In order to be
certified, that is, given the right to represent workers within a certain firm, labor unions in the US should win the majority of votes in a referendum. The referendum is held if at least 30 per cent of the workers ask for it. In the 70’s and the 80’s the number of these elections raised considerably. (Levine, 1989; Fulmer, 1978). Federal Express (FedEx) faced this phenomenon in 1989. In 1973 a veteran of the Vietnam War founded FedEx, a parcel transportation company. At that time he was 30. In 1989 the company had 70.000 employees and among them, 2.000 pilots, including 961 pilots belonging to Tiger, a company that had been recently acquired by FedEx. Tiger was founded by veterans, too, but they were veterans of the WWII. When it was acquired it had 6.500 employees and was in the business of international cargo transportation.
The acquisition affected negatively the enthusiastic labor relations in FedEx. Before the acquisition, its employees had been working with flexible rules and timetables depending on the workload and in a situation of constant need for labor force. On the contrary, truck drivers of the biggest competitor—UPS—limited themselves only to carrying packages from the truck to the doorstep; their union rules prohibited participation in truck loading, for example. The pilots shared real “battle ethics”, that had one goal: punctuality, and one enemy: the competition. Their labor relations included a sophisticated system for conflict settlement; duty assignment according to seniority; free flights in cargo planes; incentive schemes and continuous chat line through a company-owned television channel.
In FedEx, hierarchy determined job position, timetable and salary. In 1986 the founder of the company promised his pilots that the employees who would enter the company as a result of future mergers would start from the base level of the hierarchy ladder. However, when he bought Tiger he accepted to mix the seniority lists of both companies. He was forced to do that, because the opposite was legally questionable.
Before the acquisition, the labor relations in Tiger had been very tense. Unions had always represented the employees. As the US legislation stated, the representative function of the unions was revoked automatically after the fusion with a non-unionized company. A referendum of
certification was scheduled. 1.062 FedEx pilots and all 960 Tiger pilots participated in the elections. On 26 of October 1989, only 709 out of 2.022 pilots voted for being represented by the Union.
Do you think the merger was a wise decision?
FedEx was younger than Tiger. How can this fact influence the mixture of the two hierarchy ladders?
Assess the “implicit” contact between FedEx and its pilots. What would its implications be if it were not legally regulated? In addition to the ones mention in the text, can you think of another factor that makes the fusion of the hierarchy ladders advisable?
Evaluate the referendum results.
During the election campaign FedEx insisted that it was much easier to introduce a union in a company than take it out. What do you think about this argument?