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Workers answer call at debt-ridden Western Union; agree to pay cut

By Ed TownsendSpecial to The Christian Science Monitor / January 9, 1985



Newark, N.J.

Eight thousand Western Union hourly workers in two unions have agreed to take $10 million in pay cuts over the next six months, an average of $1,250 each, to help their employer weather ``quite serious'' financial problems without reducing operations -- and possibly jobs.

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Members of the United Telegraph Workers agreed 3,211 to 1,577 to take a 10 percent reduction in pay during the remaining six months of a contract that ends July 28. Workers represented by the Communications Workers of America also voted, 376 to 36, in favor of the agreement. Overall, the company has about 8,000 hourly workers under nationwide union contracts.

Warren Bechtel, a spokesman for Western Union, said that 6,000 salaried employees also have agreed to take 10 percent reductions over the six months. Mr. Bechtel would not estimate the additional savings in operating costs for the company.

The wage concessions just granted will be offset in March by a plan that gives workers ``a share of the company,'' said Jerry Grim, secretary-treasurer of the United Telegraph Workers. The specifics will be worked out later. A new contract must be negotiated this midyear. The concessions made will become a factor then.

The union concessions will help the company maintain sufficient cash to carry it through the first quarter, but, analysts say, the savings probably will not be enough to make the company profitable. They expect Western Union will need additional debt financing to avoid a need to liquidate part of its holdings some time in the future.

Western Union lost $59.1 million in 1984 and is reported to have continuing losses of close to $7 million a month. Bechtel said recently that the company has outstanding bank debts of more than $300 million.

Thirty-one banks agreed a week ago to defer $15 million in interest payments and make an additional $12 million loan to a company subsidiary, the Western Union Telegraph Company. In return for interest deferments, the company agreed to issue to the banks warrants for common stock and stock options. The unions expect ``something like that'' for workers for their lost wages.

Western Union's poor financial position is generally attributed to vast changes in the telecommunications industry, high costs for a new electronic mail service, and management problems.