FedEx Fights Back

UPS-Supported Bill Could Raise FedEx Labor Costs

FedEx is expected to launch a multimillion-dollar lobbying offensive as early as Tuesday to thwart legislation that would put the Memphis, Tenn.-based package delivery company under the same labor laws as its main competitor, United Parcel Service Inc.

The legislation would make it far easier for some 100,000 FedEx Express drivers and certain other employees to unionize.

“There’s a giant cost for the passage of this legislation that the American people shouldn’t have to pay,— FedEx spokesman Maury Lane said. “We are going to do everything we can so people understand what kind of legislative bailout this is and why it is so bad for consumers.—

“We are going to ask Congress to stop it in its tracks,— he added.

FedEx said the legislation, if passed, could lead to major traffic disruptions and reduce the reliability of its shipments.

UPS, whose employees are unionized, said the bill would simply level the playing field between the two companies.

The lobbying effort will target both the Washington market and outside-the-Beltway audiences.

“We are going to use every media means to talk about this for as long, for as loud and as simply as we can,— Lane said.

He declined to give any more details on FedEx’s lobbying strategy except that it would be “dynamic.—

The company’s public affairs campaign is the latest move in the decades-long pitched fight between the two companies over FedEx’s work force, which is regulated by the Railway Labor Act. FedEx has always been regulated under the RLA because it began as an airline company.

UPS began as a trucking company, so it is governed by the National Labor Relations Act.

FedEx, which transports most of its packages via aircraft, is less than half the size of UPS, with annual revenues, respectively, of $22.7 billion and $49.7 billion.

An amendment in the House version of the Federal Aviation Administration reauthorization bill that passed late last month would put FedEx’s work force under the NLRA, which would make it easier for its employees to unionize.

Under the RLA, FedEx’s employees require national elections in order to unionize.

The NLRA allows single-location based union organizing.

FedEx isn’t taking any chances that a Democratic-controlled Senate will pass the provision.

CEO Fred Smith recently upped the ante when he threatened in Congressional testimony to cancel a $10 billion contract for Boeing 777 planes if FedEx Express workers were to be put under the National Labor Relations Act.

UPS said it will continue lobbying the provision as it has in the past.

“We continue to educate the Members of Congress and officials looking at this issue on the merits of the issue,— UPS spokesman Malcolm Berkley said.

“Employees performing the same jobs should be covered under the same labor law,— Berkley added.

FedEx spent nearly twice as much on federal lobbying as UPS during the first quarter: $2.37 million to UPS’ $1.32 million.

Both companies have a large retinue of lobbyists.

FedEx has nine outside lobbying firms on retainer, including Breaux Lott Leadership Group, Downey McGrath Group Inc., Mattoon & Associates, Parven Pomper Strategies Inc., and Van Scoyoc Associates Inc., according to Senate lobbying disclosure reports.

UPS has 11 hired guns, including DC Navigators, PricewaterhouseCoopers, Raffaniello & Associates and Holland & Knight, according to Senate lobbying disclosure reports.

Both the International Brotherhood of Teamsters and the International Association of Machinists and Aerospace Workers have been assisting UPS’ lobbying efforts.

“Their employees do the same job, have the same skill sets as other employers in the industry,— Teamsters Package Division Director Ken Hall said.

“FedEx may have at one time been an airline, but their structure is no different than other employers,— Hall said.

While Hall doesn’t expect droves of FedEx employees to become unionized, it could give their employees more leverage against recent cost-cutting measures like pay cuts and loss of pension benefits.

The machinist union’s vice president Rich Michalski agrees.

“This isn’t about giving us a chance to organize, this is about putting everything back in perspective and back under the law the way it belongs,— Michalski said.

While the House easily passed the measure, it is likely to face more scrutiny in the Senate. The provision was part of the 2007 FAA reauthorization that languished in the Senate.

Still, Hall said he is optimistic about the chance for passage this time.

“I think it has a much better chance than it has ever had before,— Hall said.

In addition to ramping up their own lobbying activity, the Teamsters will be looking to other labor unions to help push the measure forward, according to Hall.

That doesn’t scare FedEx. The company plans to lobby full tilt against UPS. While the companies have come together on previous legislation, this appears to be the breaking point on any cooperation in the future.

“Our relationship is going to be much different going forward after UPS has gone to Congress to fix this. That offends our belief in competition,— Lane said.

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