UPS and the Teamsters have opened contract negotiations. Their last contract was signed in 2013, at the start of the online retail boom.
In light of the large growth in deliveries from online store like Amazon, UPS is looking to add flexibility in this contract to allow competition against other delivery organizations, and meet the increasing demands to speed up delivery of goods.
However, the Teamsters’ initial demands are to prohibit UPS from using drones or driverless trucks. Also, they want to eliminate deliveries after 9:00 pm (including the Christmas delivery season), and hire an additional 10,000 employees. UPS has added approximately 40,000 employees over the last five years.
This post is based on the Fox Business article, Teamsters Tell UPS: No Drones or Driverless Trucks, by Paul Ziobro, January 24, 2018.
1. Should UPS consider the demands of no drones and no driverless trucks in contract negotiations?
Guidance: Collective bargaining is a difficult process. Unions typically want to protect their membership, and expand if possible the number of union jobs. This is exactly what the Teamsters are demanding with these provisions.
Management always wants to provide as much flexibility in the contract as possible to help satisfy customers with reduced costs and better service.
If possible, UPS should avoid these concession. The industry is competitive, and the demands for fast delivery are increasing. Additionally, with the improving economy and the retirement of many baby boomers, finding delivery drivers is going to become more difficult, and probably more expensive. Drones and driverless trucks could reduce UPS’s need for drivers.
In addition to more flexibility, UPS will probably want to contain their labor cost over the contract. This is where a potential trade-off might exist. If the Teamsters are willing to limit increases in labor cost, UPS might consider protecting employees from losing their jobs due to new technologies such as drones and driverless trucks.
2. What operations management areas are potentially impacted by the negotiations?
Guidance: Areas that could be impacted include process improvement through technology, scheduling of workers and equipment, and capacity issues involving workers and equipment. The shortened working hours, as well as not seeing improvements from the use of technology, will result in the need for a larger workforce, especially during peak times like the Christmas season.
3. If you were a UPS operations manager, what recommendations or guidance would you give management in setting negotiation criteria?
Guidance: This question could generate classroom discussion about concerns like reducing cost while improving performance. Which can also lead to a discussion of potential issues.
The use of technology has the potential of reducing cost, and reducing the number of workers needed. The elimination of late deliveries for UPS would result in the need for more employees—potentially more part-time employees during peak times, with all of the problems that they bring.
The recommendation should likely be to resist accepting the ‘no drone, no driverless truck’ demands, as these would impact UPS’ ability to remain competitive by using technology to reduce costs and improve performance. The ability to gain more business would benefit both the company and the union, leading to potentially more union jobs.
Students might also argue that new technology brings higher-skilled jobs. Possibly offering training programs or guarantees of moving union members to the new jobs might be an attractive option.
Students might discuss how limiting overtime could necessitate more workers in a tightening labor market. The end result could be higher cost and a less competitive environment.