2023-08-01 09:06:13 ET
The local Teamsters unions that represents 340,000 workers at the United Parcel Service voted 161 to 1 in favor of endorsing the tentative labor agreement reached with the company on July 25.
The agreement provides historic wage increases, one more paid holiday, air conditioning in the company's delivery trucks, and other improved benefits.
Teamsters statement: "The entire UPS Teamsters National Negotiating Committee stands behind this historic contract and our UPS local unions have resoundingly voted to endorse it... Our tentative agreement is richer, stronger, and more far-reaching than any settlement ever negotiated in the history of American organized labor. The Teamsters are immensely proud of reaching agreement with UPS to improve the lives of our members, their families, and working people across the country."
The next step is that all rank-and-file UPS Teamsters will vote on the deal from August 1 to August 22.
UPS ( NYSE: UPS ) was downgraded on Monday by Credit Suisse to a Neutral rating from Outperform due to expected drag on earnings from the new contract.
Analyst Ariel Rosa and team were relieved to see UPS reach an agreement with its union this week to avert a painful strike, but warned that the Teamsters appear to have secured rather large wage increases. Looking ahead, the wage hikes will be a drag on UPS earnings in the year ahead.
"Our back of the envelope math based on an immediate increase in wages of $2.75 per hour for both full-time and part-time workers suggests an incremental headwind of between $1.5-$2.0 billion (across 340,000 union employees), which could equate to roughly a $1.50-$1.75 annualized drag on EPS."
UPS ( UPS ) is expected to be able to offset some of the pressure with price increases and efficiency initiatives, although the terms of the contract appear to allow for larger wage increases than are seen being priced into the stock.
Shares of UPS ( UPS ) were down 0.21% in premarket trading on Tuesday to $186.74.
More on UPS:
- UPS signs tentative five-year deal with Teamsters to avoid a costly strike
- UPS: Sagging Volumes Baked In, Shares Are Buy Amid Trough Earnings
- Growth metrics on UPS
- Recent options trades on UPS
- Seeking Alpha's Quant Rating for UPS
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UPS' labor deal with the Teamsters goes to a vote with rank-and-file employees