UPS labor talks heat up as both sides race to prevent first strike in 25 years

With less than five weeks to go before the expiration of a United Parcel Service Inc. labor contract, talks to renew the agreement have moved into a critical phase as negotiators begin hammering out pay raises for about 340,000 workers.

The discussions pit Sean O’Brien, the fiery union boss determined to get tough with UPS, against Chief Executive Officer Carol Tomé, who won over Wall Street after boosting profit margins during the pandemic.

The Teamsters rejected an initial offer from the company last week. On Tuesday, O’Brien released a statement reiterating his union’s demands for a “powerful tentative agreement” in a week’s time and, by the August 1 deadline, “a historic” new contract that guarantees higher pay for his members. The two sides are racing to prevent what would be the first UPS strike in a quarter century at a time the American economy has become much more dependent on shipping goods.

A failure to reach a speedy resolution could snarl supply chains. Competitors, including FedEx Corp. and the U.S. Postal Service, wouldn’t have enough capacity to absorb the nearly 20 million U.S. packages that UPS delivers every day.

Both leaders also have a lot at stake if the workers strike. For Tomé, UPS would lose about $170 million a day, based on last year’s third-quarter U.S. revenue. For O’Brien, a walkout would mean dipping into the Teamsters’ $350-million strike fund, draining him of valuable resources for his expected campaign to organize Amazon.com.