What made the “tightest ship”?

October 23, 2014

In the latest article in an occasional series on the history of United Parcel Service and workers' resistance to Big Brown, Joe Allen describes the business model UPS adopted in the 1980s and '90s--one designed to break union power and maximize profits at all costs.

"We run the tightest ship in the shipping business."

UNITED PARCEL Service in the 1980s and 1990s created a well-crafted public image of prompt, efficient, courteous service that made it the leader of the package delivery industry. It polished this image with a first-ever national television advertising campaign--costing an estimated $35 million--in the late 1980s.

These commercial were capped with the one of the most famous taglines of the era: "We run the tightest ship in the shipping business."

UPS was no longer the "quiet giant" of the shipping industry, doing little-to-no advertising, but was now boasting about itself and its services and capabilities on national television. Yet behind the brown wall of slick advertising, UPS's growing wealth and power was based on working conditions that looked more like those of the 19th century than its modern, innovative later-20th century image would have suggested.

The late 1970s and early 1980s were a historic turning point for the world economy, the shipping industry, and the U.S. labor movement. Some of the notable events of that era in the U.S. were the deregulation of airlines, the trucking industry and the banks, and the destruction of PATCO, the air traffic controllers' union. UPS was at the very center of these dramatic changes.

A UPS delivery truck
A UPS delivery truck

UPS went through several successful transformations over the decades from its humble origins as a messenger service to a department store delivery service to a major player in the shipping industry, but it was during the 1970s that UPS went through its largest territorial expansion.

In 1971 alone, according to Big Brown author Greg Niemann, "the company received ICC [Interstate Commerce Commission] authority to serve nine central and prairie states, from the Gulf of Mexico to the Dakotas." Niemann draws a parallel between the railroads' conquest of the North American continent in the 19th century and the much slower march by UPS a century later:

Finally, in 1975, the ICC granted UPS authority to begin interstate service to and from Montana and Utah, to extend to statewide the partial service Arizona, Idaho, and Nevada, and to connect these five states with those both to the west and the east. That made forty-eight states. The coast-to-coast Golden Link was forged!

Niemann's metaphorical "Golden Link," like the real golden spike that connected the Central Pacific and Union Pacific railroads and created the first transcontinental railroad in 1869, represented an engineering triumph that promised fabulous profits.

ALMOST IMMEDIATELY, UPS triumphed over its oldest and most intransigent competitor, the U.S. Postal Service. "By the late 1970s, UPS finally dominated the small package market. In 1978, for the first time, it delivered more parcels that the U.S. Postal Service," according to the Teamsters for a Democratic Union (TDU). UPS had crossed an historic threshold. Now that it had conquered the U.S. continent, it laid the groundwork over the next decade to become a global shipping giant.

In the meantime, UPS took a more aggressive bargaining position against the Teamsters, after which working at UPS became more dangerous, part-time work triumphed, and the union was significantly weakened. It became the company that the millions--who have since worked for UPS for the past four decades--would recognize.

For UPSers whose work lives traversed the 1960s and 1970s, the change was palpable. Gerald Gallagher started working full-time UPS in 1967 and became a union steward in 1973 in his hub because of the deteriorating working conditions. He told historian Dan La Botz, "The company went to a more aggressive stance regarding labor-management relations. And it's my opinion that the accountants took over, and as the wages increased, they started demanding increased productivity." It was then that what Gallagher called the "pusher mentality" came into being at UPS.

The "pusher mentality" was combined with a ruthless disciplining of what UPS considered underperforming workers. In 1976, UPSurge, the rank-and-file UPS workers group profiled in the previous installment of this series, obtained an internal company document "How to Get a Discharge for Low Productivity Sustained." The document chartered a course for supervisors to discipline and fire longstanding employees who had been, up until then valued, productive employees. It instructed supervisors to carefully plan ahead: "Success depends upon action taken weeks and months prior to discharge."

Mary Deaton, in her pamphlet How to Beat the Big Brown Machine, written in 1979, vividly captured this era in the company's history. Deaton, a former UPSer in Los Angeles, quoted the 1976 UPS Annual Report for the thinking behind what was happening in the hubs and at the negotiating table: "We must continue and accelerate our efforts [my emphasis] to absorb as much as possible...rising costs by tighter controls and further improvements in our operating efficiency."

In an otherwise bland and soulless statement, the three words to pause on are "accelerate our efforts."

What did this mean? According to Deaton:

While more and more workers are getting injured trying to keep up with the insane velocity of work, UPS is devising more ways to make the system faster. The attack has been double edged--eliminate full time jobs whenever possible and further increase the production of those who are working. Although part-timers had existed in isolated areas of the country for many years the real push came in 1976 [my emphasis]."

THESE ISSUES were openly discussed in the business and weekly news magazines of the time. Two months into the 13-week East Coast strike against UPS in 1976, Newsweek surveyed the strike and its key issues. It reported that UPS's drive against full-time jobs "provoked an internal fight in the International Brotherhood of Teamsters." However:

[t]he company refused to budge from its demand to be allowed to replace all of its full-time "inside" employees--those who sort and handle parcels in warehouses and terminals--with part-time, "casual" workers. Teamster units in the South, Midwest and West have already signed agreements allowing UPS to hire casuals for these jobs as the full-timers quit or retire.

This left the East Coast to fight alone. An exasperated federal mediator complained to Newsweek, "In the East, we are having difficulty with the concept of allowing part-time replacements. Unlike other regions, they have had a large number of full-time inside people for a long time."

UPS's strategic goal for the 1976 contract negotiations was openly stated in Newsweek, "UPS wants as much uniformity as possible in this year's settlement to facilitate national bargaining in 1979." The rank-and-file activists of UPSurge put winning a national contract at the top of their agenda. Their goal was to raise wage and benefit standards across the country. UPS perverted this by demanding a national contract in 1979 with the opposite goal in mind, to lowers standards.

While UPS didn't get everything it wanted in the 1976 contract, it got enough and acted swiftly. UPS was building an expanding empire on part-time work; a business model that they pioneered and was imitated around the globe for the next two decades.

Having achieved a rough uniformity during the 1976 contracts negotiations, UPS signed its first ever-national contract with the Teamsters in 1979. There were, of course, important Teamster local unions that didn't sign over their bargaining rights to the International union, including Chicago Teamster Local unions 705 and 710, and New York Local 804, led by Ron Carey.

The big brown hammer, however, came down in 1982. Despite being a profitable and growing corporation, UPS's strategic goal was to institutionalize the changing composition of its workforce from full-time to part-time. Cost-of-living (COLA) pay increases were eliminated, for example, but the most devastating and long-lasting defeat in the 1982 contract was the permanent pay cut for part timers. Part-time workers, who were roughly half of UPS national workforce at this time, and previously started at the same pay rate as full-time workers at $11 or $12 per hour saw their starting pay rate cut to $8 per hour.

It is virtually impossible to accurately calculate the hundreds of millions, if not billions, of dollars that UPS garnered from this world-class swindle. It's no wonder that one of the most favored plays on UPS's name is "Under Paid Slaves."

ONE OF the ways that UPS was able to underwrite their vast expansion of ground delivery and later air operations (more on this later) in the 1980s and 1990s was from this "savings" in part-time wages negotiated away by the Teamsters. The Teamsters for a Democratic Union (TDU) managed to organize a 48 percent "no" vote, though it that was not enough to defeat it. After surveying other major Teamster contract defeats that year, La Botz ominously concluded, "The union was slowly being destroyed."

This huge step backwards at UPS didn't take place in a political or economic vacuum. The deregulation of the interstate trucking industry in 1980, and the Reagan administration initiated-union-busting drive begun with the breaking of PATCO strike in summer of 1981 produced a dramatic shift of economic power and influence between Corporate America and the working class as a whole in the United States that--despite the passing of three decades--continues to this very day.

There were cataclysmic changes in the trucking industry that seismically shifted the ground from underneath the Teamsters. In 1976, the Teamsters union peaked at slightly over 2 million members but by the early 1990s its membership had been cut in half. It had built itself into the largest union in North America in an era of when the freight industry was primarily a local or regional business.

The Teamsters were simply bigger and more powerful than the companies that negotiated with them. According to the biographer of Jimmy Hoffa Sr., Arthur Sloane, "When Hoffa was chief bargainer for the union...the IBT definitely held the upper hand. Indeed, it would be not going too far to say that almost no labor relations arena had historically displayed such an imbalance of power favoring the union."

The largest freight company in the early 1960s was Consolidated Freightways (CF) with a mere operating budget of $160 million in industry that had an annual operating budget $7.4 billion industry. The next 10 biggest carriers after CF collectively made barely10 percent of the industry's revenues. Compare that to the Big Three automakers that in 1959 claimed 94 percent of all auto sales in the United States. The average trucking company was by comparison puny and dominated by the mighty Teamsters. This dramatically changed by the late 1970s, and would accelerate rapidly in the decade following deregulation.

UPS was no longer a big kid but was emerging into a looming giant. In 1988, UPS delivered 2.3 billion packages while post office delivered 1.4 billion packages. Two years later, in 1990, UPS employed nearly 190,000 workers with 130,000 of them represented by the Teamsters, and employed in 1,500 terminals across North America. Nearly 47,000 package cars rolled out on the streets every day and made deliveries for 850,000 mostly business customers in the U.S., Canada, Puerto Rico and the then-West Germany. "They are such an integral part of the American landscape," Fortune magazine journalist Kenneth Labich wrote in the first profile of UPS by a major business magazine done with the cooperation of the senior management team.

Every other freight company in the country tried to emulate UPS's methods and labor policies. "UPS as the crystal ball in which he or she can read the future," Dan La Botz wrote in 1990.

What did the future bring? "UPS maintains rigid control over nearly every aspect of its operations," Kenneth Labich enthused. "Each task, from picking or delivering parcels on a route to sorting packages in a central hub, is carefully calibrated according to productivity standards. Workers know precisely what is expected, and deviations are tolerated only rarely."

"Deviations are tolerated only rarely"? Did this make UPS a more welcoming, healthier or safer work place?

The working conditions inside the hubs became increasingly intolerable during the 1990s, with the bulk of the sorting and loading of packages done by an army of part-timers (nearly two-thirds of UPS's workforce by the mid-1990s), individually sorting close to 1,600 packages an hour, or about 27 per minute. Supervisors relentlessly pushed and harassed their workers for greater productivity. UPS was long known for its faux military-style atmosphere, dress and discipline. One former chairman, quoted in Kenneth Labich's article, boasted that UPS corporate culture was "half Marine Corps and half Quaker meeting." The Marine half was the one that most workers suffered under.

THE INEVITABLE result of this relentless pursuit of increased productivity was UPS's rank among corporations with the highest injury rates in the freight industry. In the early 1990s, the Occupational Safety and Health Administration (OSHA) issued more than 1,300 citations for safety violations--and more than one-third were deemed "serious." UPS was also fined $3 million, in one of the biggest OSHA cases of the decade, for its failure to protect workers from hazardous materials.

In 1993 alone, UPS had nearly 14 injuries for every 100 full-time workers, compared to the industry average of 8 injuries for every 100 full-time workers, according to the Bureau of Labor Statistics. UPS paid out nearly $1 million a day in workers' compensation. Things got worse in 1994, after UPS, without negotiating with the union, unilaterally raised the weight limit on individual packages from 70 pounds to 150 pounds.

The working conditions for UPS package car drivers (93 percent of whom at the time were men) significantly declined during the 1990s. The New York Times profiled the horrific injuries of one driver, Paul Heiman, for example, a veteran package car driver in Kansas, who had six operations by the end of 1995--three on his knees and three on his shoulders. This was not uncommon. The increased weight limit resulted in package cars crammed with extremely heavy packages that used to be delivered by freight companies on pallets with power jacks or forklifts. UPS drivers were being asked to deliver these by hand. On top of the increased weight of packages was the speed of work and pressure to complete anywhere from 150 to 200 stops and pick-ups a day.

Not only were drivers' bodies simply being worn out, increasing stress levels were causing physical and mental illnesses among package car drivers. In 1992, the Great Lakes Center for Occupational and Environmental Safety and Health, affiliated with the University of Illinois, conducted a nationwide study involving 317 package car drivers at an "unnamed delivery company" that was obviously UPS. It concluded: "This study suggests that job stress is a psychological health hazard for these drivers."

The "tightest ship" was not just meant for the body, but also for the mind. UPS has always wanted to mold its workers minds on the job, but in the 1990s it tried to extend this into their workers off the job hours and attempted to shape their political opinions. "In order to better control the workforce," according to La Botz. "UPS managers and supervisors are taught to use the methods and of sociology to study the behavior of employees."

La Botz pointed to a UPS company manual called "Learning to Chart Spheres of Influences" that instructs supervisors how to diagram their work area, and chart the relationships between employees under their command with the goal of identifying "Informal Group Leaders." Central to the success of the project was finding out how their workers related to each other outside of work. The manual insisted, "As a manager or supervisor, listen carefully to your people to know as much as you can about their own time contacts."

Not detail was unimportant. "Supervisors are to learn if workers ride the same bus to work, attend the same church or drink in the same tavern, to find out which workers are friendly, and which antagonistic," La Botz reported. "Most important, they are to learn to find out who influences whom. Examples in the manual tell supervisors to listen to employees' opinions of union elections [My emphasis]."

Whether this interest in its workers opinions about union elections was sparked by the 1989 federal court consent mandating the direct election of the top officials of the Teamsters by the rank and file might be just speculation, but one cannot help but feel it that there is a strong correlation between the two.

UPS's cult-like control over it workers, for most of us, is reminiscent of "The Borg," made famous by Star Trek: The Next Generation. However, others see it as a great attribution to UPS's corporate culture. Author Greg Niemann, for one, sees it as a great thing. "UPSers turn out better than machines," Neimann gushes that the process by which this is done is:

a kind of boot camp, indoctrinating employees with UPS's unique corporate culture and expectations...By the time employees have moved mountains of cardboard-clad merchandise, they have either caught the UPS commitment or they haven't. If they have, that seed of UPS perseverance will spread through their systems until they "bleed brown blood."

In the 1980s, UPS had conquered the ground delivery market--in the 1990s, it set its sights on the sky.

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