Transportation legislation: House version of FAA re-authorization bill lessens obstacles to unionization
FedEx claims bill favors UPS at a time when prices are low and service is strong
Jeff Berman, Group News Editor -- Logistics Management, 5/26/2009
WASHINGTON—Late last week, the United States House of Representatives passed H.R. 915-The Federal Aviation Authority Reauthorization Act of 2009. An amendment in the $53.5 billion bill calls for “express carrier employee protection” and has the potential to change the labor status for FedEx Express from Railway Labor Act (RLA) to National Labor Relations Act (NLRA).
If this bill is signed into law, many industry experts said that it will make it less challenging for the Teamsters Union to organize FedEx Express workers.
According to the legislation, the amendment—which was included by Representative James L. Oberstar (D-Minn.)—would amend the RLA to clarify that employees of an “express carrier” shall only be covered by the RLA if they are employed in a position that is eligible for certification under FAA’s rules such as mechanics or pilots, and they are actually performing that type of work for the express carrier. It added that all other express carriers would be governed by the NLRA.
Stifel Nicolaus analyst David Ross wrote in a research note that if this legislation passes in the Senate, it does not necessarily mean that FedEx will become unionized, noting that FedEx management “will vigorously contest all unionization attempts.” Ross added that this legislation has the potential to cause management distractions—in terms of having to fight off unions—and could potentially lead to higher labor costs if some of FedEx Express’s employees are unionized.
In describing the differences between RLA and NLRA status, Ross explained that the NLRA allows for employees to organize and bargain collectively, or choose not to, whereas the RLA requires the entire workforce of a company to have to vote on a unionization proposal.
While it appears this legislation would be a negative for FedEx, it could have the opposite effect for its biggest competitor, UPS. FedEx said as much in a statement, indicating that if this bill were to become law, it would “diminish competition for profit-laden UPS.” FedEx also said that this bill, which it dubbed “UPS’ bailout bill,” would threaten the company’s ability to provide competitively-priced shipping options and ready access to global markets.
“It is very clear this bill is a legislative bailout for UPS, which is profit-laden and a dominant player in this space,” said FedEx spokesman Maury Lane in an interview. “If this were to go through, through, [shippers] would notice no difference in our world-class service. This benefits only one group of people, and that is UPS. It hurts everyone else. Prices have never been lower, and competition has never been higher. All this bill does is put much of that at risk. And for what? To give UPS a bailout it didn’t deserve or earn, and it hurts American consumers.”
UPS spokesman Norman Black had a different take, telling Bloomberg News that UPS believes that two companies performing the same business should be regulated the same way, stating there is nothing that can justify treating UPS and FedEx differently.
Lane labeled this viewpoint as naïve, citing how FedEx moves 85 percent of its packages by air, with UPS moving 85 percent of its parcels over the road and seven percent of those moving by air.
“These are two different companies, operating two different ways, and offering two different kinds of services,” said Lane.
If this legislation is approved in the Senate it would affect the labor status of about 100,000 FedEx Express employees. FedEx’s Lane noted, though, that this same legislation passed the House in 2007 and was not included in the final version. And this time around, he said the Senate will again need to decide if this is the right thing to do for the U.S. or not.
Who benefits? A question that needs to be answered regarding this legislation, according to Satish Jindel, president of Pittsburgh-based SJ Consulting, is what is the reason for seeking the change from RLA to NLRA?
“It does not benefit shippers or the general public or company employees,” said Jindel. “This should be handled at the level of national policy, and from a national policy standpoint, I don’t understand what the reasons are for considering this, as well as what are the reasons for why there was an RLA and NLRA. My view that based upon the rationales for why the railroads and airlines are under RLA, we should also look at whether UPS should actually be under RLA. We need to take a closer look at why some of these companies are under RLA to begin with.”
What’s more, should FedEx Express be required to change its labor status from RLA to NLRA, it has the potential to have a negative effect by creating more uncertainty for its operations and its workforce.
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