UPS, FedEx "Brown Bailout" battle rages on

UPS, FedEx "Brown Bailout" battle rages on

fedex-plane.jpgThe FedEx Express and UPS battle over classification of FedEx Express workers continues to drag on and now the Teamsters, who have always been lobbying in the background, have created a website and actually, pretty funny, video of the situation, located at

oberstar2_33.jpgThe video is in response to the language inserted in the House version of the FAA Reauthorization bill, which James Oberstar (D-MN), chairman of the House Transportation and Infrastructure Committee, said will be on the president’s desk by July 4. The language, which is not included in the Senate version of the bill, would reclassify thousands of FedEx workers under the National Labor Relations Board (NLRB). Currently, all FedEx Express employees are classified under the Railway Labor Act (RLA), which governs airlines.

The difference between the two comes down to the ability to unionize employees. Under the RLA, unionization must be done on a national basis. NLRB allows unions to form on a building-by-building basis, something UPS and the Teamsters would be more than happy to see happen.

FedEx created to promote its argument against the provision.

federal-express-truck21.jpgThe Teamsters press release states: “FedEx Express claims it is an airline. So why aren’t flight attendants on the delivery trucks?” The video shows a flight attendant inside a delivery truck providing safety instructions, including telling the passenger where the nearest exit is: “the door right next to you.” She then goes on to begin her speech about what to do in the case of a water landing only to stop herself and say, “Wait, we’ve never had one of those.”

There are two different videos located here, including one where the driver of a truck is calling for ground control.

“FedEx brought its special status through political arm-twisting, plain and simple,” Teamsters general president Jim Hoffa said. “But now Congress must do the right thing and close the loophole. Americans are tired of giveaways to corporations, especially to a company that can’t even be upfront about what it really does.”

Interestingly, in an effort to build political pressure, FedEx has threatened to cancel a $6.7 billion aircraft order with Boeing if its classification changes. No doubt, this is putting pressure on Boeing to lobby on behalf of FedEx.

fred_w_smith1.jpg“If that were to happen, I can promise you that the board of directors of FedEx Corp. would reduce the amount that we invest in [FedEx Express], to the point where it was just purely a sustenance level,” said CEO Frederick Smith, according to a report in the Commercial Appeal of Memphis.

Oberstar ripped Smith in the Commercial Appeal for his characterization of the provision.

“I object vigorously to his mischaracterization and misrepresentation. He knows better. He knows how the legislative process works. He’s been involved in it for 25 years. He ought to be telling the truth rather than misleading the public,” Oberstar said.

In 1995, FedEx Express was reclassified by Congress under the NLRB only to have Congress rescind that in 1996. Oberstar called that “an arbitrary action by the Senate leadership.”

ups.jpgWhile Smith’s threats would seem to be just that – threats – this issue needs to be resolved once and for all. Would Smith actually not invest in FedEx Express, essentially killing the company? It would seem pretty foolish to shut down a profitable business. But could the landscape of package delivery change if the provision passes? Possibly. If FedEx Express is unionized, what impact would that have on delivery services? It might cost a little more to ship a package, but if FedEx can’t compete with the unionized UPS on a level playing field, maybe the FedEx Express business model needs fixing.

However it is resolved, the American public, itself trying to recover from the worst recession in decades, is going to grow tired really quickly of billion-dollar businesses bickering.