Showdown for the Phone Union

With a Nod From Washington, Verizon Prepares for Battle

"Let me explain what's really going on here . . . "

Those are the words executives at Verizon Communications Inc. should employ when confronted with reporters' questions about the looming, bitter conflict between the company and its biggest union, according to a 32-page confidential memo supplied to company officials by an outside consultant last year.

Such a response, wrote consultant Jerry Manheim of Market/Media Sciences, a Maryland-based communications firm, "begins to redefine the reporter's story." The goal, stated the memo, is to develop a believable account, which "can become over time 'the reality' to which journalists, political leaders and the union itself must respond."

Defining "reality" has become a crucial imperative for Verizon—the largest of the nation's telecommunications giants and the second most profitable—as it rolls toward an angry midsummer collision with the Communications Workers of America. Contracts covering 75,000 workers expire August 2, and based on its posture at the bargaining table so far, the company appears bent on wresting away prized benefits.

Verizon is demanding that employees pick up a much greater share of their health benefits and retirement plans, according to union officials. It has also hammered at the issue of absenteeism and, in conjunction with that, is seeking rights to subcontract work as needed and to lay off any worker hired within the past eight years, while transferring others out of the Northeast as necessary.

Those concessions are needed, company officials insist, for the firm to remain competitive in the precarious telecom world. That the changes entail a dramatic rollback for a major segment of the country's unionized private-sector workforce, the company holds, is just unfortunate collateral economic damage.

CWA officials insist that the concessions themselves are the company's main goal.

"They are taking advantage of turmoil in the industry, an anti-union climate, and a national health care crisis to drive down our members' standard of living," said Bob Master, Northeast legislative director for the CWA. "They don't need this to be competitive; they see an opportunity and they're taking it."

No one denies that the company is making money: It recorded $67.6 billion in revenues last year, the highest in the industry. Of that, it took in $4.1 billion in profit, enough to pay company chairman Charles Lee and chief executive officer Ivan Seidenberg $15.6 million and $9.5 million, respectively, excluding their stock options. But company officials say the real story—the "reality" that the Verizon consultant's memo seeks to promote—is that those figures disguise ongoing problems. The real indicator, officials say, is the steady decline of the company's core business of providing local telephone service as users switch to cell phones and as more and more people turn to cable providers instead of phone hookups for Internet access.

The union's actual objective, according to the confidential memo obtained by the CWA, is to bolster its own sagging fortunes by trying to unionize the currently non-union Verizon Wireless.

That's hard to do, the memo asserts, because such workers "tend to see themselves as white-collar professionals, [and] are by nature far more resistant to the appeals of unionization than their blue-collar colleagues in the telecom version of an old-line 'smokestack' industry."

Actually, the CWA has already obtained one major victory by recently winning union representation for some 17,000 Cingular Wireless workers. And the union believes it would have a good shot at winning Verizon Wireless if the company lived up to the agreement it made in 2000. The agreement allowed a so-called "card-check" vote in which the company would remain neutral and recognize the union once a majority of workers signed on as members. Instead, the union alleges, Verizon mounted a campaign suggesting that workers would end up paying high dues with little to show for it.

"They completely flouted the agreement," said Master. "There was never any good-faith effort to live up to it."

Verizon officials dispute that, and say the pact regarding the neutrality agreement still has a year to go. "There are more important issues that need to be discussed right now," said spokesman John Bonomo.

Still, the union asserts that the company's long-term goal is to keep its cell phone business non-union while reducing its commitment to unionized local land-line service.

"If they were allowed to do so, they would get out of the old copper lines [hardwired telephones] in a heartbeat," said Al Luzzi, leader of CWA Local 1101.

The union says Verizon is already shortchanging service to local customers, a move that was exacerbated when Verizon laid off some 2,400 employees last winter.

This spring, a scathing report by Westchester County Democratic assemblyman Richard Brodsky found that Verizon's service "showed an objective decline from year to year," and alleged that "workforce reductions and capital spending reductions are the policy of the company." In some areas, including Long Island and central New York State, the company failed to meet state standards in repairing phones that were out of service for more than 24 hours, the report found.

Last month, the state's top regulator, Public Service Commission chairman William Flynn, echoed Brodsky's charges, saying he had "grave concerns" about Verizon's "disappointing performance."

Verizon heatedly denied the accusations. The company's top local executive is Paul Crotty, who was a high-level City Hall official in both the Koch and Giuliani administrations, and who is currently up for a federal judgeship. "We believe we have the workforce and capital to deliver service quality," Crotty told Brodsky's hearings. He said the company was taking added steps to boost service in Nassau County and in several upstate cities.

Verizon was the product of a merger between the old Bell Atlantic and the Southwest-based GTE. According to the union, GTE officials, who come from non-union parts of the country, are now calling the shots on labor strategy, a trend that became clear in last winter's dispute over layoffs.

"They didn't understand why they couldn't just lay people off," said Luzzi of Local 1101. "We had to explain to them that we had job-security agreements."

"I think what [the union] is detecting is that our business is different now than it was three years ago," said Verizon's Bonomo. "Cell phones, e-mail, instant messaging—none of that was as prevalent as it is now. It is a different industry and we have to manage it differently."

In addition to a costly two-week walkout three years ago, the company, then known as NYNEX, endured a violent, four-month strike in 1989 in which, for the first time, it imported scabs to take over union jobs. There was a brief period of goodwill after 9-11, when the company credited its unionized workforce with doing yeoman work to rewire Lower Manhattan after the devastation of the World Trade Center communications hub. But those feelings have evaporated.

"They want a strike, there's no doubt in my mind," said Luzzi. "It is an opportunity for them to move thousands of jobs outside the state. They throw a switch and calls are shifted to Texas and other right-to-work states. It took us 40 years to build up our contract to provide a fair wage for our members and some protection against layoffs. They want that back."

What gives Verizon the gumption to go on the attack now, Luzzi believes, is the prevailing attitude from Washington. "It's coming from Bush on down," he said. "He is trying to roll back the fair-labor standards that have been in place for about 70 years, and Verizon is taking advantage."

Verizon adamantly denies seeking a walkout. But while the parties argue at the bargaining table, the more important battle will be waged in the media, the union suspects. The confidential memo clearly advocates that approach. It proposes that the company prepare "a white paper . . . or some form of media advisory" laying out its version of events. Such a paper "could be released by the company or, perhaps better yet, by a third party," wrote the company consultant.

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