UPS Strike Puts Squeeze on Area’s Small Businesses

As an owner of an auto supplies company in Oxnard, Brian Davis relies on daily deliveries to keep his phone order business running smoothly.

He ships up to 40 packages each day via United Parcel Service--at least, that is what happens when UPS is fully operational.

This week, however, Davis of PR Supply Co. has watched his warehouse pile to the ceiling with packages he can’t send out.

As the Teamsters union pushes its nationwide strike against UPS into Day Six--cutting the delivery service’s capabilities by 90%--Davis worries about how long his company can survive the standoff.

He has 11 employees to pay, much of his income depends on COD payments, and the word from both the Teamsters and UPS executives is that no settlement is in sight.

“Throughout Ventura County, I see a huge crisis,” he said. “There are a lot of small businesses that are absolutely starving to death.”

Davis said he is taking phone orders as usual, but having to tell customers that he can’t guarantee when their product will arrive. Most have been understanding, he said, but some customers have decided to go elsewhere.

The problem is that UPS dominates the U.S. shipping industry, moving 70% of small cargo shipments nationwide. With the company’s productivity so severely curtailed, industry competitors are overloaded and unable to pick up the slack.

“It’s really disrupting the small businesses,” said Joe Huggins, director of the Small Business Development Center in Ventura, an organization that provides free counseling and other services for business owners.

“A lot of them do not have their own delivery systems, and if you look at the cost differential between UPS and the others, UPS has a major competitive advantage.”

Huggins, who is also a business professor at Cal Lutheran University in Thousand Oaks, said that delivery alternatives are just too expensive for many small business owners.

Despite the added cost, however, he said that many companies will pursue other carriers after the strike.

“What they are going to be looking for in the future is to diversify their reliance on carriers,” he said, explaining that the long-term effects of a loss of loyalty will prove damaging to UPS.

The United States Postal Service is struggling to relieve some of the strain, but local post offices have been forced to impose restrictions. There is a four-parcel limit for packages weighing more than 11 ounces, and customers with more to drop off must make an appointment. Additionally, post offices will not handle shipments over 70 pounds, which is less than half the UPS weight limit.

Even Federal Express no longer guarantees on-time service. Patrons have complained of lost packages and delayed deliveries this week. And the company will not accept new customers or any increase in volume that exceeds 10% of a business’ prior usage.

This means that Golden Express of Oxnard--a promotional products supplier that used to rely on Federal Express to ship about 10 of its daily 150 packages--can now ship only 11 items per day under the shipping company’s new rules.

Most of its remaining boxes of special-ordered embroidered hats and logo-marked pens are stacking up in storage.

The company’s owners, Paul Reese and Dan Schaller, have hired couriers or have rented trucks to make some local deliveries. But the added cost is chipping away at profits, and most of the company’s deliveries are destined out of state.

“People are concerned about deadline orders, so they’re starting to cancel,” Reese said. Schaller said that a few customers have expressed anger at him and his partner, even while realizing it’s not their fault.

Along with shipping problems, Reese said that incoming deliveries of raw materials have been delayed. Managers at Golden Express have tried to keep workers busy by diverting their efforts to maintenance and cleanup projects. But without crucial supplies, there is only so much work that can be done.

“In 10 years of business, we’ve never laid off people,” Schaller said. “But we could have to start cutting back in a couple weeks.”

Before trimming staff, the businessmen will try attacking the source of the problem. By faxing letters to hundreds of congressional legislators, they hope to stimulate government intervention in the UPS strike.

“I’m hoping some pressure is applied by Congress for the president to start acting on this,” Reese said, expressing frustration that less economically damaging strikes have warranted political action in the past. He suggests that President Clinton has some political motive for not getting involved.

“Please do whatever is within your power to get this strike stopped!” the two men urged in their letter to government representatives.

Meanwhile, Reese and Schaller will do what many business owners have resigned themselves to doing: They’ll sit back, wait and see what happens next.

“That’s all you can do,” Schaller said.

* NEGOTIATIONS

Little movement seen in talks. D1