UPS strike 'devastating' to small distributors

Electronic News, August 18, 1997 by Fred Guinther

New York--As UPS-Teamsters negotiations intensified Friday, smaller electronic distributors were already reporting that the strike was taking a "devastating toll" on their business, but larger industrials generally indicated little or no major impact so far on their deliveries or incoming shipments.

The National Electronic Distributors Association (NEDA) used the word 'devastating' last week to describe the damage already done by the strike to smaller distributors, with regionals and other smaller specialized distribution companies reportedly hit hard by the unavailability of UPS delivery services and their own inability to obtain substitute carriers to fulfill their orders. However, larger distributors questioned by EN last week indicated that they had been able to make alternative arrangements with delivery services that had allowed them to maintain business as usual in most cases so far. Distributors big and small were all hoping for a quick settlement of the strike to fully return business back to normal.

Assessing the impact on smaller distributors, Robin B. Gray, Jr., executive VP of NEDA, said "The strike is pulling at the very heart of the distribution business and is causing far greater impact than is being portrayed by the media. If the strike goes on much longer, there will be grave consequences for many businesses."

Last Wednesday, NEDA issued a survey to its members across the country asking about the impact of the labor action on their business. By press time, NEDA told EN that about 100 responses had been received, mostly from smaller distributors. Of these, about 69 percent of the respondents said the strike was having a major impact on their business; 81 percent said they are feeling the impact "right now" when asked at what point the strike would begin to have significant impact; and 93.4 percent expressed their belief that President Clinton should intervene to end the strike.

The most frequently cited areas of impact of the strike on the NEDA members' operations were shipping product to customer, receiving product from suppliers, and increased shipping costs, in that order.

Conversely, distributors among the industry's Top 25 responded to EN inquiries last week that they were experiencing minimal effects from the labor action. At Richey Electronics, Chairman/President/CEO Bill Cacciatore said the UPS strike is not affecting Richey to any great degree. "We made alternative arrangements in advance and are feeling very little effect," Mr. Cacciatore said. "I think the people who are getting clobbered in this are the smaller distributors who, frankly, don't have the clout with the carriers they need to get taken care of in a situation like this. I don't think the major firms are having too much trouble--at least we're not."

An executive at Avnet unit Time Electronics said Time was successfully "addressing the issue with other carriers," and there had been no noticeable impact on the company's operations.

At Ft. Worth, Texas-based TTI, the company told customers on its Web site that it "began a proactive program on July 28 to limit the effects of a pending strike. This effort includes a procedure to reroute all incoming shipments from our manufacturing partners. Federal Express has provided TTI's Texas operations with supplementary equipment for added capacity... We are making every effort to ensure continuous, reliable delivery of products to every customer. Please help us through increased communication with your local TTI office."

Meanwhile, Mr. Gray of NEDA said that questions on the NEDA survey assessed the extent business has been affected by the strike, the weekly dollar impact of the strike on business, the percentage of shipping affected by the strike, and whether or not President Clinton should intervene. NEDA said that results of the survey are still coming in, and will be released this week after being tabulated.

Among the NEDA members who said they had written to President Clinton or their representative urging that government intervention be used to end the strike were William R. Feth, president and CEO of Aesco Electronic Component Distributors of Akron, Ohio; David B. Granger, director of sales of RAF Electronic Hardware of Seymour, Conn.; and Robert E. Carroll, secretary-treasurer of Hughes-Peters, Inc. of Cincinnati.

Distributors reported using a number of alternative services to UPS in their efforts to bridge the delivery gap. These include Federal Express, DHL and the U.S. Postal Service. According to a spokesperson for the Postal Service, managers there have been able to handle the additional volume of mail and maintain guarantees on their express mail, which is an overnight service, as well as other delivery guarantees.

The Postal Service spokesperson also reported that businesses are taking another look at it, saying that many did not know how significant a player their local post office is in this market area. The U.S. Postal Service says it is second in package delivery, at 6.5 million packages, behind the United Parcel Service, at 12 million packages. One reason the postal service has been able to handle all the additional volume is a new command center and branch command center system put in place over the last several years. Now, the postal service can monitor plane flights, trucking flows and weather. With this information, the postal service can reroute mail to avoid congestion. "I think people are finding out that we can deliver, even in extraordinary circumstances," said the spokesperson who added, "we're not the same old post office."