Verizon unions strike after contract talks fail

NEW YORK Mon Aug 8, 2011 12:08pm EDT

Verizon president and COO Lowell McAdam (L) talks on stage with Verizon CEO Ivan Seidenberg (R) and Consumer Electronics Association President Gary Shapiro (C) after the Verizon keynote address on the opening day of the Consumer Electronics Show (CES) in Las Vegas January 6, 2011. REUTERS/Rick Wilking

Verizon president and COO Lowell McAdam (L) talks on stage with Verizon CEO Ivan Seidenberg (R) and Consumer Electronics Association President Gary Shapiro (C) after the Verizon keynote address on the opening day of the Consumer Electronics Show (CES) in Las Vegas January 6, 2011.

Credit: Reuters/Rick Wilking

NEW YORK (Reuters) - Almost half the workers in Verizon Communications' wireline telecommunications business went on strike on Sunday as negotiations for a new labor contract failed.

The strike, involving 45,000 workers, is the first walk-out that Verizon, one of the two big U.S. telephone network operators, has faced since 2000, when about 80,000 workers went on strike for about three weeks.

Verizon and two unions -- The Communications Workers of America and the International Brotherhood of Electrical Workers -- had been in talks since late June but were still far apart when their contract expired Saturday night.

The workers who went on strike are technicians and customer support employees in the wireline unit, which provides traditional phone services to homes and businesses in the Northeast as well as high-speed Internet and FiOS television service.

The two sides were unable to agree on issues related to healthcare contributions, pension plans and work rules, according to Verizon and the CWA.

Verizon is looking to keep costs in check at its wireline business, which has been declining for a decade as customers have disconnected their home phones in favor of cellphone and Internet services.

A representative for the CWA, which represents about 35,000 of the workers, said bargaining talks were expected to resume on Sunday while employees were told to start picketing as early as 6 a.m. EDT outside their work locations.

"A strike is a hardship for all and not to be undertaken lightly," Jim Spellane, an IBEW spokesman said in an e-mail.

"I think that the fact that we are on strike instead of finalizing an agreement is a testimony to Verizon's intransigence throughout the process," Spellane said.

Michael Paleski, 45, who has worked for Verizon for 23 years, was one among the roughly 250 people gathered in front of Verizon's Manhattan corporate headquarters, where workers walked in and out of the building to chants of, "Scab! scab! scab!" on megaphones.

The strikers were all dressed in red and had signs that read, "CWA workers on strike for middle-class jobs."

"Nobody here wants a strike. I'm sure nobody on the other side wants a strike either. But we're also very disappointed that the company put forward so many demands for givebacks. We feel that's really the sticking point for us," Paleski said.

"I have two children. I have a wife, a house and two cars. And things are not cheap these days, they're getting more expensive for us. And that's why we need to have the right contract structure."

On Monday morning, thousands of striking workers will join mass picket lines and rallies at over 100 Verizon work locations across New York and New Jersey to pressure the company to back off its demands, said the CWA.

VERIZON'S BACK-UP PLAN

In a letter on Sunday, Verizon's CEO Lowell McAdam asked the company's union-represented employees to help on a number of issues to further reduce Verizon's wireline cost structure while maintaining overall compensation and benefits.

McAdam, who took the reins as president and CEO of Verizon on August 1, said the changes that Verizon is requesting are in line with what the CWA has already agreed to with other sector peers.

He also pointed to cable competitors suggesting that they are not bound by contract constraints, which has allowed them to be "more nimble and flexible meeting customer needs."

"As the U.S. automobile industry found out a few years ago, failure to make needed adjustments -- when the need for change is obvious -- can be catastrophic," McAdam wrote.

"As of now, talks are not taking place today. We're always willing to talk. We're willing to return to the bargaining table at any time," Verizon spokesman Richard Young said in an email on Sunday afternoon.

"We're in the process of implementing our emergency action plans," Young added.

Verizon said late Saturday night that it had trained tens of thousands of employees, from retirees to management, to fill the role of the workers who are now on strike.

"We are confident that we have the talent and resources in place to meet the needs and demands of our customers," Marc C. Reed, Verizon's executive vice-president of human resources, said in a statement.

Chris King, an analyst at Stifel Nicolaus, played down the impact of the strike on the company.

"The wireline business is something that Verizon is less exposed to than they have ever been in the past," King said.

"They are certainly more comfortable dealing with the strike today than they were 10 years or so ago."

King, who has a "buy" rating on Verizon, said he sees the impact limited to slower-than-usual installations.

'UNACCEPTABLE DEMANDS'

Among the changes it is seeking, Verizon said it wants to freeze employee pension plans and replace them with an enhanced 401(k) plan. It also wants workers to contribute to healthcare insurance premiums.

The CWA says the contributions to healthcare that Verizon wants the union members to make were unacceptable, and that increases in deductibles would make the proposed healthcare plan unaffordable.

It said the profitable company is asking for far too many concessions from affected workers, who include technical and customer service employees in Verizon's wireline business.

Verizon has 93,000 workers in its wireline business, of whom 58,000 are unionized. Including its Verizon Wireless venture with Vodafone Group Plc, the company's total workforce is 196,000 employees.

(Reporting by Sinead Carew, Roy Strom, Dhanya Skariachan and Nadia Damouni; Editing by Vicki Allen, Marguerita Choy and Vinu Pilakkott)

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