FedEx plays hardball with Uncle Sam
Today's Financial News - Posted March 24, 2009
FedEx (NYSE:FDX) is desperate to keep unions from destroying its bottom line. If Washington gets its way, the company may be out of luck. With billions of dollars at risk, no wonder the company is preparing for a nasty fight.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): If you ever needed proof that the government’s constant desire to meddle in the world of business is detrimental to Wall Street, this is it.
We have all heard about the current administration’s support of the nation’s labor unions. Groups like the Teamsters and the UAW helped get Obama to Washington. Now it looks like he will do his best to pay them back.
But if companies like FedEx (NYSE:FDX) get their message across, Obama may have to rethink its plans. The package transporter is playing economic hardball.
There is legislation currently pending in Congress that would make it much easier for FedEx employees to organize a union. Instead of being regulated by Railway Labor Act standards, Washington wants to shift FedEx’s employee oversight to the National Labor Relations Board. It means workers will have a much easier route to organizing a profit-busting union.
Billions on the line
Knowing that a union will most certainly have a negative impact on the company’s bottom line and “strangle” its ability to grow, FedEX is preparing for the worst and doing all it can to pressure Washington into tossing the legislation.
The effects of its maneuvering will be felt throughout the economy. But no company may feel it as hard as Boeing (NYSE:BA). That is because FedEx recently told the plane manufacturer it will not purchase the 15 cargo plans it intends to if Congress makes the regulatory changes.
With a price tag of over $250 million each, Washington’s political pandering could cost Boeing over $3.7 billion in lost revenues. That loss comes at the worst possible time, when airlines across the globe are canceling orders and scaling back capital spending.
Our so-called leaders will justify this legislation by saying it is needed to save the nation’s middle-class or to protect us from runaway greed, but when we dig right down to it, we all know what it is about. Votes are worth a lot of money these days.
To Boeing and FedEX, those votes could be worth several billion dollars in lost revenues.
Next Article: Note to America: Keep on truckin’
4 Responses to “FedEx plays hardball with Uncle Sam”
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March 25th, 2009 at 10:09 am
What the article fails to mention is that FedEx’s chief competitor, UPS, falls under the NLRB act and is doing quite well. FedEx has over the past decade trasformed itself into a company that is nearly identical to UPS. They have airplanes and trucks and they move packages. Why shouldn’t FedEx be governed by the same rules that UPS is? It appears that Fred Smith is playing “hard ball” in order to maintain an unfair advantage over it’s closest competitor. I don’t care whether they’re under the NLRB or RLA, just treat both companies the same. Anything else is just wrong!
March 25th, 2009 at 5:37 pm
FedEx is an Airline not a trucking company with air planes.
March 25th, 2009 at 7:49 pm
i think you better take a closer look at the corruption that a union these days entail. They are a business that like to strangle the companies and bring them to a $0.00 balance sheet. Please take a moment and think what the union has done to our automakers. I will never purchase an american vehicle again.
June 10th, 2009 at 3:15 am
So classify UPS under the RLA!