Strike Toll Mounts, Parcel by Parcel
Entering Day 10 of walkout, bike parts are scarce, but no dip on economic charts - yet
NEW YORK — As the United Parcel Service strike enters its second week, it is hobbling the operations of thousands of businesses - from interior decorator Linda Cameron to bicycle salesman Tom Norton. But it hasn't yet snapped a spoke on the economy.
While the walkout is taking money out of the pockets of everyone from big corporations to small businesses, its impact is being measured more in dollars and lost contracts than in something undercutting the GDP.
As a result, President Clinton has decided not to intervene - yet. But economists say pressure will build if the strike goes on for several weeks. Part of the difficulty is calculating the impact of a thousand points of annoyance:
*John McGrane, manager of the Oyster Bay Marine Center on Long Island, is sending his $65-an-hour mechanic on errands to pick up parts. How much money is he losing as a result?
*In Bethlehem, Pa., Ms. Cameron wonders how to tell customers the shipping expenses for new drapes are going to be much higher.
Cost of Strike Mounts, Slowly
* In Boston, Mr. Norton of the International Bicycle Center hasn't gotten new shipments of shocks or brakes. Some customers are waiting for special-order bikes that are stuck in the UPS system. "Some guy will walk in and say, 'Where's my part?' and I'll tell him to go home and watch the news. When the UPS strike is over, he can come get his part."
So, will the store lose its customers permanently?
"The strike is affecting the economy in so many small ways, it's hard to figure out its cost with specific numbers," says Cynthia Latta, an economist at DRI McGraw-Hill, an economic forecasting service in Lexington, Mass.
The ultimate effect will depend on how long the strike continues.
Clinton holds back
On Tuesday, Labor Secretary Alexis Herman was set to brief the president in greater detail. So far, Mr. Clinton has argued that the strike is not imperiling the national health or safety, so he can't invoke the Taft-Hartley Act, which allows for a 90-day cooling-off period.
In the meantime, talks between the striking International Brotherhood of Teamsters and Atlanta-based UPS broke off over the weekend and weren't rescheduled.
UPS is asking Clinton to intervene and for the union to submit its "final" offer to members for a vote. The union is holding firm on its demand for more full-time jobs and control of workers' pension fund.
Meanwhile, the toll mounts. If the strike were to continue for a year - considered highly unlikely - it could take about half of a percentage point off the nation's gross domestic product, or about $40 billion, estimates economist Donald Ratajczak of the Georgia State University Economic Forecasting Center in Atlanta.
But economist Danny Bachman of the WEFA Group in Eddystone, Pa., says that's not a large swing, especially considering the uncertainty that is currently swirling around the economy.
After growing quickly in the first quarter, the economy has slowed. Economists aren't certain, however, if the economy is back to its faster-paced lope or just catching its breath. Mr. Bachman's firm expects the nation's economy to slow a bit in the third quarter.
To many businesses, the impact is not all that trivial - particularly when it comes to costs.
Ed Rastatter of the National Industrial Transportation League says some of his members are turning to other services such as Overnight Express. But instead of paying $10 to get a package delivered, they are paying $30 to $40 per item. There are separate charges for door-to-door delivery. "They are not set up to deliver golf clubs to you and me," he says.
At The Write Place, a stationery store in Los Angeles, owner Lainee Ellman says they've gone to Plan B: "the Postal Service, FedEx, personal messengers, trapeze artists - whatever gets it there."
But will higher costs ratchet up the economy in the form of an inflationary spike? Possibly, says Bachman, who estimates the impact will not be more than "a couple of tenths" of a percentage point in coming months.
Initially, many firms are absorbing the extra cost. Mr. McGrane says he can't charge customers when he sends his mechanic to pick up parts. Ms. Cameron, the decorator, feels it's not fair to pass on the additional cost to customers. But, she adds, "My margins are already pretty thin."
There are also some hard-to-measure economic effects. For example, most companies ship their parts by UPS. If the parts don't get shipped, machinery could miss scheduled maintenance.
If the strike drags on, it could change UPS's business. The firm now carries about 80 percent of all the under-100-pound packages shipped by ground transport. But Audrey Freedman, a New York labor economist, says it's likely other companies will pick up UPS customers. New delivery services are likely to start up. "UPS may no longer be a near-monopoly," says Ms. Freedman. This might not be so bad for the economy either.