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UPS ratified its new master labor contract last June, but the company has yet to be able to implement this contract because several local unions have voted against their individual supplement and rider contracts. This story hasn't garnered much attention from the financial media outlets or during UPS earnings releases. For example, in the fourth-quarter conference call UPS management mentioned this very important detail exactly zero times. Don't let the lack of attention fool you, though -- this issue is one UPS investors should pay very close attention to.
The company's unionized workforce is broken down into different voting districts, and those districts vote on the master contract, and certain locales also vote on riders and supplements that need to be approved before the master contract can go into effect. The company has yet to come to an agreement with its Philadelphia, western Pennsylvania, and Louisville locales, but of the three, Louisville is the most crucial to the company.
Louisville, known as UPS's Worldport, serves as the main distribution hub for all of the company's air package delivery. The facility is immensely important to UPS's business, but Local 89, the union in Louisville, has already voted down its contract twice. The union has now voted a third time, and the votes are to be tallied by April 10. If the contract is voted down a third time, which Local 89 has recommended its members to do, the union can then move to vote for a strike.
In this video, Motley Fool industrial analyst Blake Bos takes a close look at labor relations at UPS. He gives investors key information for what to watch for as this story unfolds, and discusses just how big of an impact a strike in Louisville would have on the company.
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The article United Parcel Service, Inc. Labor Battle Heats Up: Is Worldport at Risk for a Strike? originally appeared on Fool.com.Blake Bos has no position in any stocks mentioned. The Motley Fool recommends UPS. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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