Sadman and Sackman, you guys are a piece of work....
Read this interesting article in "The Detroit News".
Sunday, June 27, 2004
Northwest, unions need new flight plan
Challenge is to turn current adversarial relations into an asset of cooperative ties
By Daniel Howes / The Detroit News
Comment on this story
Send this story to a friend
Get Home Delivery
ROMULUS--Northwest Airlines’ campaign to wrest $950 million in union contract concessions is heading for severe turbulence if its mechanics get their way.
“We’re done,†said Bob Rose, president of Local 5 of the Aircraft Mechanics Fraternal Association, or AMFA. “We’ve given almost half of our work force already. We’ve had base closings. Believe it when we tell you: We ain’t giving them nothing.â€
What, I asked, if Northwest follows USAir and United Airlines and, probably by year’s end, Delta and files Chapter 11 bankruptcy, effectively voiding labor contracts, killing pension plans and turning business decisions over to a judge?
“Detroit is such a strategic location that someone will come in here and fly,†he told me over a 90-minute conversation at a restaurant near the airport. “It may not have a red tail, but someone needs us to turn a wrench. Some of our people will work, some won’t. We can go work on cars and we can go work on trucks.â€
Maybe.
Or a low-cost carrier which outsources far more maintenance work than Northwest does under its contract with AMFA could arrive. Southwest or Jet Blue could pay just as well and foster stronger ties with the union. Or, more likely, they could use even fewer mechanics, pay them less and effectively winnow the union’s membership even more in Detroit and elsewhere.
The truth is that no one, probably including Northwest CEO Richard Anderson, knows how Detroit Metropolitan Airport, its growing reputation as a global gateway or Northwest’s Michigan payroll would be affected by a Northwest bankruptcy. But it wouldn’t be for the better.
Yes, we’re talking about a company with revenues of $9.5 billion and a cash hoard of $3 billion, which taken at face value could suggest that it would be hard to plead poverty to a bankruptcy judge. But Northwest’s losses totaled $1.1 billion over the past three years and the first quarter of 2004, its outstanding debt and capital lease obligations stand at $8.3 billion and its labor costs are too high.
“The airline industry is an essential business that must be profitable,†Anderson said in a recent interview. “There are really no healthy legacy carriers. In the future, we may see only a handful of legacy carriers remaining. We will be one of those survivors.â€
How you do that is the billion-dollar question. I can tell you this: Demonizing unions is a losing strategy in an industry where the trend, even among low-cost carriers, is toward more unionization, not less. Strikes of just a few weeks alienate customers and can cost $1.5 billion in lost revenue.
The challenge is to make the liability of adversarial labor-management relations into an asset of cooperative ties that recognize mutual self-interest. Northwest’s pilots, who stand to lose six-figure pensions if Northwest declares bankruptcy, understand this.
As Rose paints it, AMFA doesn’t much care because it has less to lose. Northwest, he says, is swimming in cash; its executives haven’t offered to take pay cuts (though none of its top five execs received bonuses last year); it’s replacing old DC-10 aircraft with new Airbus A-330s; and it’s investing heavily in new technology and new terminals at Detroit Metro.
Labor negotiations (or, more precisely, the public posturing that typically precedes them) are equal parts economics, politics and theater. Right now, we’re getting a taste of the latter two because it’s way too early (at least as far as AMFA is concerned) to talk economics and work rules.
The sparring is well under way. AMFA members in Minneapolis preparing to picket the outsourcing of maintenance work by calling Northwest “unsafe†were told they would be fired if they did so because of the damaging message that could send to the traveling public. And in Detroit, where AMFA represents roughly 1,200 Northwest mechanics, there have also been small protests, intensifying rhetoric and charges that union officials have been summarily fired.
Which raises a fundamental question neither side is prepared to answer: If labor (excluding the pilots, who have offered concessions worth more than $200 million) isn’t in a giving mood and Northwest says it needs nearly $1 billion in give-backs to stay out of bankruptcy court, what will give?
Right now, not much.
Northwest’s business imperatives are clear and sensible: It needs to continue investing in new technologies, replace old planes with new and leverage the power of the Internet and global alliances to fill planes and book revenue.
Done right, the dominant carrier in Detroit could emerge as one of the nation’s remaining Big Three airlines and Detroit could surpass Chicago as the hub of the Midwest so long as its labor costs are as lean as its operating costs.
Northwest has countered the pilots’ concession package by asking for more than $300 million in give-backs. And the airline is in mediation talks with the International Association of Machinists. Like the pilots, the machinists are a member of the AFL-CIO and both unions have confidential meetings twice each month with senior Northwest executives to review the airline’s finances and outlook.
AMFA and the union representing Northwest flight attendants are not members of the labor federation. Nor do they participate in the twice-monthly reviews with Northwest management.
There is, however, no question that AMFA’s ranks at Northwest have been hit hard by the aftershocks of the Sept. 11, 2001, terrorist attacks, the SARS outbreaks in Asia, the decline in passenger traffic and the restructuring those events forced Northwest to make. In March of 2001, Northwest had 10,324 AMFA-represented employees. Today, it has 5,458 dues-paying members, according to company records.
A membership decrease like that —
47.1 percent, to be precise — is enough to get almost any labor leader’s attention, especially when Northwest execs are getting multimillion dollar awards of restricted stock even as they ask their unions for concessions.
For AMFA, it all basically amounts to a declaration of war that Rose insists the union will fight to the end, no matter what kind of concessions Northwest wins from its pilots or the machinists.
“Do you know the story of the band on the Titanic?†Rose asked. “In this game of bankruptcy, consider us the band because we’re going to ride it to the bottom.
“You don’t believe me, do you?â€
Actually, hard as it is to understand, I do. So should anyone with a stake in Northwest’s future.
Daniel Howes’ column appears Sundays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or at dchowes@detnews.com.
OH! You are right sadman, 4700 did not lose jobs, the correct number is 4866.
Also, are you implying the
amfa is no longer the BA for those on layoff from UAL?
Again, how many
amfa card drives have failed at AA? How many?