One of the problems the Postal Service will have in selling the contract with the American Postal Workers Union is the number of new members of Congress with limited understanding regarding the impact of differences in labor law between the law covering the Postal Service and either the National Labor Relations Act or the Railway Labor Act. In addition many members of Congress will find it difficult to understand why the Postal Service did not take the approach that Wisconsin Governor Walker took with public employees, or President Reagan took with air traffic controllers.
The Postal Service did not have the option to decertify the union as President Regan did as members of the APWU never stopped working after the contract expired. Nor could the Postal Service unilaterally force cuts in compensation as it is not in a legal position that would allow it to break existing contracts and impose contract terms that it would prefer. A good summary of the negotiation process has been provided by the Postal Service.
Better comparisons are recent negotiations between the Teamsters and both United Parcel Service and Yellow Roadway working under the Labor Relations Act and Conrail that had to renegotiate under the Railway Labor Act. The following is a brief review of what happened in each of these three examples.
Over the past two decades, United Parcel Service has faced increased competition from FedEx with underfunded multiemployer pension plans sitting over its head. It took a strike in 1997 over the pension issue but eventually had to concede its demand for pension and other contract changes. Its concessions came once UPS management recognized that the strike gave FedEx an opportunity to prove that FedEx Ground was a credible competitor to UPS Ground service and that the changed perspective would make maintaining marketshare more difficult than before the strike began. UPS changed its approach to working with its union over the next decade which resulted in a contract in 2007 that allowed UPS to withdraw from the largest underfunded multiemployer plan and make important changes in work-rules and wages that made its operating costs competitive with that offered by FedEx even though FedEx provided service through non-union employees and contractors.
Yellow-Roadway has faced a combination of expanded competition of non-union competitors and a major decline in the nationwide transportation in less-than-truckload market that forced it to combine the operations of its two largest LTL subsidiaries and shutter others. It had also been near bankruptcy for most of the last five years. During this period it had to renegotiate terms of loans multiple times and its stock value plummited to near zero. Yellow Roadway renegotiated its Teamsters contract in 2008 under pressure from creditors However, the problem worsened for Yellow-Roadway when the recession hit and its continuing operations required a second round of compensation reductions with the alternative being liquidation of the business. A new round of cuts were negotiated and agreed upon in 2010 in an effort to save the company. During this period the company cut the number of Teamster employees from 40,000 to 25,000. Even these cuts may not be sufficient to prevent bankruptcy as on March 14, Yellow Roadway stated that it failed to meet a creditor milestone that would allow its creditors to demand full repayment of all loans due.
Conrail faced a different problem in its negotiations as the Railway Labor Act created an environment that forced it to maintain existing contract provisions until a new agreement could be signed. It could have declared bankruptcy which would have allowed it to impose new contracts as has occurred among passenger airlines, but at that time its creditors would have demanded liquidation and would not have supported continuing rail operations under any labor agreement. In addition, political opposition to liquidation was significant as liquidation would have had a significant impact on economic activity from St. Louis to Boston disrupting the ability of the automotive, electric utility and other industries that depended on rail freight service to conduct their business as well as the economies of cities in the from Boston to Washington DC that depended on Conrail operated commuter rail to transport employees to work. Conrail was then forced into a period of extended negotiation with its unions primarily over the elimination of workrules and positions that no longer made sense in a world of diesel locomotive engines. It took almost 8 years to get the changes needed to make Conrail profitable which eventually allowed it to be sold to the public in a public offering.
In all three cases, getting the changes neccessary for a company to survive only occurred once employees were convinced that they had no other options but concede. For both UPS and Conrail, it took nearly a decade for the changes to be implemented once they were identified. For Yellow-Roadway, it took less time but the final concession occurred only after multiple reductions in Yellow-Roadway's Teamster employees and the threat of liquidation and loss of all jobs hung over union members' heads.
The Postal Service is in a financial position similar to Yellow-Roadway and a competitive posistion that is closer to what faced both United Parcel Service and Conrail. Finally, in terms of labor-management relationships, the agreement process has significant similarities to how the Teamsters worked together with UPS, and Yellow Roadway to convince members to accept and implement contract changes.
While its financial position puts it on the brink of default on its obligations to its creditors, creditors have not threatened liquidation like Yellow-Roadway creditors did.
By eliminating liquidation as an option, the Postal Service is in a position similar to Conrail and must negotiate a contract without the ultimate threat over negotiators from its unions. The Postal Service is in a better position than Conrail as the threat of binding arbitration, even under current rules forces a time limit to negotiations and existing contract terms.
The Postal Service's position is similar to United Parcel Service as the Postal Service would be hurt by any shut downs, or even slowdowns due to a work-to-rule environment just like United Parcel Service's competitive position was hurt by taking a hard line accepting a strike in 2007.
The Postal Service's decision to come to negotiate an agreement rather than having one imposed by an arbitrator makes selling changes that would have been included in an imposed agreement easier as the APWU will act a willing partner in implementation, a position that it would not have taken as willingly if similar contract provisions were imposed. As a partner in implementation, APWU is acting in a manner similar to the Teamster which worked closely with members to explain why changes were required and why changes were best in the long-term interest of employees at UPS and Yellow-Roadway as well as working with UPS and Yellow Roadway to design and implement changes.
Showing posts with label PRA. Show all posts
Showing posts with label PRA. Show all posts
Tuesday, March 15, 2011
Thursday, February 18, 2010
Walking Between the Law and Disaster
The Postal Regulatory Commission held its public forum on the Postal Service's Annual Compliance Review (ACR) yesterday. The tenor of the discussion suggests that the Commission facing the challenge in this proceeding of walking the fine line between the law and disaster.
Simply put, the ACR proceeding raises two questions relating to the law.
The first question raises the question about both service quality and postal finances. As service quality in transportation firms often depends on both efficient operations and financial strength focusing on the financial issues raised by this question is sufficient for understanding the challenge facing the PRC.
During the public forum no party other than the Public Representative directly indicated that they understood that the Postal Service did not generate sufficient revenue in 2009 to maintain financial stability. Most parties requested that the PRC take the long view in looking at the question of financial stability. This focus hinted that most parties believe that the Postal Service's business plan did provide service at a sufficiently efficient level to ensure that current rate levels generated adequate revenues to cover operating and legislatively mandated costs and generate retained earnings sufficient to maintain financial stability.
This sentiment is consistent with the public statements of the Postal Service's CFO Joe Corbett who stated in an interview with the Federal Times, "We will need [some assistance from Congress] or we will have difficulty paying all of our obligations this year. And going into next year, we might not have enough cash to operate. ... We are dangerously close to running out of cash."
If the Postal Service is insolvent, as the Federal Times headline implies, then by definition the Postal Service is not sufficiently efficient and does not generate sufficient revenue to maintain financial stability. While the pension and retiree health care issues affect the question of financial stability the PRC is faced with the challenge of making a determination on this issue prior to any action by Congress. Furthermore, the Postal Service has numerous other operating and market challenges that threaten its financial stability that go beyond its retiree benefit issues.
Given the information available to the Commission, both on the record and in the public domain, it may have little choice but to come to the same conclusion that CFO Corbett and the Government Accountability Office have drawn, that it is not now a financially stable enterprise. This question then forces it to address the second question listed above.
What actions can or should the Postal Regulatory Commission take?
The Public Representative has presented a serious, but highly unpopular proposal to deal with the issue of financial stability. It proposed that the Commission order the Postal Service institute rate increases in 2010 and 2011 that would cumulatively raise rates between a 6.3% and 21.2%. The public representative noted that these increases would only return the Postal Service to break even. In a recent post, I noted that a more realistic proposal that included retained earnings could raise rates between 25% and 42.6%.
The prospect of such large rate increases, clearly have large mailers concerned and created a conundrum for the Commission. Large rate increases raise the possibility that large rate increases now would accelerate the diversion of mail to digital alternatives, worsening the prospects of financial stability in 2011 and beyond. (Further study is needed to understand how rates, convenience of recipients, or communication cost-effectiveness drive the switch to digital delivery.)
Commissioner Dan Blair, in his comments raised procedural concerns that the ACR review could turn into a mini rate case. His concerns reflect the intent of the PAEA to generally eliminate the traditional processes of setting postal rates.
So what options do he and other Commissioner's have if they join the consensus that the Postal Service is nearly insolvent? It is this question that inspired the title of this post, "walking the line between the law and disaster."
In my view, the Commission can walk this line if it focuses less on the obvious, the Postal Service's near insolvency. Instead, it should use the ACR Review to advance a framework for discussing the options available to make the Postal Service a financially stable enterprise. Then, the Commission would provide the Postal Service, postal stakeholders, and Congress a method to understand the financial impact of current law and how that law may need to change to create a financially stable enterprise. To that end, I would suggest that parties to the proceeding and the Commission focus on answering or at least asking the following questions.
Simply put, the ACR proceeding raises two questions relating to the law.
- Did the Postal Service's ACR filing show that it complies with the requirements of 39 U.S. Code to 1) provide prompt, reliable, and efficient services to patrons in all areas[39 U.S.C. § 101 (a)] ; and 2) "to assure adequate revenues, including retained earnings, to maintain financial stability?" [39 U.S.C. § 3622(b)(5)].
- If it did not, what actions can or should the Postal Regulatory Commission take?
The first question raises the question about both service quality and postal finances. As service quality in transportation firms often depends on both efficient operations and financial strength focusing on the financial issues raised by this question is sufficient for understanding the challenge facing the PRC.
During the public forum no party other than the Public Representative directly indicated that they understood that the Postal Service did not generate sufficient revenue in 2009 to maintain financial stability. Most parties requested that the PRC take the long view in looking at the question of financial stability. This focus hinted that most parties believe that the Postal Service's business plan did provide service at a sufficiently efficient level to ensure that current rate levels generated adequate revenues to cover operating and legislatively mandated costs and generate retained earnings sufficient to maintain financial stability.
This sentiment is consistent with the public statements of the Postal Service's CFO Joe Corbett who stated in an interview with the Federal Times, "We will need [some assistance from Congress] or we will have difficulty paying all of our obligations this year. And going into next year, we might not have enough cash to operate. ... We are dangerously close to running out of cash."
If the Postal Service is insolvent, as the Federal Times headline implies, then by definition the Postal Service is not sufficiently efficient and does not generate sufficient revenue to maintain financial stability. While the pension and retiree health care issues affect the question of financial stability the PRC is faced with the challenge of making a determination on this issue prior to any action by Congress. Furthermore, the Postal Service has numerous other operating and market challenges that threaten its financial stability that go beyond its retiree benefit issues.
Given the information available to the Commission, both on the record and in the public domain, it may have little choice but to come to the same conclusion that CFO Corbett and the Government Accountability Office have drawn, that it is not now a financially stable enterprise. This question then forces it to address the second question listed above.
What actions can or should the Postal Regulatory Commission take?
The Public Representative has presented a serious, but highly unpopular proposal to deal with the issue of financial stability. It proposed that the Commission order the Postal Service institute rate increases in 2010 and 2011 that would cumulatively raise rates between a 6.3% and 21.2%. The public representative noted that these increases would only return the Postal Service to break even. In a recent post, I noted that a more realistic proposal that included retained earnings could raise rates between 25% and 42.6%.
The prospect of such large rate increases, clearly have large mailers concerned and created a conundrum for the Commission. Large rate increases raise the possibility that large rate increases now would accelerate the diversion of mail to digital alternatives, worsening the prospects of financial stability in 2011 and beyond. (Further study is needed to understand how rates, convenience of recipients, or communication cost-effectiveness drive the switch to digital delivery.)
Commissioner Dan Blair, in his comments raised procedural concerns that the ACR review could turn into a mini rate case. His concerns reflect the intent of the PAEA to generally eliminate the traditional processes of setting postal rates.
So what options do he and other Commissioner's have if they join the consensus that the Postal Service is nearly insolvent? It is this question that inspired the title of this post, "walking the line between the law and disaster."
In my view, the Commission can walk this line if it focuses less on the obvious, the Postal Service's near insolvency. Instead, it should use the ACR Review to advance a framework for discussing the options available to make the Postal Service a financially stable enterprise. Then, the Commission would provide the Postal Service, postal stakeholders, and Congress a method to understand the financial impact of current law and how that law may need to change to create a financially stable enterprise. To that end, I would suggest that parties to the proceeding and the Commission focus on answering or at least asking the following questions.
- What financial goals indicate financial stability for the Postal Service? We know that a financially insolvent Postal Service cannot pay its bills. We know that accounting break-even does not produce financial stability under any financial management theory. We do not know what financial goals a financially stable Postal Service should have, if accounting break-even is no longer appropriate. Nearly all foreign posts have addressed this question first in examining reform of their postal policy. Postal policy in the United States has never addressed this question.
- What level of retained earnings is sufficient? Under the Postal Reorganization Act, accounting break-even was considered sufficient. The 3-year rate cycle, combined by actions of Congress resulted in the Postal Service having almost no retained earnings. In the near term, the Postal Service will soon need to end deferment of capital projects and maintenance, and improving operating efficiency will require capital expenditures to reduce the number of facilities and locate these facilities in locations that promote both cost efficiency and better service quality, transition costs to reduce the workforce at a rate at least equal to the impact of new technology and reduced mail volumes. All of these actions cost money and there is no information on how much it would or could cost or the level of earnings necessary to implement these plans.
- What impact do restrictions on capital have on postal efficiency and service quality? Currently capital spending is limited to what cash is available. The ability of any enterprise to rightsize its operations in the face of changing demand depends on the capital available to restructure its operations and provide incentives for excess employees to leave. Showing how capital constraints are linked to cost efficiency and service quality could provide Congress with a better understanding as to how serious the current situation truly is.
Saturday, January 30, 2010
Taking Control of the Board of Governors
My first reaction to President Obama's announcement of his intention to appoint Paul Steven Miller and Dennis J. Toner to the Postal Service Board of Governors was that the appointments violated the spirit if not the letter of the Postal Accountability and Enhancement Act (PAEA). The PAEA modified the qualifications for the Board of Governors to add the requirement that at least four members Board "shall be chosen solely on the basis of their demonstrated ability in managing organizations or corporations (in either the public or private sector) that employ at least 50,000 employees." 39 US Code Sec. 202 (a)(1) Neither of the two appointees have that experience..
Both of these proposed appointments meet all other requirerments for the Board of Governors. They clearly have substantial experience in "experience in the field of public service, law or accounting."
The current Board of Governors currently has one member with significant experience managing businesses or large organizations. Louis J. Giuliano, Chairman of the Board of Governors is the former CEO and President of ITT Corp. Retiring Governor Carolyn Lewis Gallagher was the President and Chief Executive Officer of Texwood Furniture, Inc., a manufacturer of educational furniture, but it is unclear whether Texwood had 50,000 employees. The experience of all of the other Governors, including the experience of the two nominees, is in law or public service. The Senate may need to ask the administration how it plans to increase the number of governors with the appropriate management experience to 4 members.
The two appointees do differ from the current board in one important respect that buttresses their case for appointment to the Board of Governors. They have close personal and professional relationship with the White House. Mr. Miller spent the past year working in the White House. Mr. Toner has spent 30 years on the Senate staff of Vice President Biden including ten years as Deputy Chief of Staff. The close ties suggest that the Obama Administration feels that it must take a more "hands-on" approach in dealing with the problems facing the Postal Service. This is clearly different from the benign neglect that has characterized the postal policy of most Presidents since the passage of the Postal Reorganization Act.
In making these appointments, the Obama administration is taking seriously the federal government's role as the primary creditor and only shareholder of the Postal Service. These appointments are not much different than what happened at GM, Chrysler, and AIG when the Federal Government traded loans for shares and made appointments to the boards of these companies. Their appointments also suggest the administration may require changes in the size of the existing board in order to speed changes at the Postal Service, as a condition for changing the formula used to calculate the pension and retiree health care benefits of the Postal Service.
These appointees clearly will join the Board of Governors with the goal of putting the Obama administrations imprint on both senior management and strategic thinking at the Postal Service. They will likely bring to the board ideas for turning around the financial position of the Postal Service, including those that require changes in the business model and regulatory framework, that were developed outside the confines of L'enfant Plaza. It is possible that they may put significant pressure on existing senior management at the Postal Service to speed up the pace of change or risk the fate of Fritz Henderson, the former chairman of General Motors.
In the coming weeks, Senators and their staff will vet these two nominees and eventually hold hearings on their appointment. This process provides the Senate with a clear opportunity to determine the Obama administration's approach to postal policy and its current thinking about the Postal Service's challenges. It is an opportunity that the Senate cannot afford to pass.
Both of these proposed appointments meet all other requirerments for the Board of Governors. They clearly have substantial experience in "experience in the field of public service, law or accounting."
The current Board of Governors currently has one member with significant experience managing businesses or large organizations. Louis J. Giuliano, Chairman of the Board of Governors is the former CEO and President of ITT Corp. Retiring Governor Carolyn Lewis Gallagher was the President and Chief Executive Officer of Texwood Furniture, Inc., a manufacturer of educational furniture, but it is unclear whether Texwood had 50,000 employees. The experience of all of the other Governors, including the experience of the two nominees, is in law or public service. The Senate may need to ask the administration how it plans to increase the number of governors with the appropriate management experience to 4 members.
The two appointees do differ from the current board in one important respect that buttresses their case for appointment to the Board of Governors. They have close personal and professional relationship with the White House. Mr. Miller spent the past year working in the White House. Mr. Toner has spent 30 years on the Senate staff of Vice President Biden including ten years as Deputy Chief of Staff. The close ties suggest that the Obama Administration feels that it must take a more "hands-on" approach in dealing with the problems facing the Postal Service. This is clearly different from the benign neglect that has characterized the postal policy of most Presidents since the passage of the Postal Reorganization Act.
In making these appointments, the Obama administration is taking seriously the federal government's role as the primary creditor and only shareholder of the Postal Service. These appointments are not much different than what happened at GM, Chrysler, and AIG when the Federal Government traded loans for shares and made appointments to the boards of these companies. Their appointments also suggest the administration may require changes in the size of the existing board in order to speed changes at the Postal Service, as a condition for changing the formula used to calculate the pension and retiree health care benefits of the Postal Service.
These appointees clearly will join the Board of Governors with the goal of putting the Obama administrations imprint on both senior management and strategic thinking at the Postal Service. They will likely bring to the board ideas for turning around the financial position of the Postal Service, including those that require changes in the business model and regulatory framework, that were developed outside the confines of L'enfant Plaza. It is possible that they may put significant pressure on existing senior management at the Postal Service to speed up the pace of change or risk the fate of Fritz Henderson, the former chairman of General Motors.
In the coming weeks, Senators and their staff will vet these two nominees and eventually hold hearings on their appointment. This process provides the Senate with a clear opportunity to determine the Obama administration's approach to postal policy and its current thinking about the Postal Service's challenges. It is an opportunity that the Senate cannot afford to pass.
Monday, December 14, 2009
Congress and the Postal Service
The United States Postal Service is unique among publicly-owned postal operators in that no executive department has the "shareholder." responsibility for the enterprise. By default, this responsibility has fallen on Congress. Since the passage of the PRA, Congress has tended to downplay its shareholder role which has resulted in Congressional actions that undermine the competitiveness of the Postal Service and the value of the enterprise.
The problem with Congress reflects the inherent conflict between its interest in the Postal Service as shareholder and its institutional interest in reelection. As such, the Postal Service has frequently become a tool to help balance the Federal Budget, with these actions constantly weakening the financial position of the Postal Service. (See. USPS-OIG white paper, Federal Budget Treatment of the Postal Service) Other actions reflect institutional interests in serving constituent groups that could be affected by postal business strategies, many times to the detriment of the enterprise.
The Postal Service has not helped its shareholder see these conflicts as its business strategy has been opaque to even many seasoned observers. Its current strategy focusing on reducing costs by reducing retail locations and delivery days raise this question again. As the observer, Rag Content notes:
A similar question is now being raised by shareholders by another troubled enterprise, General Electric. General Electric, a diversified financial, manufacturing, and entertainment company, has gone through probably the worst year in the company's history. The company had to take funds from TARP funds to shore up its financial unit and has sold nearly $10 billion in assets and slashed its dividend by two-thirds in order to improve its liquidity.
Now shareholders are looking for a clearer picture of how General Electric will earn a competitive return on investment dollars going forward. A recent Bloomberg News story covering General Electrics upcoming December 15,2009 shareholders meeting illustrates how involved shareholders think about a company with an unclear business plan.
The shareholder of the Postal Service needs to ask the same types of questions that the shareholders of General Electric are asking GE's management.
The problem with Congress reflects the inherent conflict between its interest in the Postal Service as shareholder and its institutional interest in reelection. As such, the Postal Service has frequently become a tool to help balance the Federal Budget, with these actions constantly weakening the financial position of the Postal Service. (See. USPS-OIG white paper, Federal Budget Treatment of the Postal Service) Other actions reflect institutional interests in serving constituent groups that could be affected by postal business strategies, many times to the detriment of the enterprise.
The Postal Service has not helped its shareholder see these conflicts as its business strategy has been opaque to even many seasoned observers. Its current strategy focusing on reducing costs by reducing retail locations and delivery days raise this question again. As the observer, Rag Content notes:
The potential impact of changing operations is something the Postal Service seems to be doing without much thought to its customer base these days. As it hides behind the line - matching resources to revenue, it continues to downsize its operations from closing post offices to reducing the remittance mail processing on Sundays in some locations to its AMP consolidation effort. The post office closing is the only docket open before the Postal Regulatory Commission at the moment, yet every change the Postal Service is making operationally affecting its ability to provide uniform service throughout the country.
A similar question is now being raised by shareholders by another troubled enterprise, General Electric. General Electric, a diversified financial, manufacturing, and entertainment company, has gone through probably the worst year in the company's history. The company had to take funds from TARP funds to shore up its financial unit and has sold nearly $10 billion in assets and slashed its dividend by two-thirds in order to improve its liquidity.
Now shareholders are looking for a clearer picture of how General Electric will earn a competitive return on investment dollars going forward. A recent Bloomberg News story covering General Electrics upcoming December 15,2009 shareholders meeting illustrates how involved shareholders think about a company with an unclear business plan.
General Electric Co. Chief Executive Officer Jeffrey Immelt says a financial crisis like the one he faced this past year often demanded action first and explanations later. Later is now, investors say.
“People want them to do a better job explaining what the return hurdles are for the businesses going forward,” said Mark Demos, who helps manage $19.8 billion at Fifth Third Asset Management in Minneapolis. “GE has a mixed track record on putting capital to work over the past five years.”
The shareholder of the Postal Service needs to ask the same types of questions that the shareholders of General Electric are asking GE's management.
- What is your long-term strategy to ensure a commercially viable, and more importantly self sufficient enterprise?
- How do short-term cost cutting efforts affect that long-term strategy?
- What is the long-term business strategy that the changes identified in the Postal Service's business model paper support?
- Is that strategy financially viable and what risks could derail its viability?
- How much capital and cash is needed to execute that strategy?
- If existing capital and cash is not sufficient, what is your strategy to raise more capital?
- What are the risks to the shareholder and the existing holders of Postal Service debt and other unfunded obligations?
Sunday, November 15, 2009
USPS, UPS, FedEx Express and the RLA
The choice of labor law (Postal Reorganization Act (PRA) vs. National Labor Relations Act (NLRA) vs. Railway Labor Act (RLA)) going forward for the USPS may not be clear, FedEx has a clear preference for keeping the FedEx Express Service under the provisions of the RLA. FedEx Express's current position under the action has been under attack by United Parcel Service and the Teamsters who would prefer that that FedEx Express status be changed so that it would be covered under the NLRA.
The change is currently included in HR915, the House version of the FAA Reauthorization Act. This would make it easier for the Teamsters, or any other union, to organize FedEx Express employees. The Teamsters, UPS and FedEx have run aggressive lobbying campaigns. Both UPS and FedEx have courted support from various interest groups that received extensive coverage by Politico last summer.
UPS's position is clearly presented on its website. FedEx, in addition to posting its position on its site, has run a numerous set of web-ads (that may have appeared on television in Washington DC) making its position as a satire of UPS's white-board ads.
The future of this fight over FedEx Express's status, and the labor law under which it operates will depend upon action in the Senate on the FAA reauthorization bill and a possible House-Senate conference to follow. Aviation News has reported that further congressional actions is unlikely this year, so this fight will carry on into the 2nd session of the 111th Congress.
What this fight shows is that the RLA provides advantages to non-unionized firms in their effort to stop organizing efforts. As the employees of the Postal Service and UPS are both unionized, this advantage for management has little value to them. For these firms, preference for operating under the RLA, NLRA, or PRA would depend on whether they believe that the negotiating process under the RLA is better or worse than what they now have. Unions representing UPS and the Postal Service have to ask the same question.
Market-dominant airlines and railroads have had significant challenges adjusting labor contracts to fit new competitive environments and new transportation technologies under the RLA. This should caution management of market-dominant unionized firms facing a changing competitive landscape of using the RLA as a model for labor law in their industry. UPS and Postal Service unions should be equally cautious as less is known about how the RLA negotiation process may have helped or hurt airline and railroad employees dealing with an industry in transition.
The change is currently included in HR915, the House version of the FAA Reauthorization Act. This would make it easier for the Teamsters, or any other union, to organize FedEx Express employees. The Teamsters, UPS and FedEx have run aggressive lobbying campaigns. Both UPS and FedEx have courted support from various interest groups that received extensive coverage by Politico last summer.
UPS's position is clearly presented on its website. FedEx, in addition to posting its position on its site, has run a numerous set of web-ads (that may have appeared on television in Washington DC) making its position as a satire of UPS's white-board ads.
The future of this fight over FedEx Express's status, and the labor law under which it operates will depend upon action in the Senate on the FAA reauthorization bill and a possible House-Senate conference to follow. Aviation News has reported that further congressional actions is unlikely this year, so this fight will carry on into the 2nd session of the 111th Congress.
What this fight shows is that the RLA provides advantages to non-unionized firms in their effort to stop organizing efforts. As the employees of the Postal Service and UPS are both unionized, this advantage for management has little value to them. For these firms, preference for operating under the RLA, NLRA, or PRA would depend on whether they believe that the negotiating process under the RLA is better or worse than what they now have. Unions representing UPS and the Postal Service have to ask the same question.
Market-dominant airlines and railroads have had significant challenges adjusting labor contracts to fit new competitive environments and new transportation technologies under the RLA. This should caution management of market-dominant unionized firms facing a changing competitive landscape of using the RLA as a model for labor law in their industry. UPS and Postal Service unions should be equally cautious as less is known about how the RLA negotiation process may have helped or hurt airline and railroad employees dealing with an industry in transition.
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