Behind The Scenes--The Democrats vs FedEx

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On April 29 of this year, The Hill commented on a provision in a Federal Aviation Administration bill that had failed to be included in the bill.  The provision would have made it easier for employees of FedEx to unionize.  Only a fraction of FedEx's more than 290,000 employees and independent contractors belong to unions, while more than half of UPS's 425,000 employees are unionized.  UPS is hoping that a unionized FedEx will provide less competition than it currently does.  The article points out:

"Because FedEx started out as an airline, FedEx Express is covered by the Railroad Labor Act (RLA), which only allows unions to organize on a national basis. Because airlines tend to ship a higher percentage of goods across state lines, Congress saw an interest in preventing local unions from disrupting interstate commerce."

This issue will show up again shortly.  According to a June 8, 2009 article in Business Week, which portrayed FedEx as anti-union:

"Twice in the past three months, in testimony by FedEx CEO Fred Smith before Congress and in a filing with the Securities & Exchange Commission, Memphis-based FedEx has said its future Boeing (BA) 777 jet orders are contingent upon its workers remaining governed by the RLA.

The political spat in Washington comes at a time when both companies are facing serious financial troubles amid the global recession. In its latest earnings announcement, FedEx said revenues in the quarter ending Feb. 28 fell 14%, to $8.14 billion, with income plunging 72%, to $182 million. FedEx Express was a particularly dark spot, where operating profits dropped 90%. Meanwhile, at UPS, revenue in the quarter ended Mar. 31 fell 14% to $10.9 billion, with operating profits down 20%, to $718 million."

Frankly, I think that unless Congress wants to see the economy further decline, they need to keep their hands off FedEx. 

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This page contains a single entry by Granny G published on June 9, 2009 1:23 PM.

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