Another Showdown
There's a lot
at stake in this showdown. No, I'm not talking about Iraq and the
United States. I'm talking about Federal Express and its pilots, who
are facing off in a labor struggle that the pilots hope will be a
repeat of the United Parcel Service strike of 1997.
What's at stake
is FedEx's earnings for this quarter, the busiest shipping season
of the year. And its reputation for reliable, on-time delivery. And
its labor status as an airline covered by the Railway Labor Act. (For
a full report, see Associate Editor Kristin S. Krause's report on
page 58.)
Both sides are
actively blustering, claiming they're ready for a work stoppage. The
3,500 pilots are voting, and when the mail ballots are counted on
Dec. 3, the result is expected to be overwhelmingly in favor of giving
the FedEx Pilots Association the authority to call a strike.
Of course underneath
the blustering is a desire on both sides to make substantial gains
without resorting to a strike.
And certainly
shippers don't want to see a repeat of the painful United Parcel Service
strike. That disrupted shipping around the country and caused substantial
problems for manufacturers, wholesalers, retailers and service companies
that had relied on UPS.
The LTL companies,
FedEx and other competitors took on lots of business sacrificed by
UPS, leading to a $10 million UPS loss in the third quarter of 1997.
Now, however, the tables have turned, and UPS just reported net income
of $449 million for the third quarter of 1998 while FedEx is making
contingency plans to keep it operating during a walkout.
There are a number
of factors in this labor dispute that make it different from the UPS
conflict. If the pilots strike, FedEx will lose only 2 percent of
its work force. The company is rallying the other 98 percent to pick
up the slack. None of FedEx's drivers, couriers or package handlers
are unionized. The UPS strike was started by the Teamster-represented
ground employees and honored by unionized UPS pilots.
The pilots will
make less sympathetic figures than the friendly, local UPS driver.
The pilots do not meet the public. Many already have six-figure incomes,
although some earned as little as $48,000 in 1997. FedEx says the
current offer would bring compensation of Airbus A300 captains from
$121,000 to $170,000 by the end of a five-year contract.
The union can
expect some sympathy, though, from the fact that they have not had
a contract for five years. And while the salaries are higher than
the average American's, the pilots rank only ninth among major U.S.
airlines in compensation.
FedEx has been
assuring its customers that operations will continue normally in spite
of any strike, and some large customers, including L.L. Bean, have
accepted the assurances.
The dispute has
escalated over the last several months. When the union's negotiating
committee refused to send company offers to the pilots, the company
presented its offers directly to the pilots. And in the last few weeks,
the rhetoric and strike preparations have increased on both sides.
A wild card in
the dispute is FedEx's coverage under the Railway Labor Act. Already
the Teamsters, who are eager to organize FedEx's ground employees,
are planning to use the company's plan to shift cargo from planes
to trucks as ammunition in a challenge to RLA status in Congress and
at the National Labor Relations Board. And with the labor-friendly
philosophy of President Clinton and presumptive presidential nominee
Vice President Al Gore, that's not an idle threat. 
Clayton Boyce, Editor
