By Jeff Bennett, Detroit Free Press Knight Ridder/Tribune Business News
May 26--Labor experts criticized a tentative deal reached between SBC Communications Inc. and its union early Tuesday morning -- saying that both sides ultimately could lose as competitors pick off customers frustrated with rising bills.
SBC, the state's largest local telephone service provider, and the Communications Workers of America reached a tentative agreement that would protect the jobs of its 100,000 union members and save the company about $2 billion over the next five years.
The company agreed not to fire any worker during the life of the contract and to hire back several hundred people who were laid off, including about 250 in Michigan. The union said workers will pay higher co-pays for drugs and doctor visits but retirees won't be forced to pay monthly health insurance premiums.
The agreement came a few hours after union members across the country, including about 10,000 in Michigan returned to work after a four-day strike. The deal still needs to be ratified by the rank and file. The union was protesting the stalemate in contract negotiations that had been going on since February.
"This agreement helps ensure that American workers and their communities benefit from the promise of new information technology jobs," said CWA President Motorn Bahr.
Said Ed Whitacre, SBC chairman and CEO: "It is time now for the SBC family to come together quickly and rededicate ourselves to being the best communications company we can be."
But Bill Adams, a labor consultant, said the strike didn't accomplish anything. This strike was nothing more than just a flare to make it look like they are having a hard time," said Adams, president of Adams, Nash, Haskell & Sheridan, based in Kentucky.
He said SBC and its union are in trouble based on the high-tech telecommunications market they are competing in.
"It could mean the end of them," Adams said. "How can anyone sign a five-year labor agreement? No one can predict what the market is going to be for 90 days let alone five years and now they have locked in with certain rates, number of employees and benefit plans." The telecommunications market continues to experience tremendous change as new technologies such as cellular service, Wi-Fi and voice over Internet continue to expand across the country. All of these technologies are allowing people to choose different ways to communicate based on cost.
SBC offers local telephone service, long-distance service and high-speed Internet access. But it competes against cell phone companies and cable companies that offer similar services, sometime at lower costs with smaller, non unionized workforces.
Although it remains one of the most profitable companies in the business, SBC's sales have fallen for 14 straight quarters. F or the three months ended March 31, the company generated $10.1 billion in sales -- down 2.4 percent from the previous year.
Peter Morici, a business professor at the University of Maryland who studies labor issues, said the economy and the population continue to expand but the number of telephone lines being installed continues to go down.
"This contract makes it more difficult for SBC to expand because it has to follow union rules and can't expand or shrink the workforce to meet the market demands," he said.
SBC TENTATIVE CONTRACT: Highlights of the 5-year tentative contract agreement between SBC Communications Inc. and the Communications Workers of America. The agreement must be ratified by the CWA membership; no date for the vote has been set.
--No layoffs of employees currently on the payroll during the life of the contract. This does not apply to new hires.
--Rehiring of several hundred workers, including about 250 in Michigan.
--SBC and CWA will work together to bring back jobs outsourced to India.
--Health-care insurance premiums will continue to be fully paid by SBC.
--Workers will make increased co payments for drugs and doctor visits.
--Active employees will receive cash bonuses of $1,000 and retirees will receive $2,500.
--Across-the-board wage increases total 12 percent, compounded, plus an additional 1- percent lump sum in the first year and cost-of-living adjustments in the fourth and fifth years.
--Pensions will increase 13 percent over the contract term.
--SBC can hire non union workers for emerging- technology positions that are unrelated to the core telecommunications network.
--Union workers whose jobs are deemed surplus will be offered new jobs within the state or local area.
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