Security channel avoids supply nightmare with UPS settlement – but were lessons learned?
Manufacturers, integration companies and distributors in the security industry are likely breathing easier after United Parcel Service (UPS) and unionized workers settled their labor dispute Tuesday, averting a potentially crippling strike.
After months of negotiations, the UPS and Teamsters union representing 340,000 UPS workers reached a tentative agreement a week ahead of the current contract’s expiration date.
The five-year agreement announced today raises wages for all workers, creates more full-time jobs and includes workplace improvements, according to the International Brotherhood of Teamsters. Teamsters General President Sean M. O’Brien says the delivery company put $30 billion in new money on the table due to the negotiations.
UPS handles 25 million parcels per day, which equates to 6% of the GDP. The tentative deal averts what was being forecasted to be one of the most expensive labor stoppages in at least a century, with the potential to cause billions of dollars of economic damage.
Manufacturers and integrators in the security industry have already learned some painful lessons after suffering serious supply chain issues of last year.
Supply Chain Pain
The security services industry has remained strong for integrators, with record backlogs and commercial projects powering growth in both profits and revenue for most businesses. But being able to complete projects became a major hurdle due to reduced availability of key hardware and equipment.
Hardest hit in the supply chain crisis of 2022 was access control components, but video surveillance and perimeter/alarm hardware were not immune. Integrators reported that many “go-to” manufacturers reported shipping delays and product shortages -- delaying projects by as much as two years.
Integrators were forced to redesign systems to accommodate similar products; and manufacturers are reengineering some products to omit a specific chip or part that was hindering production. Customers were also frustrated about projecting lying dormant.
In the annual State of the Industry Report published in Security Business magazine earlier this year, 51% of integrators said product shortages caused a project to be delayed more than 90 days. Some 28% said it was 30-60 days 13% said the delay was more than a year or the project was canceled.
The report says 15% of integrators lost commercial customers and 8% lost residential customers.
SecurityInfoWatch.com surveyed integrators earlier this year about the consequences of supply chain problems, asking how product shortages had affected commercial projects.
Some 65% of those participating said delays were more than 90 days, 24% said there was no effect, and about 10% said delays were a year or more. Only a small percentage experienced cancelled projects.
To fill the gap during a UPS strike, many manufacturers would have needed to diversify their carriers, but it was still unlikely those alternatives could have absorbed the entirety of UPS’ volume, says Bart De Muynck, chief industry officer at project44.
Tips for Being Pro-Active
Only time will tell if the industry has learned from all this and created contingency plans for these disruptions.
De Mynck told SIW’s sister publication, SmartIndustry, that businesses and manufacturers can proactively manage the risks associated with the UPS strike by conducting scenario-planning, establishing alternative carriers for last-mile deliveries and investing in technologies to increase real-time supply chain visibility.
“Those that take such precautions can respond to disruptions with agility and maintain operational continuity by implementing comprehensive risk-management strategies today,” De Mynck says. “Knowing no other carrier has the capacity to absorb all the fallout of a UPS strike, manufacturers should also be proactively communicating with their client base to set expectations early.”
John Luciani, COO of Northeast U.S. trucking company and package transporter A. Duie Pyle, notes UPS is a significant service provider operating in many verticals. Any labor disruption would have significantly impacted a broad spectrum of service providers, including hospitals, pharmaceuticals, retailers, e-commerce, financial institutions, real estate companies, government agencies, “along with many more industries not even considered during this response,” he said.
The challenges might not be over either. Aviation Pros reported Tuesday that FedEx Corp.’s unionized pilots rejected a tentative agreement to renew a labor contract on which talks have dragged on for more than two years.
The courier’s pilots voted 57% against the deal while 43% were in favor, the Air Line Pilots Association, or ALPA, said in a statement. There are about 5,000 FedEx pilots, according to the company, and 98% participated in the vote, an ALPA representative said.
FedEx pilots have little choice but to continue flying while negotiators return to the bargaining table. They fall under the Railway Labor Act, which governs only the airline and rail industries and makes it difficult to strike.
Although FedEx’s labor contract became amendable in November of 2021, the union cannot take any action until the National Mediation Board gives up on working out a mediated solution and declares the talks at an impasse.
FedEx said in a statement that the no-vote doesn’t impact its service. “While we are disappointed in these voting results, FedEx will continue to bargain in good faith with our pilots to achieve an agreement that is fair for all FedEx stakeholders,” the company said.
John Dobberstein is managing editor of SecurityInfoWatch.com and oversees all content creation for the website. Dobberstein continues a 34-year decorated journalism career that has included stops at a variety of newspapers and B2B magazines.
