Verizon Workers Return Without Contract

Verizon Communications Inc. (NYSE: VZ)'s striking workers will return to work on Tuesday, Aug. 23, even though they don't have a contract, and recent news reports have the two sides still far apart on key issues.

Officials of the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) announced today that the strike is ending because the two sides have agreed on how to conduct bargaining.

"We have reached agreement with Verizon on how bargaining will proceed and how it will be restructured," the unions said in a statement. "The major issues remain to be discussed, but overall, issues now are focused and narrowed."

Some 45,000 workers had been on strike since Aug. 7, fighting Verizon demands that workers pay substantially more for health care, lose job security protections and accept work rule changes that give Verizon more flexibility in using non-union labor. (See Strike Rhetoric Benefits No One.)

They say
As The New York Times notes in reporting the strike's end, the strike hit both sides hard. In addition to losing paychecks, the workers were threatened with loss of health care if the strike went past Aug. 31, according to the AFL-CIO blog.

And Verizon absorbed much criticism as well, including some from customers whose installation and repair work was delayed, and even from members of Congress, including some Massachusetts Democrats who joined the picket line this week.

We say
Union leaders are hoping that getting Verizon to focus on the key issues will enable them to wring some concessions from a company that seems very determined not to yield. But the unions are not in a strong position -- Verizon's wireline business is shrinking, and is not only not producing revenue growth but tallying operating revenue losses.

Chances are the decision to end the strike is a prelude to more concessions by the unions, as their members seek to hang on to what they can of the jobs that served them well in an era that is long gone.

For more Here's a look at the turbulent two weeks of strike activity:

— Carol Wilson, Chief Editor, Events, Light Reading

cnwedit 12/5/2012 | 4:55:43 PM
re: Verizon Workers Return Without Contract

I'm not surprised to hear the union officials are calling this a victory - would you expect them to announce defeat, or even concede a standoff? That's all part of the posturing in this fight. So now instead of negotiating on 100 different issues, they are focused on the hardcore battles. Those battles have not been won and the union has already used up its most important amunition.

As for the wireline business being profitable, I have no doubt there are accountants hard at work, as you say, but there is also no doubt that what is driving the business these days is wireless. Much of the wireline revenue will come from providing backhaul services to support wireless.

FiOS was an enormous investment by Verizon, and while it is paying off competitively, video services are not a high-margin business by any means. The recurring cost of content makes this unlike any previous business in which Verizon or any other telco has been engaged.

Again, I don't doubt that there are accounting games at work here, as there are in every major corporation that deals with regulation. I don't think that puts Verizon on a par with a criminal like Madoff, but it certainly reflects the antiquated nature of telecom regulation in the U.S.

fgoldstein 12/5/2012 | 4:55:43 PM
re: Verizon Workers Return Without Contract

I've seen stuff from the union calling this a victory.  The old contract remains in effect while they negotiate, and the terms of negotiation have been changed to be more amenable to the unions. 

While VZ claims that they're hurting on the wireline side, it's more of a ploy than reality.  VZ Wireline is doing fine, very profitable.  They're playing games to move revenues out of the state-regulated subsidiaries into unregulated ones.  The old telco's employees do the work and the unregulated entity shows the profit.  FiOS is on track and they're milking Special Access for a ridiculous monopoly profit, while their plant is heavily depreciated and their labor force is very much shrunken.  Losing money? Bernie Madoff's accountants have nothing on them.

Duh! 12/5/2012 | 4:55:42 PM
re: Verizon Workers Return Without Contract

Actually, both sides are claiming victory, despite apparently having agreed not to do so.   From the outside, it looks like a draw.  VZ (despite the bravado) was apparently not able to hold the network together without the IBEW techs, and threat of losing health care benefits at the end of the month was going to ruin the workers.  Neither side was winning the propaganda war.  

Realistically, there will be concessions from both sides.

The real winners at this point are the non-union workers who got drafted into a particularly punishing strike duty, and can now return to their regular jobs. 

It will be interesting to see VZ's strategy for the wireline businesses play out from here.  I would not be surprised to see more asset sales or a complete spin-out.

Rush21120 12/5/2012 | 4:55:41 PM
re: Verizon Workers Return Without Contract

Duh, I'd be interested in hearing where Verizon had outages and/or couldn't hold the network together?  Thats not what I've heard. Understandably resources were an issue and thus installations, etc. were/are affected but I never heard of any significant or major outage or issue.

Duh! 12/5/2012 | 4:55:40 PM
re: Verizon Workers Return Without Contract

NYT, Boston Globe and WSJ all reported customer complaints of scattered outages and excessive waits for repairs.  The company blamed some of these incidents blamed on sabotage.   Clearly, service did not meet Verizon's usual standards, as I believe the company admitted.   I have seen no reports of major outages.

fgoldstein 12/5/2012 | 4:55:35 PM
re: Verizon Workers Return Without Contract

I did get an email report of a subscriber's being told that because of the work stoppage, "no new repair orders are being issued".  So management was apparently unable to cope, in contrast to past srikes.