45K Verizon Workers Call Strike, Service May be Impacted

About 45,000 employees of Verizon Communications went on strike after contract talks failed.

The striking employees work for Verizon's landline unit, which is losing subscribers to mobile phones and cable TV companies and has been in a downward spiral since 2003. In 2010, the number of landline subscribers fell eight percent to 26 million, it said.

Verizon CEO Lowell McAdam urged striking workers to compromise, considering the division's customer losses and eroding profitability.

The contracts --which cover about 35,000 workers represented by Communication Workers of America and about 10,000 workers represented by International Brotherhood of Electrical Workers -- expired Sunday.

According to media reports, the primary issue for the strike is healthcare costs. The strike may impact service calls and interrupt installations for phone and Web service.

"Since bargaining began on June 22, Verizon has refused to move from a long list of demands. As the contract expired, nearly 100 concessionary company proposals remained on the table. As a result, CWA and IBEW have decided to take the unprecedented step of striking until Verizon stops its Wisconsin-style tactics and starts bargaining seriously," CWA said in a statement.

Unions said the members would return to work when the management demonstrates the willingness to begin bargaining seriously for a fair agreement. If not, CWA and IBEW members, and allies will continue the fight, they said.

"If Verizon had shown any good faith effort to negotiate honestly, our members would still be on the job," said IBEW International President Edwin Hill. "Instead, they turned their backs on any attempts to reach a reasonable settlement. We cannot stand by while one of the richest, most successful corporations in the world joins the race to decimate the middle class of this country. We remain ready to meet with Verizon to work out a fair agreement, but at this point, we had no choice."

Here is the letter from the Verizon CEO addressed to wireline employees.

Meanwhile, Verizon has activated a contingency plan to ensure customers experience limited disruption in service during this time. Approximately 45,000 managers could step in for striking workers to keep the business (and network) functioning.

Verizon has trained tens of thousands of management employees, retirees and others to fill the roles and responsibilities of its union-represented wireline workers, the company said in a statement.

"We are confident that we have the talent and resources in place to meet the needs and demands of our customers," said Marc Reed, Verizon's executive vice-president of human resources. "It's regrettable for our employees and our customers that the Communications Workers of America and the International Brotherhood of Electrical Workers have decided to walk away from the table instead of continuing to work through the issues. We will continue to do our part to reach a new contract that reflects today's economic realities in our wireline business and addresses the needs of all parties. It's also our intent that under a new contract, Verizon employees will continue to receive competitive pay and benefit programs."

A strike isn't new to Verizon and analysts suggest that the issue will be sorted out soon, noting that the employees may not be willing to walk out long due to the weak economic environment.

"History would suggest a prolonged strike is unlikely. Our analysis of prior strike situations -- and conversations with industry contacts -- shows that these situations tend to get resolved successfully within a short period of time. Moreover, the current economic environment would suggest that Verizon's employees would have very little appetite for a long labor strike," Jefferies' analyst George Notter wrote in a note to clients.

In September 2003, Verizon averted a strike with both the CWA and IBEW. The agreement covered 79,000 employees in the Northeast. During the negotiation process, the two sides agreed to federal mediation and delayed a walkout in lieu of negotiations.

In August 2000, about 87,000 Verizon workers went on strike. That strike began on Aug. 6 and lasted 18 days. While an agreement was eventually reached in late August, the strike had a noticeable impact on customers. Orders for new lines and services placed in August weren't fulfilled in many cases until September 2000.

Shares of Verizon fell 2.2 percent, or 75 cents, to trade at $34.30 in Monday morning trade on the NYSE.