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UPS soared through the pandemic — but its biggest challenge in 25 years is still to come

UPS CEO Carol Tomé sits in a UPS delivery van on a package route ride-along.CEO Carol Tomé (left) has made UPS a success story throughout the pandemic — but a looming fight with the Teamsters spells a different kind of challenge.

UPS

  • UPS CEO Carol Tomé successfully led UPS through the pandemic.
  • Now she faces a thorny union negotiation.
  • Teamster drivers are already threatening a strike — the first since 1997.

UPSers working for the company in 1997 have sharp memories of the 13 days Big Brown’s more than 185,000 union drivers spent on strike that year.

“It was absolute hell for me as an operator,” Glenn Gooding, now president of iDrive Logistics, told Insider. Then, he was a UPS hub manager in the Seattle area — almost halfway through his two decades with the company. When all of the drivers went on strike, Gooding, who had driven trucks earlier in his career, did the job of both loader and driver, working 18-hour days to get packages delivered. 

UPS is, so far, a rare and lasting pandemic success story. But it’s headed into rough terrain again this year as the contract with its union drivers expires this summer, threatening a strike that could disrupt millions of deliveries. 

Today UPS has roughly 350,000 Teamster employees, including drivers, package handlers, and loaders, out of 534,000 global staff. 

UPS cruised through the pandemic

Almost all businesses related to e-commerce got a boost in 2020 and 2021. By now, many have experienced a brutal undoing as explosive consumer demand falls back to normal levels. UPS rival FedEx has also struggled to improve profits amid rising costs and fewer packages.

But UPS CEO Carol Tomé’s guiding principle of “better not bigger,” which she brought into the company in June of 2020, has served it well through wild three years that followed. The idea was to protect profits by cutting customers that didn’t contribute enough to the bottom line, and it worked. 

From 2020 to 2022, shares of UPS soared. The stock began the pandemic circling $110 and soared some 100% to peak near $225 last year, while the benchmark S&P 500 index gained around 33%.  

Teamsters are spoiling for a strike

Though the pandemic brought serious safety concerns and a massive increase in demand to a brand new CEO, Tomé’s biggest challenge yet may be what’s coming this year.  

Teamster General President Sean O’Brien has openly threatened a strike, amassed a $350 million fund to pay members should they stop work, and shortened the time it takes for members to receive those funds from eight days to one.  

O’Brien wants to use the UPS negotiations as a sales pitch to Amazon workers — demonstrating what a union can get them. He’s aiming to get rid of a system that pays “second-tier” drivers less money, fight back against seasonal workers who use their own cars to deliver packages, and get better pay for part-timers, among other demands.

“There are a lot of pokes and pricks to the Teamsters that have them aggravated. All the while, they’ve demonstrated record profits,” Gooding said of UPS. “I put the odds of a strike incredibly high.” 

Tomé, while a seasoned executive and long-time UPS board member, has never managed a union negotiation before. She has repeatedly said that she won’t comment on any details beyond the negotiating table. 

“The only read-through to the upcoming Teamsters contract negotiation would be that we’ve got a great relationship with our employees, and these are great jobs,” Tomé said in October. 

“She’s very astute,” Gooding said of Tomé. “I guess the problem is, how does Carol Tomé make Sean O’Brien look like the fighter he’s professing to be — to have extracted every bit of value possible — without putting the Teamsters on the street? How do you do that?”

Read the original article on Business Insider