What's The Right Choice For At&T?

When American Telephone & Telegraph Co. sat down to negotiate a new labor contract on Mar. 30, its two unions weren't in a cordial mood. They've grown angry as AT&T shrank the largely unionized work force in its core phone business. Meanwhile, the company grew rapidly via largely nonunion new ventures and acquisitions, such as its Universal credit card and NCR Corp. Tensions mounted after AT&T, which traditionally has cooperated with unions, said on Mar. 4 that it would eliminate a third of its 18,000 phone operators.

It has all put AT&T Chairman Robert E. Allen in the hot seat. The unions are threatening strikes or customer boycotts if Allen doesn't rein in his new units, which aren't covered by the pact that expires May 30. But Allen's management plan is built on independent operations setting their own strategies. The flash point: computer maker NCR, which AT&T bought last year largely for its managerial talent. NCR, which recently defeated two organizing drives by the Communications Workers of America, AT&T's largest union, says it will continue to fight such moves.

That's why Allen may be forced to choose between undermining his own strategy or increasing labor strife. The CWA delivered a warning shot on the first day of bargaining, when some 30 members were arrested for occupying NCR's Dayton headquarters. That same day, the CWA held rallies in 11 cities, including outside an AT&T building in Atlanta. "We told Allen that he has to make up his mind whether his policy toward unions is what he says it is or what NCR says it is," says CWA President Morton Bahr. "He can't have it both ways."

The unions' ire stems from the huge number of jobs they have lost since 1984 (chart, page 38). To compensate, AT&T agreed to extensive layoff protections and to one of the best job-transfer systems in the country. That has helped maintain AT&T's long tradition of labor-management cooperation even as new subsidiaries swelled its nonunion payroll.

NARROW DEFEAT. But now CWA leaders believe AT&T is deliberately trying to keep them out of the growing parts of the company. The job-transfer system gives laid-off employees a shot at jobs that open in AT&T's core businesses but not those in the new units. So the unions' only recourse is to mount organizing drives. AT&T has pledged neutrality in such efforts that occur in its core businesses. But Allen has allowed managers of the new units to pursue aggressive antiunion tactics.

For instance, Paradyne Corp., a modem maker AT&T acquired three years ago, actively opposed a CWA organizing attempt last year. NCR has been equally combative. It was 60% organized in the 1960s but has cut unions to about 5% of its 27,000 U.S. workers today. In two recent CWA elections in Dayton and Indianapolis, NCR hired an antiunion law firm, held one-on-one meetings with employees, and stressed that the union is an unnecessary third party.

The result: NCR workers narrowly defeated the union both times. NCR workers who led the drive say some of them were intimidated by management's tactics, and the union has filed unfair labor practice charges against the company. "Their wish is for us to respond to union drives the way AT&T has," says William W. Holloway, NCR's vice-president for personnel. "But we don't have that same historical position of neutrality."

Allen and Bahr have been wrestling with the issue since last fall, when they agreed to set up a joint committee to hammer out rules AT&T would follow in organizing drives. The committee, which included Charles L. Brumfield, vice-president for labor relations for AT&T's operations unit, agreed on a two-page policy statement in early March that would have blocked a number of NCR's antiunion tactics. But the talks ended when Allen told Bahr that the discussions excluded NCR.

KEEPING NEUTRAL. That left the CWA angrier than ever. Union leaders say that NCR was their primary concern all along, mostly because its 12,000 blue-collar employees dwarf the 3,300 or so unorganized workers at AT&T's other three new units. So when Allen removed NCR from the table, workers refused to sign the statement. Even AT&T concedes some confusion. "The CWA's assumption may have been that the draft would apply to NCR," says William Ketchum, AT&T's vice-president for labor relations and Brumfield's boss.

Because the committee's effort failed, neutrality now will become a hot topic in the negotiations. For the unions, more than AT&T's labor relations are at stake. The CWA last year won a similar neutrality pledge from Nynex Corp. Next August, the union's contracts expire at the other Baby Bells, some of which also have been expanding nonunion operations. If the CWA lets AT&T off the hook, those companies may refuse to follow Nynex's lead.

Allen may try to assuage the unions by matching the relatively generous pay hikes Nynex granted last fall, which total more than 13% over three years. But that could be expensive. If it doesn't work, he'll have to decide whether it's worse to anger the unions or NCR managers. Allen declined to be interviewed for this story. But don't bet on him tilting toward the unions.

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