS puts the average annual pilot paycheck at $175,000; the union says its $168,105.
As UPS and IPA began their last talks, FedEx was trying to cut short its negotiations with its pilots and possibly get a competitive advantage. FedEx sent the pilots an offer of some $500 million in salary and bonus increases if they took the money while sticking to the work rules and other parts of a 1999 contract agreement.
As long as FedEx is engaged in open negotiations, "it is tough for FedEx to sell against UPS on this point," said an industry source.
However, FedEx's effort was roundly rejected by the Air Line Pilots Association, which represents the FedEx pilots. "Clearly, they didn't come anywhere close to what the union was expecting," said an industry analyst. "It was more of an effort to put something on the board as a starting point."
Like UPS and IPA, FedEx and ALPA are slated to begin another round of negotiations on June 13.