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http://finance.yahoo.com/news/FedEx-may-de...f-14734990.html
NEW YORK (AP) -- FedEx Corp. is trying to play a little hardball with Congress.
The package delivery company revealed it might delay purchasing 30 new Boeing 777 cargo planes if Congress reclassifies the company under a different labor act, which would make it easier for its employees to unionize.
A bill currently in front of Congress would place the company under the jurisdiction of the National Labor Relations Act, instead of the National Railway Labor Act. The Railway Labor Act allows for the union organization of workers, but all those workers must vote at the same time. This has served as an impediment to unions which could not afford a nationwide campaign. If FedEx Express workers were to be reclassified under the National Labor Relations Act, then workers could be organized one terminal at a time.
But the company argues that the loss of cost-cutting flexibility that would accompany unionization would make it impossible to also afford the planes.
Commissioning the 30 planes -- at a price tag of $225 million each -- is expected to create thousands of jobs for Boeing employees, workers at General Electric Co. who make the jet engines and workers at hundreds of subcontractor companies.
"This notice gives Congress a chance to protect jobs instead of killing jobs," spokesman Maury Lane told the Associated Press on Tuesday. "This is a prudent business decision based on a potentially devastating Congressional decision."
FedEx might be particularly concerned about unions forming within its ranks as the company's new economic realities unfold. Thousands of employees have taken wage reductions or salary freezes as the company tries to adapt to deteriorating demand, and it warned last week that even more cuts are coming. The company has also frozen 401(k) contributions for a year.
Worker unrest may drive more interest in union support -- making cost-cutting efforts more difficult if workers eventually unionize. The company's pilots are currently the only workers with union protection.
Lane declined to offer details on further moves FedEx would take, such as further job cuts, if the change is made. But he underscored how significant Congress' action could be.
"If this happens we will have to make changes with serious ramifications," he said. "We hope (Congress) makes the right decision."
In a note to investors, Avondale Partners analyst Donald Broughton said the bill is "directed at making it easier for the Teamsters to try to organize FedEx Express workers."
"We find it more than a bit intriguing that now Congressmen will have to vote against Boeing, GE, and the creation of thousands of unionized jobs for machinists (and several other trade unions) in order to change the labor law status of FedEx in an attempt to possibly help the Teamsters union," he wrote.
Broughton notes that if those workers are reclassified, FedEx is not obligated to spend the more than $6 billion it plans to use to buy the Boeing 777's, and would instead delay the purchase and probably eventually buy planes from Airbus, since it already owns 136 Airbus planes.
The company, which released fiscal third-quarter earnings last Thursday, also has said it expects "significant declines" in fourth-quarter earnings and revenue as consumer and business spending remains weak.
NEW YORK (AP) -- FedEx Corp. is trying to play a little hardball with Congress.
The package delivery company revealed it might delay purchasing 30 new Boeing 777 cargo planes if Congress reclassifies the company under a different labor act, which would make it easier for its employees to unionize.
A bill currently in front of Congress would place the company under the jurisdiction of the National Labor Relations Act, instead of the National Railway Labor Act. The Railway Labor Act allows for the union organization of workers, but all those workers must vote at the same time. This has served as an impediment to unions which could not afford a nationwide campaign. If FedEx Express workers were to be reclassified under the National Labor Relations Act, then workers could be organized one terminal at a time.
But the company argues that the loss of cost-cutting flexibility that would accompany unionization would make it impossible to also afford the planes.
Commissioning the 30 planes -- at a price tag of $225 million each -- is expected to create thousands of jobs for Boeing employees, workers at General Electric Co. who make the jet engines and workers at hundreds of subcontractor companies.
"This notice gives Congress a chance to protect jobs instead of killing jobs," spokesman Maury Lane told the Associated Press on Tuesday. "This is a prudent business decision based on a potentially devastating Congressional decision."
FedEx might be particularly concerned about unions forming within its ranks as the company's new economic realities unfold. Thousands of employees have taken wage reductions or salary freezes as the company tries to adapt to deteriorating demand, and it warned last week that even more cuts are coming. The company has also frozen 401(k) contributions for a year.
Worker unrest may drive more interest in union support -- making cost-cutting efforts more difficult if workers eventually unionize. The company's pilots are currently the only workers with union protection.
Lane declined to offer details on further moves FedEx would take, such as further job cuts, if the change is made. But he underscored how significant Congress' action could be.
"If this happens we will have to make changes with serious ramifications," he said. "We hope (Congress) makes the right decision."
In a note to investors, Avondale Partners analyst Donald Broughton said the bill is "directed at making it easier for the Teamsters to try to organize FedEx Express workers."
"We find it more than a bit intriguing that now Congressmen will have to vote against Boeing, GE, and the creation of thousands of unionized jobs for machinists (and several other trade unions) in order to change the labor law status of FedEx in an attempt to possibly help the Teamsters union," he wrote.
Broughton notes that if those workers are reclassified, FedEx is not obligated to spend the more than $6 billion it plans to use to buy the Boeing 777's, and would instead delay the purchase and probably eventually buy planes from Airbus, since it already owns 136 Airbus planes.
The company, which released fiscal third-quarter earnings last Thursday, also has said it expects "significant declines" in fourth-quarter earnings and revenue as consumer and business spending remains weak.