FedEx needs you… not the unions
Today's Financial News - Posted June 9, 2009
After a pro-labor Congress took over Washington and the fall of Detroit, the nation’s largest employers are doing all they can to keep unions at bay. FedEx (NYSE:FDX) has unveiled a campaign like no other.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): If you want to run a multi-billion dollar international conglomerate these days, you had better have a few high-ranking friends in Washington. If not, this administration appears ready to do anything and everything it can to wipe you and your shareholders out.
The battle that is brewing between United Parcel Service (NYSE:UPS), FedEx (NYSE:FDX) and Capitol Hill is a perfect example.
While the two companies have business models that are very similar and are direct competitors with one another, their respective labor forces look quite different.
Because it started as an airline, FedEx and its nearly 100,000 hourly workers fall under the rules laid out by the Railroad Labor Act, a law designed to keep the nation’s skies and rails running smoothly despite labor disputes.
But UPS, on the other hand, must follow a different set of rules, the National Labor Relations Act (NLRA). Instead of forcing a synchronized nationwide vote to unionize, the NLRA allows workers to unionize one hub at a time, a much easier task.
Spreading unions like cancer
FedEx obviously knows the horrific damage that could be done to its bottom line if unions start calling the shots. That is why the company is preparing to spend millions of dollars promoting its “Brown Bailout” campaign designed to make current legislation, the FAA Reauthorization Act of 2009, appear to be designed solely to benefit, or bail out, FedEx’s chief rival, UPS.
In addition to the Web site, brownbailout.com, revealed today, get ready to see online ads, radio spots and television campaigns promoting the company’s lobbying initiative.
With few friends willing to fight for FedEx in a labor-friendly Washington, the company is hoping you and I will do some letter writing and phone calling. The company is hoping taxed-out taxpayers will buy the “bailout” message and join FedEx in a political battle.
As investors, FedEx is one to watch. While it is not in full-blown panic mode just yet, the company’s business model is likely about to change in a big way.
Already this year, the company is lagging Big Brown in share price performance. Over the past six months, shares of UPS are down by about 10%. Meanwhile, FedEx has lost over 20% of its value.
If union bosses start calling the shots and FedEx loses access to its cheap labor force, expect the divergence to grow even larger. There is a reason FedEx is spending billions and fighting so hard. It has a lot to lose.
As I told TFN Strategic Trader subscribers this morning, the market as a whole is a dangerous short position right now, but there are select stocks well worth selling now and buying later.
FedEx is a strong candidate.
A rough economy, surging fuel prices and political headwinds could stir big trouble.
Next Article: Small-cap fight of the week: Sonic steps into the ring
3 Responses to “FedEx needs you… not the unions”
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June 9th, 2009 at 11:10 am
You can view UPS’s response to this issue @ http://pressroom.ups.com/landing/0,2111,101,00.html
July 22nd, 2009 at 8:54 pm
There is no clear explanation of benefits either way for the most important two components of this fiasco – lower level employees and the consumer. If there is no positive, and I am not meaning a dollar pay raise (offset by new union dues … duh..) or lower prices for customers. More money manipulating by higher level executives both company and on the union side to make sure they secure same or higher salaries in a tough time for the little guys: lower level employees (making under 30K/customer) if you ask me. But they won’t ask me cause a fair solution/answer would come out. All BS for monopolies or rich to get richer and hand the ACTUAL workforce pennies and save consumer nickels. Both companies need a reform like our health insurance situation. Nobody is happy with it honestly except the big boys who many times think it is a big game. Shame …
July 22nd, 2009 at 9:13 pm
Where do union dues go anyway … marble floors and private limos. There are fairness and ethics flaws all over the place. Unions don’t enforce performance based initiatives in order to support fair treatment of all laborers. For example if two drivers work 9 hours and one delivers 100 packages and the other delivers 50 it all is just treated as 9 hours. Non-union labor can be manipulated also as goals can be altered or unrealistic so raises become unlikely although market share of business may rise. Real workers and people who have really worked want performance based not education and who you know based. No one can really trust anyone to do what is fair these days because the majority is ready to watch the other suffer in an effort for money, profit, control, more security and comfort. “If we do this fairly I will only make 300,000 this year and not 330,000 ” said the exec. Pres Obama is going to have a near impossible task of making people see the big picture over individual and special interest-group benefits. His intentions are too “right” for America. Poor man, but bless his heart and soul for wanting to see everyone successful. I dream of a place where the Really Really good hearted people could live and work. This is not the place, but it is home so we deal with it. True but still BS.