This week FedEx kicked things up a notch in its battle with Congress, threatening to cancel orders for as many as 30 Boeing 777 freighters if the House proceeds with a bill making it easier for FedEx employees to unionize.
FedEx says the shift would create such financial uncertainty that buying new planes would be impossible. Archrival UPS argues that the move would level the playing field in the competitive package delivery biz, and unions say it would improve the working conditions of nearly 300,000 employees. And Boeing is caught on the side, with a $3.75 billion deal hanging in the balance of an argument it has nothing to do with.
At issue is a proposal wending its way through Congress that would change the way labor relations are managed at the company. Right now, FedEx falls under the auspices of the Railway Labor Act, which makes it tough to unionize and requires drawn out arbitration before employees can legally strike. If Congress has its way, FedEx will instead be covered by the more worker-friendly National Labor Relations Act.
FedEx says that's a big problem.
A FedEx spokesman, without offering much detail, said the move would create such "upheaval" that won't be able to afford new airplanes. "Thirty out of 45 airplanes we won't be buying if our RLA status is changed by Congress," a spokesperson told Reuters. FedEx's contract with Boeing has a clause allowing it to back out if its labor status were to change.
The Teamsters, who would love to get their hands on FedEx's nearly 300,000 workers, are peeved. "(FedEx) is threatening to leverage a contract to purchase additional aircraft from an American company to blackmail Congress,” said Ken Hall, a Teamsters International Vice President. “It is a slap in the face to Congress and the American people.”
FedEx's archrival UPS also wants the rules changed and,
according to a research note from Gerson Lehrman Group, has been "working feverishly behind closed doors in Washington to get FedEx resasigned to fall under the NLRA."
UPS has a good case. It has always been classified as a trucking company, placing it under the jurisdiction of the National Labor Relations Act and allowing its employees to unionize. FedEx, on the other hand, was classified as an airline when it was founded in 1971 and has never looked back, despite operating many more trucks than planes. UPS argues, rightfully so, that this is an unfair double standard.
Caught in the middle of the mess is Boeing. The company would probably love to sit this one out, but with $3.75 million billion worth of planes on the line, it has started quietly lobbying Congress on behalf of FedEx. A Boeing spokesman would say only that FedEx is “an important Boeing customer and we understand the company’s concerns about the proposed legislation."
Translation: "We'll do everything we can to make sure our plane order doesn't get messed up."
If the bill passes, Allendale Partners analyst Donald Broughton points out, and FedEx follows through on its threat to cancel the Boeing order, it could result in the loss of thousands of union jobs at Boeing and engine maker GE. That puts Congress in the uncomfortable position of having to decide whether paving the way for union jobs at FedEx is worth the risk of union job losses at Boeing and GE.
Photo: FedEx
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