A publication of the
Mineta Transportation Institute
College of Business
A seven-week strike occurred at Greyhound in 1983. Another one started in 1990 and ended more than three years later. Both made history. Both had devastating consequences, for both the union and the company. Greyhound Bus Lines had experienced strikes before 1983, but they were generally only local strikes with relatively modest impact on the company's labor relations and its financial health.
Generally speaking, the relationship between company and union had been good, and both sides had prospered. All that changed dramatically in November of 1983, when contract negotiations between the company and the ATU broke down and a bitter, highly publicized nationwide strike erupted.
It was a strike marked by physical violence between striking employees and the company's newly hired striker replacements. It was a seven-week long strike that the ATU could not win. Some 12,700 ATU members walked off the job. Many of them regretted it, especially as Christmas drew closer and closer.
Before 1982, Greyhound was a prosperous company that prided itself on
paying the highest wages in the industry.
Greyhound all but ignored its competition, including Trailways, its
main competitor, which paid considerably lower wage rates than
Greyhound.
Considering Trailways' frail financial situation and the prospect of
losing union members' jobs, the ATU agreed in early 1982 to a wage
freeze at Trailways.
Lower wages enabled Trailways to launch a major price war against
Greyhound, well publicizing its lower bus fares.
At first Greyhound ignored Trailways' discounted fares and price war
publicity.
During spring of 1983, however, Greyhound began to experience a sharp
decline in ridership. Passengers had become more price conscious. As a
result, Greyhound had no choice but to drop its fares.
Deregulation of the transportation industry made the competition for
passengers even stiffer. New entrepreneurs who paid low wages entered
the business and offered fare prices much lower than the more
established inter-city lines.
The newly deregulated airline industry made things even worse for
Greyhound.
Low-cost passenger airline carriers sprang up after deregulation of the
industry and gave intercity bus lines a run for their money. People
Express, for example, charged only $23 for a flight between New York
City and Buffalo. Greyhound charged $41 for the trip. A flight by
Southwest Airlines from San Francisco to Phoenix was only $60, compared
to a Greyhound's bus ticket to the same location costing $79. By the
middle of 1983, Greyhound showed an operating loss of $18 million.
Greyhound's operating costs were 30 to 50 percent higher than that of
other major bus lines.
The company was paying about $62 million a year more for salary and
benefits of its nearly 7,500 bus drivers than other bus companies. The
difference in wage and benefit cost for mechanics, service personnel and
office employees between Greyhound and its competitors showed a similar
disparity.
No wonder during the 1983 contract negotiations with the ATU, Greyhound
insisted on a 9.5 percent wage cut. Union leaders and union members were
outraged, and a bitter strike ensued. Unfortunately for the union, it
came during a period of high nationwide unemployment and only weeks
before Christmas.
The company was ready. It had already recruited more than 1,300 new
hires in anticipation of the strike. Many of them were experienced
drivers of other bus companies. The company announced that it would
replace all striking employees with new hires at the lower, prevailing
industry wage rate. The company gave its all in resisting the strike and
kept the buses rolling. It trained new drivers, sent hundreds of
executives to do field work, video taped acts of violence on the picket
line, and did everything in its power to fight the union in the courts.
Still, replacing the entire workforce on strike was costly and time
consuming. Both sides felt the economic pressure.
Greyhound had to cut back on its passenger service. The company had lost
much business, and the union many jobs.
In an attempt to get striking employees to return to work, Greyhound
lowered its proposed pay cut to 7.8 percent. The union leaders submitted
the offer to a vote of its 12,000 members but recommended strongly
against it. As one might expect, the overwhelming majority of those
voting rejected the offer. Federal mediators entered the picture. They
eventually managed to broker a tentative agreement on December 2, 1983.
The union agreed to send the last offer of the company, including the
7.8 percent wage cut, to the homes of its members for a vote, to be
returned by mail. The vote count on December 19, 1983, showed that this
time an overwhelming majority of striking employees decided to return to
work.
A painful seven-week strike had come to an end just a few days
before Christmas. But the ATU had suffered a major defeat that would
haunt it for years to come. It had to settle for the same 7.8 percent
wage cut the company had insisted on way back in November. In addition,
the union had to swallow a cut in pay from ten to eight percent per
year; a four percent cut in pension benefits, and a two-tier pay
schedule that paid new hires 20-25 percent less than employees under the
old contract.
Greyhound, on the other hand, boasted that it had gained the wage
parity it had been seeking, yet at the same time paid the highest wages
in the industry. At that time, labor costs amounted to about 62 percent
of total operating costs. The union's concessions had brought the
company about an eight- percent reduction in bus line operating expenses
over the life of the new three-year contract.
The company's victorious feelings were short-lived. Economic pressures
kept increasing. The deterioration of economic conditions in the
inter-city bus industry in general continued to get worse, and with it
the strength of the ATU deteriorated further.
In 1984 Greyhound laid off about 1,500 employees, including 400
supervisors, and in 1985 sold 120 bus terminals, terminating 2,000 more
employees, and franchised many routes to lower-cost bus companies.
Amongst economic chaos, in 1987 a group of Greyhound investors, led by
Fred Currey, acquired Trailways, Greyhound's major competitor, in a
leveraged buyout.
Approximately 1,400 Trailways bus drivers were absorbed into ATU
bargaining unit at Greyhound. Greyhound gave them full seniority for
their years at Trailways. In the contract negotiations that followed,
ATU members suffered further wage cuts, even greater than before. In
addition, they had to agree to another two-tier pay schedule, under
which new hires would be making even less than they did already.
By the time the next contract negotiation between the ATU and Greyhound
Lines came around in 1989, the company's profits had improved, although
it still had a large debt burden. With the news of improved profits in
1989 came employee expectations of higher pay. The company strenuously
resisted union demands for a wage increase citing its heavy debt burden,
claiming that its profit in 1989 was modest, and that it had incurred
losses amounting to $20 million the previous two years. In addition, the
company emphasized its need to keep its labor cost down because of the
heavy competition from railroads and airlines.
The union claimed that the company had understated its profits, and
that its heavy debts were due to poor management. The acquisition of
Trailways alone had increased Greyhound's debt by $80 million, bringing
the company's total long-term indebtedness to $300 million.
Given its increased profits in 1989, the ATU claimed that the company
could afford higher wages. Yet by June 1990, Greyhound had declared
bankruptcy.
By the time the collective bargaining agreement had expired on March 2,
1990, the parties were still hopelessly deadlocked.
Greyhound management
refused to extend the current contract, and a bitter strike ensued.
It
was the most violent strike the industry had ever seen, marred by dozens
of shootings, over 100 bomb threats, and even one striker being killed
by a bus driven by a striker replacement.
Close to 9,000 Greyhound
employees were out of work, and the company once again hired a large
number of striker replacements. The ATU claimed, with a good deal of
justification, that Greyhound was out to bust the union.
Greyhound CEO Fred Currey certainly was no friend of organized labor.
The ATU filed unfair labor practices charges with the National Labor
Relations Board (NLRB), which were later upheld.
The ATU pointed out that Greyhound had already advertised that it was
hiring permanent striker replacements while it was still in negotiations
with the union, and had already hired and trained hundreds of non-union
strike breakers well before the strike began.
As the strike progressed Greyhound continued operations, using more than
2,450 strike-breakers. The union successfully enlisted public and
government support by pointing out that striker replacements were poorly
trained and presented a danger to public safety. It also publicized
injuries of strikers on the picket line and blamed the company for
inciting the violence.
Union attempts to get legislation passed to make the hiring of
strike-breakers illegal were unsuccessful.
Both the union and the
company, however, filed a large number of unfair labor practice charges
with the NLRB, and even initiated lawsuits in the courts. They accused
each other of inciting violence on the picket lines and illegal
collective bargaining practices. One of the most shocking examples of
strike violence occurred in Redding, California, when a striking ATU
member was killed by a Greyhound bus driven by a newly hired
strike-breaker.
In March 1990, Greyhound broke off further negotiations. As time went
on, and no end seemed to be in sight, the strikers became more and more
weary. The picket lines at Greyhound bus terminals around the country
grew thinner and thinner. Drivers started to cross the very picket lines
they had staffed earlier.
In 1993, near the second anniversary of the strike, when about 1,500
striking employees had already returned to work, the ATU capitulated and
told its members that they were free to return to work.
Lessons Learned
Did Greyhound "win" the strike?
Certainly not. Both sides had lost, and lost badly. Before the 1990
strike, Greyhound had employed 6,300 drivers. When the dispute ended,
there were only 3,300. The ATU suffered devastating losses in
membership. The company was already bankrupt by the middle of 1990.
CEO Fred Currey lost his job, and he was replaced by Frank Schmieder,
who had a reputation of being less hostile to unions than his predecessor. The company lost its appeals to the NLRB. Both sides had filed over a hundred charges, claiming unfair labor practices by the other during the strike.
On the major issues, the NLRB ruled in favor of the union. It decided that the strike had been caused and delayed by the illegal practices of the company--practices that included bargaining in bad faith, illegally
giving striker replacements seniority over striking drivers, making unlawful bargaining proposals, interfering with employees' rights to engage in lawful union activities, and unlawfully discharging over 200 striking drivers nationwide.
But the union lost also. Although the NLRB awarded $22 million in back
pay to ATU employees, the bankruptcy courts severely limited the back
pay to which striking workers were entitled.
The NLRB rulings, and a
more conciliatory attitude of the new Greyhound CEO Frank Schmieder,
however, led to renewed contract negotiations between the ATU and
Greyhound. This resulted in an agreement reached in April 1993, more
than three years after the previous contract had expired. The ATU had
reestablished its right to represent Greyhound workers, but Greyhound
gained the right to retain the replacement workers it had hired during
the strike.
The ATU won the recall of 550 drivers still on strike and the
reinstatement of workers the company had fired for violence related
incidents. The contract, which the ATU membership ratified in May 1993,
called for a 20 percent wage increase for employees over the life of the
six-year contract, in addition to the $22 million in back pay to
eligible strikers which the NLRB had previously awarded the union.
It is difficult to overestimate the impact these two Greyhound strikes had on labor relations in the entire transportation industry, including transit. The realization that strikes of this magnitude could ruin both union and company brought about a greater willingness on both sides to engage in interest-based bargaining and other forms of union-management cooperation. We have encountered union leaders in transit facilities who used to work for Greyhound and who still remember the hardships the Greyhound strike brought to striking drivers and mechanics. Said one interviewee, the chair of the union negotiating committee at a transit facility:
When the company and the national VP of the ATU suggested that we try interest-based bargaining here at this transit facility, I was ready. I have been through three strikes in 10 years, including the big one at Greyhound. I am a middle-aged woman, a single parent. I knew I couldn't afford another strike...Nobody ever wins in a strike, even if you get what you want. By the time the strike gets settled, for the most part you have lost a lot, and it takes years to recoup it. As far as I was concerned, strike was not an option...there had to be a better way...The others [who once worked at Greyhound] felt the same way.
The losses suffered during the Greyhound strikes also caused the national leadership of the ATU to re-evaluate its bargaining relationship with transit companies. Jim LaSala, president of the ATU, became a champion of interest-based bargaining. Terry Van der AA, founder of and CEO of Vancom Transportation, which owns a number of transit companies in this country, spoke of a meeting he had with Jim LaSala in Washington in 1993:
I have to give Jim LaSala credit. He had just been through the Greyhound strike for three years. ATU had lost two-thirds of its membership, and the strike almost ruined Greyhound. When I was in his office in Washington, he said that the ex CEO of Greyhound had sat in the same chair I was sitting in and had told him the same thing that I was telling him about working together. LaSala said: "I should have listened." He now recognized, because of the Greyhound strike, that whoever ATU's employees worked for had to be successful, or else ATU was not successful. The Greyhound contract now has some elements of participation in it, and LaSala was introduced to those by Greyhound. When the whole thing was settled, Secretary of Labor Reich was at the final signing of the contract and gave both sides accolades for reinventing, if you will, labor relationships. It's possible that LaSala liked that sense of being a pioneer.
There are lessons to be learned by transit management and transit unions, not only from the Greyhound strikes, but strikes in the airline industry as well--particularly those experienced by Eastern Airlines. Kenneth Jennings, distinguished labor relations scholar, has noted that Eastern Airlines failed to learn from the Greyhound experience, and as a result, suffered the same fate. According to Jennings, there are several lessons we need to learn from the Eastern Airline and Greyhound experiences, lessons that apply to the entire transportation industry:
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Credits:
MTI Report 01-02
TRANSIT LABOR RELATIONS GUIDE
September 2001
Herbert H. Oestreich (Principal Investigator)
George L. Whaley (Research Associate)
a publication of the
Mineta Transportation Institute
College of Business
San Jose State University
San Jose, CA 95192-0219
Created by Congress in 1991
Click Here for the Complete Labor Relations Guide
