UPS can't compete because of high labor costs?

[UnconTROLLed]

"Huffa and cronies" cant "strongarm" anything.

They negotiate for what they feel is the best offer that they can, and the membership votes on it.

I'm not thrilled with the current contract either. I voted against it. But when I made a choice to take a union job, I also made a choice to accept whatever wages and benefits the membership of that union voted to accept.

Imperfect though it may be, the contract I work under is far superior to the alternative.

For who?

That was my point ,maybe "strongarm" wasn't the correct way of saying it (however, when all of the BAs and stewards are saying "vote yes" to contract in 2007, that is a bit concerning)

I agree with the last part.

 

[soberups]

The majority of UPS workers are part time, but they have been screwed over since 1982 because most of them do not get involved with the union or its elections. At contract time, UPS puts a certain amount of money on the table. Its the union that decides how that money is divided up.

If they chose not to get involved with the union or its elections, then they didnt get screwed over. Those who refuse to participate in the process have no right to complain about its outcome.

And while the union might decide the manner in which the money is divided up for a particular offer , it is a voting majority of the membership that decides whether to accept or reject that offer.

 

[soberups]

For who?

That was my point ,maybe "strongarm" wasn't the correct way of saying it (however, when all of the BAs and stewards are saying "vote yes" to contract in 2007, that is a bit concerning)

I agree with the last part.

For those who are willing to take the time to vote, thats who.

We get the contract that we are willing to vote for. More importantly, we get the contract that we are willing to go on strike for.

Contract negotiations are pretty much like a poker game, with each side trying to get maximum value out of the cards that they are dealt.

 

[Catatonic]

I see by the last earnings report that we made 330 million a month profit last quarter. Looks like the high labor cost is really killing us.

When UPS Stock was owned by UPS Employees, an Operating ratio of 7 - 10 % was acceptable in good times and less when there was economic downturns.

Publicly Owned Corporations want more ... it's all about being a public company these days.

 

[thessalonian13]

UPS makes between $2.5 billion profit (on a bad year) to $4.5 billion (on a good year) in clean profit. When was the last time UPS had a losing quarter? I don't remember a losing quarter in the 20 years I have worked for UPS. Give backs? NO WAY!!!!! I expect a reasonable contract that is both good for the company and the workers. Why are people offended when the little guy makes a descent living and not offended when the suits at the top make millions even when the companies lose money?

 

[22.34life]

The hourly wage for a FT driver who has gone through progression will be approx. $32/hr by the time 2013 rolls around. This puts our base earnings at $66K, not including overtime or benefits. It is no secret that we are well compensated for a job that does not require more than a high school diploma. It is also no secret that our job is demanding with little tolerance for error. UPS is a mindset unlike any other non-military job that I have ever held.

The following is my opinion only but I think the word that we will all need to get used to hearing in 2013 is concession, whether it be a wage freeze or whether we will begin paying for a portion of our healthcare. We have got to control our costs and our labor costs put us at a distinct disadvantage when we try to secure new volume or keep our existing volume. I would personally prefer a wage freeze over paying for healthcare but fear that we may see both. I would also not be surprised to see a two-tiered wage system proposed. I also fear that 2013 will make 1997 seem like a minor disagreement amongst family members. One of the advanatages the company will have is that the recent DIAD upgrades will make it much easier to simply hand the DIAD to a replacement driver with minimal service disruptions.

i agree with upstate,in 2013 ups is coming to the tabel with their guns loaded.this contract will be the last good one we get,i think the company will take care of the people that have been there for a long time but people getting hired after 2013 will be getting screwed.a two level pay system for drivers is almost certain,and reduction in benefits is probably coming also but i think it will be more of a thing where people hired after x date will get this and people hired before x date will get that.raises will probably stay around what they are maybe a little less but this idea that ups is going to be crippled financially because we all make to much money is absurd how can a company that had a net profit of $996 million in the third quarter make a claim like that.at this rate ups will make a net profit for this year of almost $3 billion,when we got the 2002 contract i went to a union rally where the teamsters said ups had a net profit for that year of $4 billion and i didnt hear people saying lets give it all back to the company cause they cant survive with only $4 bilion.now i know thats a billion dollar difference but $3 billion is still a good yearly net profit.the difference between now and then is the fear factor.

 

[brown_trousers]

I think the problem is that UPS thinks this is a one-way road. take-take-take. If they want concessions on our contract during these hard economic times, (which I'm not completely opposed to) then its only fair that we should get extra raises and benifits during the good economic times.

 

[TechGrrl]

I think the problem is that UPS thinks this is a one-way road. take-take-take. If they want concessions on our contract during these hard economic times, (which I'm not completely opposed to) then its only fair that we should get extra raises and benifits during the good economic times.

So you would be willing to make part of your wages and benefits contingent on a percent of company profits?

Management already has that deal, it's called MIP, and look what it got them the last couple of years.

 

[EAT MY OVERALLOWED]

This thread....wow, just wow. Two drivers who live in Montana that work 40hr weeks think they are overpaid because they can afford a double-wide while their lowly neighbor cannot. Followed by basically 11 pages of so-called friend/T drivers agreeing that concessions are needed. Yeah guys, your new Hyundai sonata is definitely a sign of significant wealth that you obviously didn't earn. This is comedic gold...take this show on the road fellas, seriously.

Yeah man, this job should be a minimum wage job. Better yet...lets make it a P/T job like everything else at UPS. ::thumbs up::

 

[EAT MY OVERALLOWED]

I had my annual safety ride yesterday and my on-car and I talked about a lot of the issues facing the company today, among these being the high labor costs. We both agreed that there is no way the company can continue to give us raises year after year after year. We are going to be at $32/hr when 2013 comes around and this is for a job with no formal education requirements. He also feels that 2013 will see concessions from the Union, whether it be a wage freeze or paying for a portion of our health care. As we all know, mgt has gone without raises, have lost their 401k match and are unsure how much their MIP will be and whether their 1/2 month bonus will be given this year, so perhaps it will be our turn in 2013.

I wish you'd post your name or whatever scab Local you work out of...so I never make the mistake of voting for you or anybody you work with for any type of elected Teamster position. You make Hoffa Jr look like Hoffa Sr.....

 

[UpstateNYUPSer(Ret)]

I wish you'd post your name or whatever scab Local you work out of...so I never make the mistake of voting for you or anybody you work with for any type of elected Teamster position. You make Hoffa Jr look like Hoffa Sr.....

My name is David ******* and I work out of Plattsburgh, NY, which is Local 687. I have said repeatedly that I am a UPSer first and a Teamster by default. Based upon what I have read from you here on BC not having your support may actually be a good thing. You sound like the typical Joe Union who hides behind the contract.

Have you tried getting a sales lead lately? Our price point makes it very hard to secure new volume.

I re-read what you had quoted and stand by what I wrote.

 

[Bubblehead]

Dave why would concessions be necessary at a company that is enjoying record quarterly profits?

 

[UpstateNYUPSer(Ret)]

Dave why would concessions be necessary at a company that is enjoying record quarterly profits?

That is the one part that I would have to change, based upon this past quarter's performance.

I hope that what I have written proves to be inaccurate and that we continue to receive annual payraises and not have to pay for healthcare.

 

[upssalesguy]

What do you all think UPS does with all of their money? DO you think Scott Davis sits on a pile of money, smoking Cuban cigars and laughing at teamsters?

Or do you think UPS takes that money and invests it back into the business to improve technology and expand our service?

The only thing I think that is missed in this thread is reality. UPS is the highest priced carrier. We also have the dominant market share. SO what does that add up to? Well, in a macro sense, it leads to UPS shrinking in the USA and growing elsewhere. Is that UPS' fault? Nope. That is what happens with competition.

UPS has to be the driver of higher prices, because our costs structure is so much higher. The last pie chart I saw showed UPS spends 75% of our money on labor. FedEx spends 30-40%. They make more money per package and pay their drivers less. FedEx has built facilities already to handle UPS' market share. Their costs won’t raise that much more with carrying more packages. You all said it yourself; most of the FedEx ground trucks you see are half full.

The only thing that FedEx can do to increase efficiencies even more is to integrate their networks. That will then raise their driver costs to somewhere near where you are (especially if they are organized). Fred won't let that last part happen and as long as he continues to pay independent contractors, UPS is toast when it comes to pricing.

And please, don't yell at me when your "great sales lead for hundreds of packages per day" doesn’t sell because UPS could not undercut the competition on price.

 

[22.34life]

What do you all think UPS does with all of their money? DO you think Scott Davis sits on a pile of money, smoking Cuban cigars and laughing at teamsters?

Or do you think UPS takes that money and invests it back into the business to improve technology and expand our service?

The only thing I think that is missed in this thread is reality. UPS is the highest priced carrier. We also have the dominant market share. SO what does that add up to? Well, in a macro sense, it leads to UPS shrinking in the USA and growing elsewhere. Is that UPS' fault? Nope. That is what happens with competition.

UPS has to be the driver of higher prices, because our costs structure is so much higher. The last pie chart I saw showed UPS spends 75% of our money on labor. FedEx spends 30-40%. They make more money per package and pay their drivers less. FedEx has built facilities already to handle UPS' market share. Their costs won’t raise that much more with carrying more packages. You all said it yourself; most of the FedEx ground trucks you see are half full.

The only thing that FedEx can do to increase efficiencies even more is to integrate their networks. That will then raise their driver costs to somewhere near where you are (especially if they are organized). Fred won't let that last part happen and as long as he continues to pay independent contractors, UPS is toast when it comes to pricing.

And please, don't yell at me when your "great sales lead for hundreds of packages per day" doesn’t sell because UPS could not undercut the competition on price.

ups only competition is fedex,compared to other buisness thats nothing.most companys have multiple competition,not just one.fedex is growing but that growth comes at a cost they are in big time dept and that means they have to turn bigger profit than ups to survive,why else do you think that they are talking about laying off almost 2,000 employees ,they didnt lose money but their gross profit wasnt big enough.do not beleive the hype,ups is feeding all of us fear based crap and from reading this thread most of you are eating it up,hook line and sinker.ups is showing growth both in domestic and international.look at the numbers and use YOUR common sense.ups is not stupid they know that this next contract will be the time to go for blood and the propaganda campain has already begun.ups has a good poker face and will never let you know what they have in their hand,wouldnt you?

 

[Bubblehead]

What do you all think UPS does with all of their money? DO you think Scott Davis sits on a pile of money, smoking Cuban cigars and laughing at teamsters?

Or do you think UPS takes that money and invests it back into the business to improve technology and expand our service?

The only thing I think that is missed in this thread is reality. UPS is the highest priced carrier. We also have the dominant market share. SO what does that add up to? Well, in a macro sense, it leads to UPS shrinking in the USA and growing elsewhere. Is that UPS' fault? Nope. That is what happens with competition.

UPS has to be the driver of higher prices, because our costs structure is so much higher. The last pie chart I saw showed UPS spends 75% of our money on labor. FedEx spends 30-40%. They make more money per package and pay their drivers less. FedEx has built facilities already to handle UPS' market share. Their costs won’t raise that much more with carrying more packages. You all said it yourself; most of the FedEx ground trucks you see are half full.

The only thing that FedEx can do to increase efficiencies even more is to integrate their networks. That will then raise their driver costs to somewhere near where you are (especially if they are organized). Fred won't let that last part happen and as long as he continues to pay independent contractors, UPS is toast when it comes to pricing.

And please, don't yell at me when your "great sales lead for hundreds of packages per day" doesn’t sell because UPS could not undercut the competition on price.

Did that pie chart breaking down the labor cost do so by hourly vs. management?
They had the right idea last year when they whacked those 1200 management positions.
I think the next wave of cuts will once again be in the managerial ranks.
The advent of the telematics system makes the oncar supervisor expendable.
Far less time will need to be spent in the field to identify issues and solutions making Center managerial staffing expendable.
We are already seeing centers combined.
Whether it be through attrition, buy out, layoff, or termination, On Car Supes BEWARE!!!

 

[clueless]

...use YOUR common sense...

Also try looking at the facts without preconceptions:

--to those who are pounding the table over 'record profits' please look at the SEC filings and note that for every dollar of revenue in the MRQ, UPS brought in, it made 7 cents in profit. For the last fiscal year, UPS made 5 cents in profit for every dollar it brought in. To preempt those of you who are about to scream 'last year the economy was in the tank', look at the prior 4 years of revenues vs profits:

2005 net income amounted to 9 cents per each dollar of revenue
2006 net income amounted to 9 cents per each dollar of revenue
2007 net income amounted to 1 cents per each dollar of revenue
2008 net income amounted to 4 cents per each dollar of revenue

Are these really all that extraordinary or exorbitant? How long would you work somewhere if your job-related expenses consumed 95 cents of every dollar of pay you received?

As far as labor costs being the culprit--again look at the facts--the trends and relationships are clear:

In the years net income as a % of revenues was at its highest in the last 5 years, the compensation & benefits line item represented on average 52% of revenues. For the lowest income year (2007), they amounted to 64% of revenues. As compensation/benefits decreased to 51%, net income rebounded to 6%. In the MRQ, where net income is back down to 5%, compensation/benefits are up to 53% revenues. IOW, the lost net income as a % of revenues occurred precisely when compensation/benefits were at their highest level. See the correlation?

To make it even clearer:

2005 Net income 9% Compensation/Benefits 53%
2006 Net income 9% Compensation/Benefits 51%
2007 Net income 1% Compensation/Benefits 64%
2008 Net income 6% Compensation/Benefits 51%
2009 Net income 5% Compensation/Benefits 57%
MRQ Net income 7% Compensation/Benefits 53%

As far as 'ability to compete'. Looking at its primary competition, FDX--its compensation/benefits line in consistently substantially lower than UPS' at no more than 40% of revenues over the past 5 years as well as the MRQ.

2006 39%
2007 39%
2008 37%
2009 39%
2010 40%
MRQ 40%

The 'other' trucking company--you know the one that's going bankrupt--has a more similar cost structure in terms of compensation/benefits to UPS than to FDX--YRCW's compensation/benefits line has been as follows over the past 5 years & MRQ:

2005 58%
2006 58%
2007 60%
2008 59%
2009 70%
MRQ 61%

Now, think clearly, logically, and rationally--which model do you think you'd want to more emulate if you were in charge of running the company? I should hope that answer if obvious.

 

[Bubblehead]

...use YOUR common sense...

Also try looking at the facts without preconceptions:

--to those who are pounding the table over 'record profits' please look at the SEC filings and note that for every dollar of revenue in the MRQ, UPS brought in, it made 7 cents in profit. For the last fiscal year, UPS made 5 cents in profit for every dollar it brought in. To preempt those of you who are about to scream 'last year the economy was in the tank', look at the prior 4 years of revenues vs profits:

2005 net income amounted to 9 cents per each dollar of revenue
2006 net income amounted to 9 cents per each dollar of revenue
2007 net income amounted to 1 cents per each dollar of revenue
2008 net income amounted to 4 cents per each dollar of revenue

Are these really all that extraordinary or exorbitant? How long would you work somewhere if your job-related expenses consumed 95 cents of every dollar of pay you received?

As far as labor costs being the culprit--again look at the facts--the trends and relationships are clear:

In the years net income as a % of revenues was at its highest in the last 5 years, the compensation & benefits line item represented on average 52% of revenues. For the lowest income year (2007), they amounted to 64% of revenues. As compensation/benefits decreased to 51%, net income rebounded to 6%. In the MRQ, where net income is back down to 5%, compensation/benefits are up to 53% revenues. IOW, the lost net income as a % of revenues occurred precisely when compensation/benefits were at their highest level. See the correlation?

To make it even clearer:

2005 Net income 9% Compensation/Benefits 53%
2006 Net income 9% Compensation/Benefits 51%
2007 Net income 1% Compensation/Benefits 64%
2008 Net income 6% Compensation/Benefits 51%
2009 Net income 5% Compensation/Benefits 57%
MRQ Net income 7% Compensation/Benefits 53%

As far as 'ability to compete'. Looking at its primary competition, FDX--its compensation/benefits line in consistently substantially lower than UPS' at no more than 40% of revenues over the past 5 years as well as the MRQ.

2006 39%
2007 39%
2008 37%
2009 39%
2010 40%
MRQ 40%

The 'other' trucking company--you know the one that's going bankrupt--has a more similar cost structure in terms of compensation/benefits to UPS than to FDX--YRCW's compensation/benefits line has been as follows over the past 5 years & MRQ:

2005 58%
2006 58%
2007 60%
2008 59%
2009 70%
MRQ 61%

Now, think clearly, logically, and rationally--which model do you think you'd want to more emulate if you were in charge of running the company? I should hope that answer if obvious.

Give me a break!
YRC is in trouble because they took on way to much debt at absolutely the wrong time.
Now they want the front line worker to bail them out for a second time with concessions.
YRC is another company that needs to clean house in the managerial ranks.

 

[John19841]

.
Are these really all that extraordinary or exorbitant? How long would you work somewhere if your job-related expenses consumed 95 cents of every dollar of pay you received?

...This makes no sense? Yes, in our lives, 95% of our pay is quite a bit of money. BUT, when you have a salary of billions, upon billions of dollars, getting to keep that 5% could add up to quite a bit of money (which it does, in this case.)

 

[clueless]

Give me a break!
YRC is in trouble because they took on way to much debt at absolutely the wrong time.
Now they want the front line worker to bail them out for a second time with concessions.
YRC is another company that needs to clean house in the managerial ranks.

Give me a break--there is no such thing as "too much debt' IF you have sufficient earnings to make the interest and prinicipal obligations. Debt becomes an issue when you default on those payments. And that is an earnings issue. The fact of the matter is that the compensation and benefits line item at YRCW is/was approximately 60% of revenues. Again--be objective without preconception and look at the numbers. Looking at YRCW's debt obligations--interest payments and current portion due of long-term debt as % of revenues vs. its compensation/benefits line:

2005 interest 1% current portion of LT debt 3% compensation/benefits 58%
2006 interest 1% current portion of LT debt 4% compensation/benefits 58%
2007 interest 1% current portion of LT debt 2% compensation/benefits 60%
2008 interest 1% current portion of LT debt 5% compensation/benefits 59%
2009 interest 3% current portion of LT debt 8% compensation/benefits 70%

Looking at those line items (debt-related expenses vs. compensation-related expenses) can you honestly and seriously blame the debt for YRCW's problems? What I think you're mistakenly doing is blaming the default of the debt obligations triggering bankruptcy for the bankruptcy itself vs. instead of looking at the reason(s) behind the default (i.e., non-payment) to begin with--i.e., an unsustainable cost-structure.

Let's take a theoretical look at YRCW had they had a cost structure in terms of the compensation expense more in-line with FDX--IOW, 40% of revenues. This is how the numbers would've looked:

2005 compensation 40% net income 22% (vs. compensation 58% net income 3%)
2006 compensation 40% net income 21% (vs. compensation 58% net income 3%)
2007 compensation 40% net income 13% (vs. compensation 60% net income -7%)
2008 compensation 40% net income 8% (vs. compensation 59% net income -11%)
2009 compensation 40% net income 18% (vs. compensation 70% net income -12%)

Pretty clear YRCW's risk of default would've been non-existent--even with the same amount of debt.

...This makes no sense? Yes, in our lives, 95% of our pay is quite a bit of money. BUT, when you have a salary of billions, upon billions of dollars, getting to keep that 5% could add up to quite a bit of money (which it does, in this case.)

Of course it makes sense--the use of percentages puts things in context vs. simply looking at absolute numbers devoid of context and perspective. The net income provides a cushion for when things go wrong--if you're operating on a razor thin profit margin, you have far less of a cushion than if that margin in more substantial. With low profit margins, any significant change in any expense line could easily turn profits into losses. Additionally, if these margins are eroding, this is a red flag--it is a trend which is not sustainable in the long run.