FedEx Hits Turbulence; A Cautionary Tale of Energy Politics and Unionization

July 13, 2007

As FedEx fights off a measure that could make it easier for some of its employees to unionize, the company is having a tough time finding allies, even among some traditionally anti-union Republicans, and especially from Members in auto states such as Michigan. And therein, say lobbyists familiar with the battle, lies a cautionary tale from K Street.

In a recent House Transportation and Infrastructure Committee markup of a bill to reauthorize the Federal Aviation Administration, Chairman James Oberstar (D-Minn.) offered an amendment that would change the labor law that now applies to many FedEx Express workers, the FedEx division that moves packages by air. The measure passed by an overwhelming 51 to 18 margin, with 14 Republicans voting with Oberstar.

That's because at least some of those who voted for the amendment have been none too pleased with FedEx and its chairman, Fred Smith, who publicly has called for higher Corporate Average Fuel Economy standards - standards that Detroit and other automakers strenuously oppose. Smith's position cost FedEx some of its support among GOPers, who, along with unionized UPS, lobbied for the Oberstar amendment.

Rep. Candice Miller (R-Mich.) said Smith's comments were not the reason she voted to pass the amendment, but they didn't help FedEx's side, either.

"Well, I would just say this, you've got Fred Smith out there talking about how the domestic auto industry has to get with the program and increase standards, yet FedEx has a very small percentage of their fleet that has any kind of advanced fuel technology. So I have to say that Fred Smith's comments did not sit well with me," Miller said. "If you want to be righteous, you have to take a good look in the mirror."

As for the amendment, Miller said she cast her vote on the merits.

Oberstar's amendment would put FedEx Express employees such as drivers and package handlers under the National Labor Relations Act instead of the 1926 Railway Labor Act, which applies not just to railways but airlines and express carriers as well. Workers who are governed by the Railway Labor Act must unionize at the national level, a more difficult task than at the local level, which is permitted under the NLRA.

UPS drivers, for example, are unionized locally and are affiliated with the Teamsters.

"I looked into this issue quite a bit," Miller said. "It's an issue of fundamental fairness. Both the workers, and most importantly consumers, would be better served."

Fred McLuckie, the Teamsters' legislative director, said that other Republicans on the committee, such as Reps. Steven LaTourette (Ohio) and Frank LoBiondo (N.J.), often take votes that are in line with the union side.

"There are some moderate Republicans on the committee who are sympathetic to the unions," McLuckie said. "Some votes were the result of lobbying by UPS and some were the result of what actions FedEx may have taken on these energy matters, the CAFE standards."

That left some lobbyists, particularly on the FedEx side, to openly speculate about whether auto companies were urging Members to retaliate against FedEx by voting for Oberstar's amendment.

"Why would auto companies care about an exemption to the Railway Labor Act?" asked one auto industry source. "It would be like FedEx lobbying on passenger automobile CAFE standards." The source added, "It doesn't do anyone any good when industries go out and attack other industries for no reason."

The International Association of Machinists and Aerospace Workers also is on the anti-FedEx side, said the group's legislative and political director Tom Trotter. "What it's trying to do is put fairness and consistency in the package-delivery sector," Trotter said. "It's trying to level the playing field so that all the companies play by the same rules."

UPS and the unions are talking the same talk. "Employees performing the same functions, even at different companies, should fall under the same labor law," said Malcolm Berkley, the Washington, D.C., spokesman for UPS. "From our perspective, it levels the playing field in a way that needs to be leveled."

Only employees who perform airline-specific duties - such as flying the planes - should be covered under the railway law, he said.

FedEx, which was founded in the early 1970s as an airline, does have employees, such as those who work for FedEx Ground or FedEx Freight, who are covered under the NLRA. But employees of FedEx Express have always fallen under the Railway Labor Act, including the drivers who deliver FedEx Express packages to and from the FedEx airplanes. The Railway Labor Act is designed to make it more difficult for workers to unionize and strike because of the importance of limiting disruptions to the national transportation system.

"UPS is attempting to change the rules by harming the competition through legislation. FedEx thrives on competition - we just think it should be done in the marketplace, not the halls of Congress," said David Bronczek, president and CEO of FedEx Express, in a statement e-mailed to Roll Call. "FedEx Express has been under the Railway Labor Act since its inception. We would be happy to discuss how the RLA is applied to the express industry as a whole but it should be done in a fair and open process."

Kristin Krause, a FedEx spokeswoman, said in 1996 Members passed a technical correction reinstating "express carrier" under the Railway Labor Act provision, which had been deleted the previous year by the Interstate Commerce Commission.

"We have never ever changed the way we've been structured or organized," Krause said. "There's been this misinformation, they've used the term that we got some sweetheart deal in 1996, and that isn't the case."

Even though the amendment passed the Transportation and Infrastructure Committee 51 to 18, Krause said the change is "really a long way from happening." The House Ways and Means Committee still has to put its stamp on the FAA reauthorization before the full House gets a vote.

FedEx did have the vote of one Democrat on Transportation and Infrastructure: Rep. Steve Cohen (D-Tenn.), whose district includes Memphis, FedEx's home base.