It seemed like a deal that was too good to be true.
In 2006, as International Brotherhood of Teamsters (IBT) general president James P. Hoffa fought for re-election against dissident Tom Leedham, he waved an agreement before the membership that signified progress for workers in the freight sector as well as those at the union’s largest employer, the United Parcel Service. UPS had recently acquired Overnite, a freight company at which the Teamsters had failed to get union recognition, becoming UPS Freight. Hoffa had a pledge from UPS that it would not interfere in a card-check, virtually ensuring unionization. The membership, although tired of organizing losses at other nonunion companies like FedEx under Hoffa, handed him another term.
What members did not know at the time was what UPS would get in return. The collective bargaining agreement reached the next year allowed the company to pull out of the Central States Pension Fund, shifting unfunded liabilities onto the other employers. The union’s second-largest retirement fund was now in jeopardy; even with the company putting in $6.1 billion before departing, it was left 30 percent underfunded.
“You cannot have a pension fund with a huge ratio of retirees to actives,” explains Local 805 president Sandy Pope, the New York City Teamster leader who is running against Hoffa in the general election that begins in October. “You’ve got to feed it with fresh blood, but for so many years pension funds have been relying on investment return because the market was always going up and no one ever dealt with the issue of cash flow.”
That wasn’t the only problem. Pope and the Teamsters for a Democratic Union (TDU), the dissident caucus that backs her candidacy, allege that union representation at UPS has steadily weakened since Hoffa trumpeted the deal and that the parent union has ignored major grievances, such as subcontracting. The Teamsters have also agreed to give major freight companies breaks in pension contributions, and the union has reached three separate concessionary contracts with shipping and freight giant YRC since 2008. Disgruntled members point to other losses. In 2008, after a protracted strike, the 200-plus members of Teamsters Local 200 working at Waste Management Inc. in Milwaukee reportedly agreed to a contract with diminished pension benefits. And in the Northeast, Pope says, Teamsters have watched their leadership stand relatively idle as C&S Wholesale Grocers leave warehouses for new, nonunion facilities, and she notes that the international did not aid her local’s uphill organizing drive at the grocery-delivery service FreshDirect.