Shift To National Labor Relations Board Now Being Debated

Claiming a possible shift in union representation could negatively impact its future operations, this week FedEx Corp. said if legislation is passed to allow unions in to the company, FedEx would be forced to cancel a large order for Boeing's 777 Freighter.

The Wall Street Journal reports the cargo hauling giant has a stipulation in its contract with Boeing for up to 30 777 Freighters, noting the company has the right to pull out of the deal should the company be forced to comply with a shift in regulatory oversight.

"Our obligation to purchase these additional aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act," reads a January filing with the Securities and Exhanges Commission.

That clause is significant, as the Democratic-controlled -- and, presumably, union-friendly -- Congress considers a measure that would shift FedEx labor relations oversight from under the control of the 1926 Railway Labor Act, to the National Labor Relations Board. The latter is viewed as more ameable to the worker side of labor relations than the RLA, which governs labor rules at most unionized US airlines. The NLRB governs labor conduct at most of FedEx's competitors, however, including UPS.

An attempt to force the issue was postponed last year, when the Senate tabled the last FAA reauthorization bill. As ANN reported, Minnesota Congressman James Oberstar had attached a rider amendment to that bill, calling for FedEx to come under the control of the NLRB. The measure is once again under scrutiny as Congress works on a new attempt to pass a funding bill for the agency.

If FedEx is forced by Congress to make the move to the National Labor Relations Board, unions would be allowed to hold representation votes at one FedEx station at a time; under the Railway Labor Act, unions must hold a company-wide vote within a set timeframe, a practice that's essentially unworkable given FedEx's global organizational structure. That stipulation has kept FedEx largely union-free as a result.

Only one group of FedEx workers is currently unionized, its pilots. Company spokesman Maury Lane says if more unions are allowed in, they would compromise FedEx's cost structure and financial strategy... which has already been stressed by the current economic recession.

"It's difficult to make large-scale capital investments like airplanes if you are unsure if you are going to be able to fully utilize them," Lane said of the impending 777 order, which came in November 2006 on the heels of FedEx cancelling an order for the stillborn Airbus A380 Freighter.

If FedEx cancels the order, it would mark a significant setback for Boeing, which has struggled this year to garner new orders and retain current ones. Each 777 Freighter is worth close to $256 million at list prices.

Of course, that's precisely the message FedEx wants to deliver.

FMI: www.fedex.com