THE PERILS OF RON CAREY

By John Greenwald

Poor Ron Carey. He could be a labor hero for cleaning up the Teamsters Union since becoming its president in 1991. But that distinction has eluded him. Carey, 61, is in the middle of a bitter internal power struggle as well as a federal investigation into charges that an aide diverted more than $100,000 of union funds last year to Carey's campaign for re-election. To these headaches is added the wrath of millions of Americans who waited in vain last week for strike-bound UPS trucks to transport everything from lobsters to Lands' End T shirts. "I'm mad at the Teamsters Union," says Paula Lambert, founder of the Mozzarella Co. in Dallas, Texas, who has had to scramble for ways to ship her perishable specialty cheeses to restaurants and gourmet shops around the country. Declares Darlene Garalde, owner of Bridals by Heaven Scent in Honolulu: "It's not going to be heaven-sent if we don't get our gowns soon. It's going to be a wedding from hell."

For Carey, a former UPS driver, the strike by 185,000 Teamsters over issues ranging from the company's pension plan to part-time workers represents a desperate two-front battle. He sorely needs a big win to maintain his political advantage over archrival James Hoffa Jr., son of the notorious Teamster boss who disappeared under mysterious circumstances in 1975. Carey edged Hoffa in the race for the presidency last fall, but Hoffa has jumped on the fund-raising charges to demand a new election. "If Carey loses the strike or is perceived to have lost, his position vis-a-vis Hoffa is markedly weakened," says Marvin Kosters, a labor expert at the American Enterprise Institute in Washington.

The Teamster leader has picked a particularly tough time for a showdown. Even as Carey rallied the troops last week, it was clear that the Teamsters' finances were in no shape for a lengthy walkout. With the union's membership down from 2 million a decade ago to 1.4 million today, its strike fund is thinner than a picket sign. Strikers, some of whom have been pulling down $50,000 a year, can count on benefits of only $55 a week.

But Carey could hardly have found a more tempting target than UPS. The giant company (1996 revenues: $22.4 billion) delivers 80% of all packages shipped by ground nationwide, making it impossible for rivals to pick up much of the business quickly. Indeed, as the strike wore on last week, America suddenly awoke to the crucial role of UPS as a hauler of goods with a dollar value equal to an astonishing 5% of the country's gross domestic product. So widespread was the pain that major retailers, who rely on UPS for supplies of fresh merchandise, urged President Clinton to intervene. But the President refused, saying the strike had not yet created a national economic emergency.

Nonetheless, the high-profile walkout gave Carey a stage on which to attack not just UPS but the rest of corporate America as well for its reliance on part-time workers. Of the 40,000 new jobs that UPS has filled with union members since 1993, fully 80% have been part-time slots that pay an average hourly wage of $9, vs. $19.95 for full-time positions. (UPS says most part-timers are people such as college students and housewives who don't want a full-time job.) "Part-timers do the same work and should be paid the same rates," Carey says. "We're not going to let big companies like UPS continue to undermine good jobs in America."

Despite such rhetoric, the battle over the UPS pension plan struck many observers as a far stickier issue. UPS pays more than $1 billion a year into 31 Teamster pension funds whose beneficiaries include workers at financially weaker companies. But UPS wants to pull out of the plan and set up a fund with the Teamsters solely for its own employees, which the company says could add 50% to its workers' retirement benefits. Not so fast, say the Teamsters, who want the contributions to continue being spread among more of its members and have refused to authorize a vote at UPS on the company's contract proposal. "We're convinced that Carey's primary concern is the pension issue," says James Kelly, UPS chairman and chief executive officer. "Why should our workers bear this burden?"

A more cosmic question loomed as the two sides broke off talks last weekend. Did the Teamster strike presage a new militancy by unions or would it prove to be just one more indication of how limited their clout is? With fears of downsizing and layoffs still rampant, unions staged only 37 walkouts involving 1,000 or more workers last year, in contrast to 231 major strikes in 1976. "If the Teamsters can't deliver [a winning settlement] on this one," says Charles Craver, a labor expert at the George Washington University law school, "organized labor is in big trouble."

--Reported by Hilary Hylton/Austin, Barbara Maddux/New York and Bruce van Voorst/Washington

With reporting by HILARY HYLTON/AUSTIN, BARBARA MADDUX/NEW YORK AND BRUCE VAN VOORST/WASHINGTON