Things don't look so great to either Verizon (NYS: VZ) or the unionized workers of its wireline division, who walked off the job on Aug. 6 after negotiations failed to be resolved prior to expiration of the workers' contract. And in what has become a somewhat contentious strike, with acts of sabotage on wireline equipment alleged and Verizon management accusing strikers of blocking building entrances and access to trucks and equipment, successful negotiation and a new contract may be some ways away.
Or will it? Negotiations resumed last week and are "progressing," according to Verizon VP of Policy Communications Ed McFadden. CWA (Communications Workers of America) spokesperson Candice Johnson indicated that workers could put down the picket signs and go back to work -- "if Verizon demonstrates that it's serious about bargaining."
McFadden and Johnson, along with Jim Spellane of the IBEW (International Brotherhood of Electrical Workers), spoke with me on Thursday about the strike.
Verizon's wireline division is somewhat stuck when it comes to bargaining. Wireline voice subscriber numbers, like those of all other U.S. telcos, have dropped steadily. In the meantime, as demand for broadband services for both residential and business customers rises, Verizon is in the unenviable position of building out an all-new fiber network while meeting that demand for high-speed data at the same time, all while trying to stay profitable.
"We're looking at this from a forward-looking perspective," McFadden explained. "We're in a highly competitive market; a number of different competitors are not bound by the same kinds of rules and regulations that Verizon is. There are a number of cable companies that are not unionized, and they have a great deal more flexibility relating to some of these work rules and other things than we are." MSOs are Verizon's chief competition in the broadband data market.
Considering the pressures that Verizon is facing in its buildout, it's not surprising that the company requested some concessions of its union employees. But the IBEW's Spellane took a negative view of the company's stance. "Verizon is seeking to remake themselves as a company with low standards of wages, benefits and working conditions like its so-called competitors, and would probably only succeed in becoming a company with poor levels of consumer service, while executives take in more money," he said.
Johnson also disagrees with Verizon's position. It isn't just a few concessions: "Verizon had nearly 100 demands on the table from the start of negotiations in June to Aug. 6," she said, without going into detail as to what they were.
Healthcare and employee benefits are two major bones of contention in these negotiations, along with changes Verizon wants to make in work rules. Naturally, both sides characterize these issues differently.
Verizon wants union employees to help cut expenses "by chipping in a small percentage of their healthcare premium, and looking for some ways around flexible work rules that would allow us to better compete in the marketplace," McFadden said. "A good example of this is they claim we're taking away vacation days. That's not true. Instead of having all these holidays locked in, we'll give personal days, and allow them the flexibility to take that vacation day or use that day for something else. Same number of holidays, just more flexibility for them to take them."
Johnson disagreed, saying that the concessions amount to $20,000 a year in lost compensation for workers -- not just lost benefits, but "across the board." She said that Verizon wants to "eliminate benefits for workers who get injured on the job; it wants to freeze pensions for existing workers and eliminate pensions for new workers."
"These gains enable these families to be in the middle class," she added.
"What's at stake is decades of progress," said Spellane. "Verizon has sought throughout these negotiations to -- in one fell swoop -- wipe out wage provisions, benefit programs and working conditions that are in keeping with a skilled workforce that provides good service to customers."
Johnson, like McFadden, said that negotiations are continuing and hopes that both sides can move forward. She said the CWA was putting together a healthcare proposal and was consulting with Value Based Healthcare, a health insurance consultant, for a package that would reduce healthcare costs.
"It's hard for people to be on strike," she said. "It's scary. But at the same time, people cannot be forced out of the middle class."
And that's a large part of the unions' strike strategy -- warning that American workers in general, not just Verizon wireline employees, are at risk of being put out of the middle class due to declining wages and benefits.
But is it fair to say that Verizon's proposed concessions would knock its union employees out of the middle class? McFadden feels the unions are mischaracterizing the issues on the table. "We pay our workforce well," he said. "They're well compensated, they get good benefits, we've made a long term commitment to being a great place to work and keeping a happy employment base."
For now, things are in a holding pattern. CWA and IBEW members demonstrated in front of newly appointed CEO Lowell McAdam's house Thursday evening, continuing the aggressive tactics that have characterized the strike so far. But it remains to be seen whether this level of organization continues if the strike drags on past a third week.
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