The Brown Bailout guy has a point

Over the past few months you have not been able to go on the Web without running
into the Brown Bailout guy talking about FedEx using airplanes and UPS using
trucks without seeming to make much of a point.

While the ads are lighthearted, the issue is serious. If UPS and the Teamsters
get the FAA Reauthorization amendments that they are lobbying for, Federal
Express will be forced to change its entire business model and may never
recover.

The issue is not that complicated. As everyone knows, Federal Express’s core
business is taking a package from point A to point B guaranteed next-day
delivery. This constitutes about 80 percent of its business, and it relies upon
the dependability of strike-free airline hubs to deliver this service to the
public at a reasonable cost.

Federal Express is an airline that uses vans to finish the job, and as such its
employees have been classified, since the company’s inception in the late 1970s,
as covered under the Railway Labor Act (RLA). When FedEx acquired a ground
trucking company, it separated its express business from its ground business,
incurring the additional expense of having two trucks delivering to the same
location in order to have the certainty provided under the Railway Labor Act
for its core express-delivery business. You see, under the RLA, employees have
to unionize nationally, and cannot have local hub strikes, and the Teamsters
have been unable to unionize Memphis-based FedEx. However, without this local
hub organization prohibition, they might be able to unionize a single hub and
destroy Federal Express’s reliability promise.

In the early 1990s, UPS tried to get all of its employees covered under the
Railway Labor Act as well, but the federal courts and regulators ruled against
it because about 80 percent of UPS’s package traffic goes by truck. Upon
losing the ruling, UPS had a choice: It could separate out its airline business
and have those who work in that business covered under the RLA, or it could
continue with its combined businesses under the National Labor Relations Act.

UPS chose to avoid the extra expense and not split up the company. Now it is
whining to Congress alongside a frustrated Jimmy Hoffa Jr. that the playing
field is not level due to this decision.

While I have always been an admirer of UPS, it seems incongruous for the market
leader in a very lucrative worldwide business to be complaining to Congress
that the playing field is not level due to a business decision that it made
almost 20 years ago and has come to regret.

Ironically, the source of the un-level playing field is the fact that UPS is
unionized, and FedEx isn’t. UPS’s lobbying effort essentially is telling
Congress and anyone else who would listen that the Teamsters are too heavy of a
burden for it to carry alone, and it is unfair that its competitor is not
saddled with Jimmy Hoffa’s boys as well. Hardly a ringing endorsement for Big
Labor, but a telling admission about the significant drag that a union puts on
a company’s ability to compete.

The sad part about this power play is that the FAA Reauthorization has been
held hostage to UPS and the Teamsters’ power play, and some much-needed
upgrades to the air traffic system are not being done due to this attack on FedEx.

Let’s hope that Congress strips this unnecessary bit of corporate warfare out
of the bill when it convenes again in the lame-duck session, or else we might
all be subjected to Mr. Brown Bailout dominating our screens no matter where we
turn for another six months or so.

Rick Manning is the communications director for Americans for Limited
Government, but his posts don’t necessarily reflect the views of that or any
other organization.