Behind the Verizon showdown
August 8, 2003 | Page 5
THE CONTRACT showdown for 78,000 union workers at telecommunications giant Verizon will have a enormous impact on the future unions in that industry--and the labor movement as a whole. LEE SUSTAR look at the issues behind this battle.
WHEN UNIONS face a big struggle, they appeal for solidarity and mobilize their allies. Verizon CEO Ivan Seidenberg is doing the same thing. Only he's lining up support from employers throughout Corporate America for the company's drive to restructure the telecommunications industry on the backs of Verizon's 78,000 union workers.
"Just as the auto industry came to a crossroads in the 1980s, communications is at a similar turning point today," Seidenberg said in a speech before top corporate executives--many from the Big Three automakers--at the Economic Club of Detroit. "As Detroit learned the hard way, it couldn't manage successfully in the 1980s with an industry structure based in the 1950s. That's the situation we face in our core business today. We need to come up with a new model based on 21st century realities
"That's why the union leadership is standing at a crossroads, too. They can hold on to the old industry--and accelerate the flow of jobs and investment away from traditional telecom companies to the newer competitors. Or they can join the fight for our mutual survival--and help us find a new model that will help us preserve jobs and compete in the marketplace."
In other words, Seidenberg wants the kind of labor concessions that reduced the United Auto Workers from 1.5 million members in 1979 to fewer than 639,000 today.
Verizon's public relations campaign during the contract showdown produced a cover story in the August 4 issue of Business Week on "Verizon's Gutsy Bet"--which portrayed Seidenberg as the best hope to remake the crisis-ridden telecommunications industry. The article makes it clear that the company has plenty of cash for decent pay and benefits for the 60,000 members of the Communications Workers of America (CWA) and 18,000 members of the International Brotherhood of Electrical Workers (IBEW).
The product of mergers between NYNEX, Bell Atlantic and GTE, Verizon is now the biggest local phone company in the U.S. and the second-largest wireless carrier. In the late 1990s, Verizon joined in the massive wave of investment in telecommunications plant and equipment amid the explosive growth of the Internet. But the resulting overcapacity wiped out profits and was a key factor in the stock market collapse in 2000-2001.
The result is that telecommunications accounted for 11 of the biggest 25 corporate bankruptcies. Journalist Naomi Prins estimates that the telecom crash led to 540,000 layoffs since January 2001--a huge proportion of the total number in the U.S. economy as a whole.
Verizon, however, used its local monopoly in the Northeast to come out on top in the industry shakeout. The company worked with the three remaining Bell companies to roll back deregulation rules that would have allowed competitors access to its networks.
With its monopoly guaranteed, Verizon hauled in $22 billion in cash operations in 2002--twice as much as SBC, the second-biggest phone company--and pocketed $4.1 billion in profits. These totals led Business Week to call Verizon "one of the great cash machines of Corporate America."
The company is launching a new fiber-optic network to almost every home and business on its operating territory in the Northeast--an effort that could cost as much as $40 billion. In fact, Verizon's capital budget is the third largest in the world, trailing only automaker DaimlerChrysler and General Electric.
Yet Verizon is determined to squeeze union members for even more--in particular for the outsourcing of union jobs and increases in workers' share of health care costs. That's because Verizon bosses are threatened by the survival of big nonunion telecommunications companies like MCI, formerly known as WorldCom, which is expected to emerge from bankruptcy free of debt. "When you're the market leader, part of your responsibility is to reinvent the market," Seidenberg told Business Week.
If Verzion gets away with breaking the power of the CWA and IBEW, an important bastion of union strength could be threatened. It's crucial that the unions stand up to Verizon's bullies--and get the solidarity they need to win from all of labor.
What this fight means for all labor
THE STAKES for labor at Verizon are clear when you look at the numbers.
In 1984, the CWA had about 700,000 members in AT&T's Bell System monopoly when a federal court order broke up the company. Today, the union has about 300,000 members at the four remaining Bell companies and their successors--Verizon, SBC, BellSouth and Qwest--while AT&T has been broken up into pieces.
Nonunion companies like Sprint and MCI WorldCom used every anti-union trick in the book to prevent the CWA from getting a toehold, such as closing facilities in advance of union votes. Meanwhile, the old unionized companies have tried to keep new ventures, such as wireless service, nonunion.
The CWA was able to use the telecommunications boom in the late 1990s to regain leverage, winning strikes at Verizon and US West (now Qwest) in 1998 and at Verizon again in 2000. The union also negotiated "card check" agreements that were supposed to allow workers to join the union as soon as a majority signed union cards. But in practice, companies like AT&T and Verizon resisted the unionization effort tooth and nail.
When the telecom bubble finally burst in 2000, layoffs hit the CWA hard, with about 40,000 union jobs eliminated in recent years. Many of the cuts were negotiated by the union through early retirement incentive plans--until the crisis led to outright layoffs.
The telecom collapse also highlighted CWA President Morton Bahr's own conflict of interests. As a director of ULLICO, the union-owned insurance company, Bahr and other union leaders were able to take advantage of a special low insider price for stock in Global Crossing, a high-flying telecommunications company that ultimately went bankrupt.
Now, the CWA and IBEW's decision to work without a contract at Verizon highlights union leaders' lack of strategy to deal with the employers' drive to break union power in the industry.
Union officials were willing to use the leverage of the boom years to make gains--and mobilized their members to win short strikes at Verizon in 1998 and 200.
Today's fight will be much tougher. Management has hired thousands of scabs in case of a strike or lockout. If picket lines go up, they could last for weeks. But the CWA and IBEW have won long strikes at Verizon's predecessor companies before--in 1989 and 1971.
A strike at Verizon would be a tough battle--but it's a battle that can't be avoided forever.
And it could prove to be a rallying point for working people--whether or not they are members of unions--who want to see someone stand up to corporate greed. That's why the 1997 strike at United Parcel Service was able to capture the popular imagination--and defeat one of the world's biggest corporations. Verizon workers have the potential to win a similar breakthrough victory--but only if they fight.
Taking on Verizon in North Carolina
GREENSBORO, N.C.--Some 150 members of CWA Local 3763 are taking on Verizon in a strike that began May 19.
Local 3763, which represents workers scattered across 11 different counties, is covered by a separate contract, which expired in April. The workers are fighting against forced overtime and Verizon's attempts to cut back health benefits and family emergency sick days. Jerold Jones, a worker in Marion, N.C., told Socialist Worker, "We're fighting for our benefits. We'd like to see them hire some people so that they don't work us to death."
Verizon has hired scabs and brought in managers from Florida to keep things running. The local sent representatives to appeal to the Northeast and mid-Atlantic CWA locals--which have added a fair contract for Local 3763 to their own demands. In the meantime, community support for the strikers in North Carolina remains high.