FedEx: Could it happen again?
04-26-2015 | 06:56 AM
#11
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From: MD-11 Captain
1995 Red Letter ... Could it Happen Again?
INTER-OFFICE MEMORANDUM
Date: November 16, 1995 To: All FedEx Employees
From: F. W. Smith
RE: Pilot Contract Negotiations
As the 30-day cooling-off period in our contract negotiations with the Air Line Pilots Association (ALPA) nears an end, I think it is important for each of you to clearly understand the position of the Board of Directors and Senior Management of Federal Express on this matter. As you may know, the National Mediation Board has requested that talks resume on Monday and we will be participating in those talks with the goal of reaching a fair and responsible agreement.
We have entrusted the responsibility for representing the company in this process to the FedEx Negotiating Committee. They have done a good job of presenting a series of proposals that meet our objective of reaching a mutually beneficial agreement. The terms and conditions we are proposing are fair and consistent with the balanced approach we have employed in our compensation practices throughout the company. At the same time, we are seeking to correct inefficient and outdated work rules that may have made sense several years ago but no longer fit the FedEx global, multi-hub system. Obviously we realize that not all of our proposals are universally popular. We are simply not in a position to ask our customers to grant any group of employees everything they want, and that is true in this case as well.
The key to our position is the belief that the best thing we can do for our pilots and for all other employees is to grow this company and continue to provide excellent job security. Our pilots are well aware of the opportunities made possible in the last several years as a result of this growth. This growth is totally dependent on two things: reliability and competitiveness. If we can no longer promise our customers reliable, cost-effective service, that growth will slow or stop altogether, with obvious implications to our future.
The Board of Directors and Senior Management will also be making some pivotal decisions as we look to the future and decide how or if we will continue our strategy of growth. If we can no longer count on all of our employees to maintain the promise of reliability to our customers, it is important that we know this now as we decide the direction in which we will take the company.
We are in a tough competitive environment. As I've stated in previous communications, our domestic profit margins have been cut in half in the past five years alone. Though we’ve seen recent improvement in international results, we face increasing competition in that sector as well. Our earnings must grow to fund the needed investment in our future. Yet some competitors are already circulating ALPA’s ads to customers in an attempt to take advantage of the uncertainty created by this situation. You can rest assured that the competition will exploit to the fullest any perceived change in our reputation for reliability and value. Some of our largest accounts have already indicated they may need to look to our competitors if we can no longer promise reliable service. While this is regrettable, we refuse to mortgage our future competitiveness by agreeing to unreasonable demands now.
ALPA's leaders have avoided the fact that our competitors are already putting enormous pressure on our domestic profit margins and are very clearly arming themselves for an all-out offensive on our business, both in the US and abroad. They have ignored the realities of pay cuts and furloughs that pilots at countless other carriers have faced in recent years when confronted with the realities of the marketplace. Yet we know that if we implemented the pilot work rules, pay and benefits of our most profitable competitor we would save almost $40 million per year. Our customers do make comparisons with our direct competitors--UPS, Airborne, DHL, TNT, Polar, Emery and Burlington--and they inevitably choose the company that can deliver reliability and value most effectively.
Had ALPA's negotiators been more realistic in recognizing the competitive pressures we face, I believe we could have progressed more quickly towards an agreement. The latest proposals ALPA's negotiating team submitted before the most recent session of talks broke down would have raised our costs to an unacceptable level, well over $300 million over the three-year term of the agreement. The cost increase ALPA proposes would be more than our entire net income last year, benefiting only 2.5 percent of all employees. To fund such increase, we would have to raise prices to level our customers simply would not accept.
This company is clearly at a crossroads, and each of our pilots faces a pivotal decision as ALPA's leadership calls for them to withhold their services from our customers. In our 22 year history, we have never faced the prospect of a systematic effort to harm our customers. Any actions that ALPA's leaders direct our pilots to take have the potential to permanently damage the company's reputation, a reputation all of us has helped build. It is my personal belief that if our customers no longer feel they can rely on FedEx services, it will affect their competitive choices for years to come.
We fully intend to continue to provide our services to customers during the self-help period. We hope we can depend on the personal support of each employee--including our pilots--as we continue to seek a balanced and mutually beneficial agreement. Clearly, not all of our pilots agree with ALPA's confrontational tactics and all employees should be careful not to generalize about how “all pilots” may feel about this process. In fact, the vast majority of our pilots have continued to serve our customers through volunteering and overtime flying during the negotiating period, and we greatly appreciate their loyalty and support. You should also understand that our resolve is strong and we intend to use all available options under the rules of the Railway Labor Act for any pilot who chooses to engage in job actions.
We fully respect the enormous contributions all of our employees have made to this company over the years, and certainly that includes the pilots who have helped build Federal Express. We appreciate the extra effort and personal sacrifice many of you have made during this negotiation process to maintain reliability to our customers. We remain committed to reaching an agreement that can put these differences behind us and move on to a new chapter in the company's history. Such an agreement must, however, respect the balance between the needs of our pilots, the needs of our other employees and the demands of our customers.
We trust that all pilots will consider the long-term impact of their decisions carefully as they make what will undoubtedly be the most important choices of their professional lives.
04-26-2015 | 06:59 AM
#12
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From: MD-11 Captain
1998 Red Letter ... Could it Happen Again?
INTER-OFFICE MEMORANDUM
Date: November 17, 1998 TO: All FedEx Pilots
From: Frederick W. Smith
Subject: Strike Threat
I am writing to express my extreme disappointment with the actions of the Fedex Pilots Association. The threat of a pilot strike against our customers by FPA has seriously jeopardized our outstanding reputation for reliability and customer service, helped our competitors, and resulted in additional, and unnecessary, operational costs.
For over twenty-five years I have watched with great pride as the employees of FedEx have changed the way the world works. Throughout this Company's existence, its outstanding reputation has never been tarnished in any significant way, except now by the actions of your union.
In 1993 a majority of the pilots elected to withdraw from the People-Service-Profit System and to be represented by a union. That is your legal right, and FedEx has scrupulously honored your decision. FedEx has conscientiously negotiated to develop a contract which fairly compensates the pilot group, but which also recognizes the needs of our customers, our other employees, and our shareowners. On two separate occasions, FedEx has reached an agreement with your legal representatives, only to have both agreements rejected. Some in the pilot group succeeded in defeating both of those agreements with innuendo and distortion. Those actions denied you improvements that would have long since enhanced your compensation and benefits.
You recently have placed your career in the hands of an FPA leadership which has adopted a negotiating strategy which reflects 1) little or no business experience, 2) a poor understanding of the customers and markets which FedEx serves, 3) no analytical capabilities to evaluate negotiating demands, 4) totally unrealistic expectations given the competitive realities of the express market, and 5) an erroneous comparison of pilot issues at FedEx with those at passenger airlines. Additionally, this approach has repeatedly - and deliberately - misrepresented to you, the customers, and the public, the Company's positions throughout this negotiating process.
FedEx has been willing in the past, as demonstrated by our having reached two separate agreements, to improve pilot compensation and benefits in a fair and equitable manner. As an example, FedEx provided an independent analysis of the last offer presented to FPA the week ending October 30th which showed that proposal would have placed FedEx pilots in the top tier of the transport industry. This offer was rejected and FPA demanded over $400 million more! Acceding to these demands would have been imprudent from a business standpoint and manifestly unfair to other employees.
Since that rejection and in order to protect our customers, our other employees and the interests of our shareowners, we have been forced to find ways to continue to operate the system by contracting for a considerable amount of additional transport capabilities, both air and ground. Our customers are already committing an increasing amount of business to our competitors and our wonderful business reputation is being tarnished. Our competitors are making every effort to take advantage of the situation. For example, UPS distributed the following message last week to our customers:
UPS has additional air and ground capacity that can be used to accommodate the needs of domestic and international shippers who may be seeking alternatives in light of the labor situation at Federal Express.
Make no mistake; the Company's offer of October 30th is no longer valid. It is too expensive in view of the contingency plans we have been forced to implement. Moreover, I want you to understand clearly that FedEx has the capability and resolve to compete effectively in the event of a pilot strike and, if necessary, to restructure our aviation operations.
Contracts for supplemental transport aircraft, and other contracts consummated due to the strike threats of FPA, will be honored with the resultant loss of thousands of flying hours for FedEx pilots. Potential fleet additions have been substantially reduced recognizing diminished growth prospects as a result of FPA's actions.
Respecting your decision to be represented by a union, I have not addressed the pilot group directly in many years. I make this exception only to ensure there is no misunderstanding on the part of any FedEx pilot as to the future course of action we will pursue. I regret that there are many fine pilots who are committed to serving our customers and deserving of enhancements to their pay and benefits, but who have not enjoyed those enhancements due to the failed ratification of the previous agreements. I trust whatever career decision you and your family make will therefore have been made with a clear view of the consequences.
In the event of a strike, I will ensure that all available company resources are deployed to protect any pilots who decide to fly for the Company and that FedEx is supplied with sufficient resources reasonably necessary to operate its contingency plans during any strike. When and as appropriate, the details of the arrangements to be made will be communicated to you. Safety, teamwork, and reliability will remain the focus of all pilots operating FedEx aircraft. Accordingly, no intimidation or physical threat to any pilots will be tolerated in the short or long term. Detailed and comprehensive security plans are in place to ensure this.
Let me reiterate that safety must be the number one issue for all FedEx pilots regardless of these unfortunate developments. Flight management will therefore ensure that discussions about politics and economics always remain off our aircraft.
I express again my disappointment with this state of affairs, but I want you to know that our Board of Directors, our senior management team, our other employees, our major shareowners, and the vast majority of our large customers are absolutely resolute on this matter. I think you will also find in the weeks to come, as the other employees deal with the consequences of your actions, there will be unwavering dedication to serving our customers and rebuilding FedEx in the future with or without you.
.
Date: November 17, 1998 TO: All FedEx Pilots
From: Frederick W. Smith
Subject: Strike Threat
I am writing to express my extreme disappointment with the actions of the Fedex Pilots Association. The threat of a pilot strike against our customers by FPA has seriously jeopardized our outstanding reputation for reliability and customer service, helped our competitors, and resulted in additional, and unnecessary, operational costs.
For over twenty-five years I have watched with great pride as the employees of FedEx have changed the way the world works. Throughout this Company's existence, its outstanding reputation has never been tarnished in any significant way, except now by the actions of your union.
In 1993 a majority of the pilots elected to withdraw from the People-Service-Profit System and to be represented by a union. That is your legal right, and FedEx has scrupulously honored your decision. FedEx has conscientiously negotiated to develop a contract which fairly compensates the pilot group, but which also recognizes the needs of our customers, our other employees, and our shareowners. On two separate occasions, FedEx has reached an agreement with your legal representatives, only to have both agreements rejected. Some in the pilot group succeeded in defeating both of those agreements with innuendo and distortion. Those actions denied you improvements that would have long since enhanced your compensation and benefits.
You recently have placed your career in the hands of an FPA leadership which has adopted a negotiating strategy which reflects 1) little or no business experience, 2) a poor understanding of the customers and markets which FedEx serves, 3) no analytical capabilities to evaluate negotiating demands, 4) totally unrealistic expectations given the competitive realities of the express market, and 5) an erroneous comparison of pilot issues at FedEx with those at passenger airlines. Additionally, this approach has repeatedly - and deliberately - misrepresented to you, the customers, and the public, the Company's positions throughout this negotiating process.
FedEx has been willing in the past, as demonstrated by our having reached two separate agreements, to improve pilot compensation and benefits in a fair and equitable manner. As an example, FedEx provided an independent analysis of the last offer presented to FPA the week ending October 30th which showed that proposal would have placed FedEx pilots in the top tier of the transport industry. This offer was rejected and FPA demanded over $400 million more! Acceding to these demands would have been imprudent from a business standpoint and manifestly unfair to other employees.
Since that rejection and in order to protect our customers, our other employees and the interests of our shareowners, we have been forced to find ways to continue to operate the system by contracting for a considerable amount of additional transport capabilities, both air and ground. Our customers are already committing an increasing amount of business to our competitors and our wonderful business reputation is being tarnished. Our competitors are making every effort to take advantage of the situation. For example, UPS distributed the following message last week to our customers:
UPS has additional air and ground capacity that can be used to accommodate the needs of domestic and international shippers who may be seeking alternatives in light of the labor situation at Federal Express.
Make no mistake; the Company's offer of October 30th is no longer valid. It is too expensive in view of the contingency plans we have been forced to implement. Moreover, I want you to understand clearly that FedEx has the capability and resolve to compete effectively in the event of a pilot strike and, if necessary, to restructure our aviation operations.
Contracts for supplemental transport aircraft, and other contracts consummated due to the strike threats of FPA, will be honored with the resultant loss of thousands of flying hours for FedEx pilots. Potential fleet additions have been substantially reduced recognizing diminished growth prospects as a result of FPA's actions.
Respecting your decision to be represented by a union, I have not addressed the pilot group directly in many years. I make this exception only to ensure there is no misunderstanding on the part of any FedEx pilot as to the future course of action we will pursue. I regret that there are many fine pilots who are committed to serving our customers and deserving of enhancements to their pay and benefits, but who have not enjoyed those enhancements due to the failed ratification of the previous agreements. I trust whatever career decision you and your family make will therefore have been made with a clear view of the consequences.
In the event of a strike, I will ensure that all available company resources are deployed to protect any pilots who decide to fly for the Company and that FedEx is supplied with sufficient resources reasonably necessary to operate its contingency plans during any strike. When and as appropriate, the details of the arrangements to be made will be communicated to you. Safety, teamwork, and reliability will remain the focus of all pilots operating FedEx aircraft. Accordingly, no intimidation or physical threat to any pilots will be tolerated in the short or long term. Detailed and comprehensive security plans are in place to ensure this.
Let me reiterate that safety must be the number one issue for all FedEx pilots regardless of these unfortunate developments. Flight management will therefore ensure that discussions about politics and economics always remain off our aircraft.
I express again my disappointment with this state of affairs, but I want you to know that our Board of Directors, our senior management team, our other employees, our major shareowners, and the vast majority of our large customers are absolutely resolute on this matter. I think you will also find in the weeks to come, as the other employees deal with the consequences of your actions, there will be unwavering dedication to serving our customers and rebuilding FedEx in the future with or without you.
.
04-26-2015 | 12:15 PM
#13
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From: Bus driver
''I can't tell you how many, but I know there is a large number of Federal Express pilots committed to providing service to our customers should there be a strike action by our union,'' Theodore L. Weise, Fedex's president and chief executive, said in an interview last week.
FedEx management MBO'd that out of us. It's just a paycheck now.
FedEx management MBO'd that out of us. It's just a paycheck now.
04-26-2015 | 02:58 PM
#14
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''I can't tell you how many, but I know there is a large number of Federal Express pilots committed to providing service to our customers should there be a strike action by our union,'' Theodore L. Weise, Fedex's president and chief executive, said in an interview last week.
FedEx management MBO'd that out of us. It's just a paycheck now.
FedEx management MBO'd that out of us. It's just a paycheck now.
04-26-2015 | 03:27 PM
#15
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Joined: Apr 2006
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From: MD-11 Captain
That absolutely has to be an exaggeration, or maybe he is considering two pilots to be a large number. I don't know a single person here that I think would be a scab. I also doubt (and have the highest of hopes) that we would ever have to strike to achieve a contract. Actually getting us to that point would be a huge failure by the company, as nobody wants to do that.
The 1998 "Red Letter" was sent to pilots after we had taken a strike vote. If I recall correctly ... the ballot had not yet been counted?
Back in those days we still had "NO" (as in NO UNION!) guys and probably only 50% union membership.
We'll never know what would have happened if we had actually gone on strike?
Slow learners?
04-26-2015 | 05:12 PM
#17
"blue collar thug"!
Joined: Nov 2006
Posts: 1,614
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From: A proponent of...
That absolutely has to be an exaggeration, or maybe he is considering two pilots to be a large number. I don't know a single person here that I think would be a scab. I also doubt (and have the highest of hopes) that we would ever have to strike to achieve a contract. Actually getting us to that point would be a huge failure by the company, as nobody wants to do that.
04-26-2015 | 07:35 PM
#19
...Whatever It Is!
Joined: Jul 2006
Posts: 4,680
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The 1998 "Red Letter" was sent to pilots after we had taken a strike vote. If I recall correctly ... the ballot had not yet been counted?
Back in those days we still had "NO" (as in NO UNION!) guys and probably only 50% union membership.
We'll never know what would have happened if we had actually gone on strike?
Slow learners?
Back in those days we still had "NO" (as in NO UNION!) guys and probably only 50% union membership.
We'll never know what would have happened if we had actually gone on strike?
Slow learners?
05-04-2015 | 12:19 PM
#20
Gets Weekends Off
Joined: Sep 2009
Posts: 231
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The 1998 "Red Letter" was sent to pilots after we had taken a strike vote. If I recall correctly ... the ballot had not yet been counted?
Back in those days we still had "NO" (as in NO UNION!) guys and probably only 50% union membership.
We'll never know what would have happened if we had actually gone on strike?
Slow learners?
Back in those days we still had "NO" (as in NO UNION!) guys and probably only 50% union membership.
We'll never know what would have happened if we had actually gone on strike?
Slow learners?
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