In one of the most dramatic and specific responses by a corporation to the potential passing of the Employee Free Choice Act, FedEx has made specific threats of drastically cutting capital expenditure should the legislation pass:
The Memphis, Tenn., company has exercised an option to buy 15 B777F planes from Boeing Corp. and has an option to buy an additional 15 planes, Mr. Lane said. But in exercising its option on the first 15, FedEx has obtained contract language that would allow it to cancel the order should Congress pass the law. FedEx would likely obtain similar conditions for the purchase of the other 15, the company said.
The Boeing 777 Freighter, which FedEx has options to by 30 of:
While devious, I think FedEx's move here is brilliant in combating the pro-EFCA arguments. A company actually threatening to cut capital expenditures, when we really do need companies to be spending to avoid more layoffs and to create jobs.
If FedEx were to decide to decline their options on these 30 new jets, that would be over $7.5 billion in revenue that Boeing would be short. This would inevitably lead to Boeing outsourcing more and hurting the http://, which has already been taking hits as of late. Basically, pitting union against union as well as union against management.
"It's difficult to make large-scale capital investments like airplanes if you are unsure if you are going to be able to fully utilize them," Mr. Lane said Tuesday, arguing that the pending legislation could be "detrimental to the way we operate our company."
While I do support the EFCA, what FedEx is saying is undoubtedly true. It is very possible the EFCA could hurt FedEx, as much of their business is operated by independent contractors that own their own vehicles. How this could reconcile with union organization is unclear and as such FedEx is wise to be cautious concerning new spending, especially on the heels of their third-quarter profit dropping 75% compared to last year.
This is going to be an interesting and vicious debate upcoming, made all the harder by Arlen Specter's decision not to vote for the EFCA and to oppose cloture as well as Al Franken still not being seated.
The unions are going to need all the help they can get. Let's make sure we give it to them.
