Verizon eyes margin improvements, labor contract

NEW YORK, USA: Verizon Communications is looking to boost profit margins in its traditional wireline telephone business through a new labor contract, restructuring its business services products and cost cuts in other areas, according to its Chief Executive Lowell McAdam.

McAdam said the company wants a labor contract that helps it operate more efficiently. He is also looking to cut costs by reducing the number of business products it offers from thousands to hundreds.

On the labor front McAdam said the company is making progress with unions representing 45,000 workers and expects them to come up with a proposal for a new contract that would address the concerns of both sides by Oct. 1.

"I'm encouraged over recent dialogue. The union, by October 1 has committed to giving us a proposal," Chief Executive McAdam told the Goldman Sachs Communacopia Conference.

The company has been negotiating since late August after a two week strike. Verizon wanted big changes in areas such as benefits and work rules but the unions said it was asking for too many concessions all at once.

The biggest issue for the union is jobs because the company has outsourced a number of jobs in its telephone business.

For two weeks after technicians and customer service representatives walked off the job Verizon asked thousands of managers to try to cover for the striking workers.

McAdam said that while they were on strike duty, many managers had come up with suggestions about where the company could operate more efficiently and cut more costs.

"The strike was a great opportunity" from that perspective, McAdam said.

The executive said that Verizon is also looking for more efficiency in its business services division, which offers about different 4,000 products.

"We're going to streamline those down to a few hundred," McAdam said. "It's our goal to expand margins on the wireline side."