Verizon Wireless under Pressure; CEO Stresses Need for Hard Measures

August 8, 2011, By Sanjeev Ramachandran

Verizon Wireless is facing a stiff month with contract disagreements and employee walk-outs happening. The bitter air in the company has resulted in the first strike in 11 years.

The strike which bore out of Verizon’s attempt in extracting concessions from its workers has seen the company wave goodbye to 45,000 of its workers.

A majority of the workers are field technicians or work in call centers represented by the Communications Workers of America and the International Brotherhood of Electrical Workers.

After the exodus, a letter from the Chief Executive, Lowell McAdam, issued to the management justified the need to extract better contract terms and said “additional hard decisions” by the company has to be made so as to keep the cost of its wireline business under leash. The company’s take on the contracts and negotiations, reportedly, weren’t serious enough and the resulting disagreement was said to lead the union leaders, representing 45,000 workers in the Northeast and Mid-Atlantic states, to call a strike.

Verizon’s wireless business has, reportedly, seen a slope in the customer base and profitability graph, and the forage for reduced benefits paints a sketch of the pressures the company’s landline business is facing.

In a note pinned to the company’s website, McAdams  said:

“We’re asking our union-represented employees to help us on a variety of issues that could streamline our processes and further reduce our wireline cost structure while keeping their overall compensation and benefits among the best in corporate America.”

Verizon’s decline in the second quarter of this year was considerably less than the first quarter. The company’s wireline business posted a 0.3 percent decline in revenue which could be considered as an improvement from the 2.2 percent decline in the first quarter.

The only source of growth the company can lay a finger to is their FiOS service (which offers faster Internet and television services), whereas their traditional phone business continues to go downhill. With the union workers and the management continuing to point fingers at each other, their ensuing spat is yet to see some reprieve.

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