Jane Roberts article on FedEx talks...

A300Capt

Freight Dawg
FedEx, pilots talking contract
Tough negotiation reminiscent of '99

By Jane Roberts
Contact
March 4, 2004

FedEx Express and its 4,100 pilots opened contract negotiations
Wednesday on a stage likely as contentious as the last round five years ago.

While neither side would discuss specifics of the all-day meeting, key
concerns for the pilots are quality of life issues, pay and the security of
their pension plans.

"The overwhelming issues are going to revolve around addressing work
rules," said David Webb, chairman of the FedEx unit of the Air Line Pilots
Association.

Among other things, the rules determine how many days a month pilots
are required to work and how many additional days they may be called in.

The No. 2 issue is pay.

The average FedEx pilot makes $167,000 a year and works 13 days a
month, according to data provided by FedEx.

The average household income in the United States is $42,409; in
Memphis, it was $63,680, according to the 2000 Census.

While the economic environment seems to be improving, analysts doubt
FedEx is in any mood to be generous with its only unionized labor group.

"The price of fuel is eating up what might have gone to labor," said
Michael Boyd, principal of the Boyd Group, an aviation consulting firm in
Evergreen, Colo. "FedEx is going to have a difficult time entertaining
anything that says higher costs."

In 2003, revenues at FedEx Express surpassed $16.3 billion, up more
than 6 percent from 2002. But operating income since 2001 has dropped more
than 7 percent as the delivery giant grapples with decreasing demand for its
domestic Express business and double-digit increases in fuel and maintenance
costs.

"The last time the pilots threatened to walk, Fred Smith told them
very eloquently 'You walk, I'll replace you,' " Boyd said.

He doubts it's possible now, even though about 10,000 pilots are
available for work, many on furlough from passenger lines.

Because new hires start at the bottom of the seniority scale, Kit
Darby, head of pilot consulting service Air Inc., doubts a pilot surplus
will have any impact on negotiations.

"They don't fly the same planes, and they all would have to be
trained, which is very expensive," he said.

While cargo carriers have not suffered nearly as much as passenger
carriers since 9/11, they have been affected by the general downturn in the
economy.

"Stress on the industry certainly has gotten the pilots' attention
that things are bad in some places," Darby said.

Most passenger carriers have cut their pilot numbers by double digits
since 1999. US Airways leads with nearly a 29 percent reduction; Continental
and United follow with cuts of more than 14 percent.

"The good news is that boxes are not afraid to get on airplanes; boxes
aren't hassled by security; and boxes don't get sick with SARS," said Darby,
who compares the first days of labor negotiations to chickens "throwing dirt
in the air. . . . The openers on both sides at best are wish lists."

The problem the sides have had in the past, including a vote to strike
in 1998, is lack of trust, Darby said.

"The way to make a deal is to find some way to build consensus," which
usually happens through good information, he said. "What's offered can be
negotiated, assuming you understand where you are in relation to others."

Neither side has any idea how long the talks will last. FedEx has
cleared pilots on the negotiating committee from assignments through the end
of the year.

"The length of the talks really depends on if FedEx walks in looking
for concessions," Webb said. "The average pilot does not believe FedEx needs
or can justify any concessions."

- Jane Roberts:
 

mtsu_av8er

Well-Known Member
[ QUOTE ]
The No. 2 issue is pay.

The average FedEx pilot makes $167,000 a year and works 13 days a
month, according to data provided by FedEx.

The average household income in the United States is $42,409; in
Memphis, it was $63,680, according to the 2000 Census.

[/ QUOTE ]

Did anybody notice how they sqeezed that in there?
 

tonyw

Well-Known Member
[ QUOTE ]
Did anybody notice how they sqeezed that in there?

[/ QUOTE ]

Of course they did. And as usual, they fail to mention that the FAA limit on hours is 100 per month and 1,000 per year.

Just once, I'd like to see that go in there. I'm not holding my breath.
 

Derg

New Arizona, Il Duce/Warlord
Staff member
Standard, but they didn't mention that the person who earns $63K in MEM probably has a low risk job where he can have a bad day and not end up in a body bag, couldn't pass the physical and probably spends most nights in the comforts of his own home instead of 12-day trips.
 

danielsexton

Well-Known Member
[ QUOTE ]
Standard, but they didn't mention that the person who earns $63K in MEM probably has a low risk job where he can have a bad day and not end up in a body bag, couldn't pass the physical and probably spends most nights in the comforts of his own home instead of 12-day trips.

[/ QUOTE ]

I know this post is kind of old but for some reason I was thinking of it today. Not only did they not mention what Doug said they didn't mention that FRED SMITH made 2.67 million last year, WOW that’s a lot more than $63k an average citizen in Memphis is making or the "average" pilot pay of 163k, and I wonder how many days/hours a month Fred works.

Here's More:

Alan Graf, CFO, 1.35m + 1.58m stock
David Bronczek, Ceo Express, 2.09m + 1.42m stock
Daniel Sullivan, Ceo Ground, 2.82m + 579k stock

A lot of people at FedEx are living awful high on the hog to be complaining about a 163k salary, and again I bet none of them work the kind of hours there pilots due.
 

b_r

New Member
If you're looking at execs, don't forget the sweet perks of exercising your options! Now I don't know these guys from adam, and I'm not saying they haven't worked hard for it, or don't deserve it, yada yada...

Let's take a look at some of the insider (legal) cash-ins that took place last year. (Taken from yahoo finance)

David Bronczek
2003-10-16 30,000 shares=@$2,215,000

Daniel Sullivan
2003-10-08 20,000 shares=@$1,350,000
2003-07-22 20,000 shares=@$1,313,000

And the winner has got to be Garrison Sheridan--who he is, I have no idea, but this is what he got last year:

2003-02-12 500,000 shares=@$25,141,500
2003-08-14 53,800 shares=@$3,609,000

I don't know if he did or not, but late 2003 he announced another planned sale that should net ANOTHER $22M and some change.

That seems like a pretty good year to me, when you consider this is all gravy. I wonder if they have houses in Memphis.
 

danielsexton

Well-Known Member
[ QUOTE ]
And the winner has got to be Garrison Sheridan--who he is, I have no idea, but this is what he got last year:

2003-02-12 500,000 shares=@$25,141,500
2003-08-14 53,800 shares=@$3,609,000



[/ QUOTE ]

He was a Director of FedEx, he is also the founder of American Freightways, which is now FedEx Freight. I would guess he got all those stock options when he sold American Freightways to FedEx, he is no longer a director.
 

Derg

New Arizona, Il Duce/Warlord
Staff member
Makes me want to refresh my high school studies on Macchiaveli!
 

cargopusher

New Member
I have to back Fred all the way - I've been w/ these guys for 15+ years and it is one of the best and hardest company's to work for - Fred's taken us through it all and has great plans for this company-- when I say it's the hardest to work for it's that service is everything, you are expected to go the extra mile every day and you don't leave till the job gets done-but you are paid well for it and you really want to go the extra mile for the customer! But, just in my city, our volume is down and it's been that way since 9/11--and that's reality, so something's gotta give if you want to stay competitive.
 

pilot602

If specified, this will replace the title that
Then I'm sure "Fred" and his top-dogs would be more than happy to do their part and take 50% pay cuts. Gotta stay competitive ...
 

danielsexton

Well-Known Member
[ QUOTE ]
I have to back Fred all the way - I've been w/ these guys for 15+ years and it is one of the best and hardest company's to work for - Fred's taken us through it all and has great plans for this company-- when I say it's the hardest to work for it's that service is everything, you are expected to go the extra mile every day and you don't leave till the job gets done-but you are paid well for it and you really want to go the extra mile for the customer! But, just in my city, our volume is down and it's been that way since 9/11--and that's reality, so something's gotta give if you want to stay competitive.

[/ QUOTE ]

I think Fred Smith is a true pioneer; he turned FedEx into a Corporate Empire, after his teachers at Harvard laughed at his “hub and spoke” system, and told him it was not feasible. At the end of the day when something absolutely positively needs to go overnight, FedEx is the company to call. I have nothing wrong with Fred Smith making millions of dollars in principle, that’s called capitalism, I was just pointing out the hypocrisy of sitting back making MILLIONS of dollars per year and saying that the guy responsible for making you that money needs to take a pay cut from approx $160K. It’s kind of like biting the hand that feeds you. Fred needs to remember if there were no pilots; there is no need for planes; if there are no planes there is no need for ramp workers; if there are no planes there is no need for aircraft mechanics; and most of all NO MILLION dollar mansions in Memphis. So as you can see PILOTS are the most important person in the food chain at FedEx. Why? Because if FedEx didn’t have planes with pilots to fly them they how would they get a package from NYC to LA overnight? With out pilots FedEx would just be the US MAIL.

As for using 9/11 as a bargaining point, what was the excuse Fred used in 1998 when they said pilot salaries were killing them and FedEx couldn't afford to give a raise?
 

cargopusher

New Member
Maybe I'm looking through rose-colored glasses, but we are all part of the team and when one group starts thinking they are more important, the whole team suffers. It's my job to make sure I know what is in the packages I take and get them out and delivered on time as well as keeping the customers happy- 'cause there are plenty of other guys who are happy to get their business. I think we are all well paid for what we do --
 

tonyw

Well-Known Member
Okay, fair enough. But don't you think that the execs at FedEx, when they're asking for paycuts from their employees, are acting like they think they are more important than the rest of the team when they don't take paycuts as well?

I think that every exec that asks for paycuts from the staff needs to bite the bullet and take one as well.
 

cargopusher

New Member
But this is not about paycuts at Fedex - that was not mentioned, these new negotiations are about pay raises, etc for the new contract - no one has had to take any paycuts at Fedex. I have no beef with what Fred or the others make because the profession I chose will never warrant those types of salaries. If I wanted to try and make that much $$ I should have tried to start my own company! He hit on the American dream so it goes to show it can be done. Not many people are willing to give up everything, take the risks and battle beaucracy to do it - like I said we are well paid for the jobs we have chosen.
 

danielsexton

Well-Known Member
[ QUOTE ]
But this is not about paycuts at Fedex - that was not mentioned, these new negotiations are about pay raises, etc for the new contract - no one has had to take any paycuts at Fedex. I have no beef with what Fred or the others make because the profession I chose will never warrant those types of salaries. If I wanted to try and make that much $$ I should have tried to start my own company! He hit on the American dream so it goes to show it can be done. Not many people are willing to give up everything, take the risks and battle beaucracy to do it - like I said we are well paid for the jobs we have chosen.

[/ QUOTE ]

Can I ask one question? Please give an honest answer. What type of pay raises have ramp workers seen since 98? (not trying to start a rant or anything, I was just wondering)
 

tonyw

Well-Known Member
You're right, nobody is going to be asked to take a paycut. I don't hold a grudge against rich people, believe it or not. I just think that they need to remember that they can't get rich without their employees, and that if they're going to hand themselves a pay hike, then they should give their employees the same thing.; If they're going to ask people to take pay cuts, so should they.
 

cointyro

New Member
So when all you guys are CEOs you can implement all the advice you're giving.

People, in day to day living, do whatever it takes to achieve as much happiness as possible. That includes you, me, the president, and Warren Buffett. We're all the same in that respect. Of course, what we define as happiness may be different (could be power, money, more time with family, etc), but we're all after that happiness.

To the majority of CEO types, happiness is making as much money as possible, subject to few constraints. Now, if the FedEx CEO can get away with lowering salaries for thousands of pilots and in doing so bag both a higher salary for himself and greater corporate profits (which help the shareholders), should he do it?

If I am a pilot, I'd say no. If I am a shareholder, I'd say yes.

So it comes down to: who does the FedEx CEO work for? Why does FedEx exist? For the shareholders - exclusively.

I'm not saying that short-term cost reductions are always best for shareholders in the long run. But after an educated business decision has been made on how short-term decisions affect long-term outcomes, it's time for action by the CEO. That may mean boosting salaries, or reducing them - but whatever he does, it should be primarily for the shareholders, and no one else.

Just for the record I have nothing against the FedEx pilots. I respect all pilots (especially professional ones) tremendously; I think it is a cool and very important job, and if I worked their job I'd definitely want to get paid $163k. Hell, I'd want $300k, or whatever I could negotiate for. I'd want as much money as possible. It's perfectly reasonable.

At the same time I wanted to play devil's advocate a little bit and stand up for the theory of shareholder profit maximization. Though it's true that we'd all like to see pilot wages rise forever, with pilot jobs expanding and becoming more secure and comfortable, the reality is that they probably will not. We may not like it, but we should all be prepared for it.

Pilot wages, or any wages for that matter, are not set on how important they are, how hard the job is, or how many boxes or self-loading freight ride in the back. Only supply and demand curves determine wages. How hard and important a job is may affect these curves, but then again, they may not affect them as much as you'd think, or would like.

For pilots, the supply curve is pretty robust. I'm all for the unions seeking to maximize their own profits by restricting the supply of pilots to FedEx (at least, in the short run). Hope it works.

But conversely, the CEO needs to work for different goals and for different people. I think that is the way it should be.

FedEx employees and FedEx corporate directors work for different reasons. Not entirely different: both want FedEx to do well with increasing revenues, good service, etc. But at the end of the day, the employees want decent compensation and want time to enjoy that compensation; while the directors want to make as much corporate profit as possible. These goals aren't always cooperative and symbiotic. It therefore seems absurd to suggest that pay levels throughout the company should rise and fall in tandem.

***********

Anyways sorry to get so serious! No hard feelings intended and hope no one takes any offense.
 

tonyw

Well-Known Member
Ah, shareholder profit maximization.

Then riddle me this: companies that take care of their employees consistently return more to their shareholders than companies that treat their employees like crap.

Gee, I wonder why.
 
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