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Published Monday, February 11, 2019 at insiderlouisville.com
UPS Mechanics Ratify New Contract with 18 Percent Immediate Raise
By Boris Ladwig
UPS aircraft mechanics have ratified a new five-year contract that will give them an immediate 17.72 percent raise for a base pay of about $123,000 per year. Over the life of the contract, base pay will increase 32.61 percent, to about $139,000.
The new contract also makes no changes to employee premiums of a key early retirement health care benefit that had been one of the sticking points in protracted negotiations. UPS and Teamsters Local 2727, which represents about 1,400 mechanics and related employees, including about 550 in Louisville, had been negotiating since October 2013.
Mechanics had received no raises during negotiations, which means the 17.72 percent immediate base pay increase translates into a roughly 3.5 percent annual raise since negotiations began. And the 32.61 percent raise over the life of the contract actually means a roughly 3.3 percent annual raise between 2013 and 2023. In the last five years, UPS has recorded net income of $21 billion. Net income of nearly $4.8 billion in 2018 was 16.3 percent higher than the average net income in the last five years.
The union said in a news release that the contract “makes UPS Air Cargo mechanics the highest-paid air cargo mechanics in the country by a wide margin.” UPS spokesman Mike Mangeot told Insider via email that the new contract allowed the company to reward its employees “while managing our business effectively.”
Negotiations had dragged on for more than five years in part because they are governed by the Railway Labor Act, a federal law that makes it more difficult for the parties to initiate a strike or lockout. Any such action has to be approved by the National Mediation Board, a government agency that has been charged by Congress to oversee labor contracts in railroad and airline industries to avoid severe economic disruption.
The union had said in the last couple of years that negotiations were at an impasse and that members had voted to strike, but the mediation board told the parties each time to return to the negotiating table.
In October, the union rejected a deal that called for an immediate 16 percent pay raise and a 30.7 percent pay raise by the end of the contract.
The mechanics play a pivotal role in the operations of one of the logistics giant’s North American hubs, where it employs about 21,000. E-commerce growth and a need for modernization have prompted UPS to invest hundreds of millions of dollars in Louisville in the last few years to increase capacity. The company said about a year ago that it ordered 14 new cargo planes to increase the amount of freight it can handle.
Health benefits largely unchanged
The mechanics inspect the planes every time they take off and land, and if they’ve been grounded for an extended period. Inspections can take several hours or even a full shift. Among other things, the mechanics look at fluid levels, inspect turbine blades and use borescopes to get a view of the engine’s interior. The mechanics note their findings in a log book and then figure out how to fix problems, which may involve calling an engineer for assistance.
It’s complex and physical work: A local aircraft mechanic had told Insider that he frequently crawls through tight compartments on his knees to inspect critical parts of the aircraft, such as the electronics. The work also requires heavy lifting: An aircraft battery, which mechanics have to squeeze into a tight space, weighs 90 pounds. The work has to be done in all kinds of weather, including freezing rain and snow.
The mechanic had told Insider that he has seen fellow union members with back, knee and shoulder problems, while others have suffered hearing loss. In addition, proximity to kerosene and toxic chemicals increases their cancer risk.
Union officials have said that the severity and frequency of the physical ailments sometimes push the mechanics into early retirement, which raises the importance of a benefit that provides health coverage until the workers are eligible for Medicare, which kicks in at age 65. That bridge benefit had cost union members and their dependents $3,700 a year, but the company had proposed raising it to $19,401.
Teamsters Local 2727 President Tim Boyle told Insider via email that the protection of “unparalleled health care benefits” was one of the agreement’s key components.
“It’s because of the tremendous resolve and unity of UPS aircraft mechanics and their families that we’re celebrating this historic agreement with UPS,” he said.
Current workers also will continue to receive health benefits without paying a premium, though, Mangeot said, they will have to pay an annual deductible of $150 for single and $300 for family coverage. American workers in employer-sponsored health plans last year paid average deductibles of about $1,500 for single and $2,800 for family coverage, according to a survey from the International Foundation of Employee Benefit Plans.
UPS said last month that its domestic division delivered a daily average of more than 21 million packages in the fourth quarter. Revenue of nearly $12.6 billion was up about 6.3 percent from a year earlier — but operating profit fell 8.1 percent, to $999 million, because of “planned pension expense, start-up costs for several large facilities, and one less operating day than in the prior year’s fourth quarter.”