This change means we will all have to work longer and will retire with less income. And FedEx can change its plan at any time, since we have no contract.

So what does this mean for you and your families? Ken Eckel, a Senior AMT in Memphis, wrote this article for one of our newsletters. It’s full of important information that you need to know.

Here are Ken’s words:

"The latest and probably greatest loss to your career income and family security was the change FedEx made to the pension plan on June 1. They have taken a corporately responsible "traditional plan" to a "cash balance" plan. They have taken a liability for the corporation and changed that liability into an asset to the corporation (they hold the money and pay you interest, like a bank).

Their new cash balance plan is unlike other companies’ plans where the "cash" is sent to a third party and held in the employee’s name, and the investments are chosen and controlled by the employee. With FedEx’s plan, the cash stays with them and is earmarked for you with a fixed interest rate (like a bank).

This company was not forced to do this by economic hard times. Applying the new laws to the previous five years of corporate numbers in the example they showed us, the pension funding amount never exceeded even 50 percent of profits!

One thing you can be sure of, for all their talk about LEAN and KAISEN, they never had a Kaisen event, or brought in the end user as a subject matter expert when they made the decision to freeze the traditional pension plan and replace it with a cash balance plan.

And all you high seniority folks with 25 years or more of service but are too young to retire right now, every year you wait, your traditional pension plan is worth less due to inflation—and with gas prices soaring, inflation is not far behind. My "locked in" 10 years of traditional pension plan from the early 1980s is now paying me $157 a month for life since I turned 55 years old. This is how inflation can work against a "locked" pension plan.

So here’s a simple way to determine how much you have personally lost:

1. Determine how many years until you retire.
2. Estimate what your final year’s income would be, adjusted for inflation (mine will about double what it is now based on what it did in the last 10 years (I will be 65 in 10 years).
3. Take that final year’s income and apply the traditional plan formula (years of service, up to 25) times two (up to 50 percent) times your last year’s income (high five).
4. Take the number of years until you retire, multiply that times 10 percent of last year’s income.

You now have two totals (#3 & #4). The total from #3 is your annual retirement income paid to you until death. The total from #4 is your total cash balance.

The company never used me as example in the sales brochures they mailed to your house and here is why:

I’m 55 years old now with 10 years of service all under the "traditional plan." I was planning to retire at age 65. My current high five = $80,000. The high five 10 years ago was approximately $45,000. So my income, due to inflation, almost doubled in 10 years. My projected high five, conservatively, will be more than $100,000 when I reach age 65.

So here we go: On #3, $100,000 times 40 percent (20 years of service times two) = $40,000 a year for life. On #4, 10 years times $8,000 = $80,000 plus some interest, so let’s say $100,000 lump sum.

So here’s the rough numbers on me: The traditional part is $80,000 of locked high five, times 10 years service = $16,000 for life, plus 10 years of the portable pension plan, or about $100,000 in that account at retirement.

So I went from $40,000 for life down to $16,000 a year, a reduction of $24,000 a year, or a $2,000 a month cut! And to top that off, I will have a lump sum at retirement of around $100,000. It would take a lump sum of around $400,000 to create an annuity to make up for the $24,000 a year loss. It will take about $35,000 a year in savings, not $8,000, to have $400,000 in 10 years.

Without a CONTRACT (like the pilots and our fellow mechanics in Europe have) this may not be the end. There is still more the company can take. Can we afford it? I don’t think so."

The global third-party aircraft maintenance industry (MRO), is currently a $45 billion dollar industry as estimated by industry analysts. Some analysts project the MRO industry revenues to reach over $68 billion within the next 10 years.

This figure of outsourced labor doesn’t even account for the number of Jiffy Lubes, diesel, automotive, welding, electrical, HVAC and body shops located across the nation that perform all the same duties that our GSE and VT mechanics do.

Our employer is already utilizing these vendors to do our work. Some are in China, some are down the street. In some cases 3^rd party vendors are working right next to us. What does that mean? It means that our employer’s trend is to outsource or give our jobs to 3^rd party vendors. The question for today is not "if" it will happen – but "when"?

Our corporation has recently hired a master of outsourcing, Greg Hall. Mr. Hall used to work at United Airlines and we have carefully reviewed his record. While Mr. Hall was at UAL:

• More than 3,300 mechanic lost their jobs
• The percentage of outsourced maintenance expenses nearly doubled to over 40%
• UAL outsourced and signed a 5 year contract for maintenance with Ameco in Beijing, China
• UAL outsourced and signed a maintenance contract with a South Korean facility.

According to UAL employees, Greg Hall outsourced their work and cut jobs. Mr. Hall now works at FedEx and we have reason to be concerned!

We need to take action now to protect our jobs. The best way to gain job security from the outsourcing threat is through a Teamster contract. Teamster contracts, like the contract at UPS, offers specific language to protect jobs from outsourcing.

Our health insurance is costly. Right now, FedEx employees pay approximately $258 a month for family coverage. For single people, it’s $54 a month.

In addition to paying our monthly costs we also pay: copayments, deductible and out of pocket maximums. The Company just increased our yearly out of pocket health care maximum. For example, in the premier plan the yearly family maximum is now $3,000. (This is in network, the maximum for out of network is $16,500 per family). Also, we are seeing increases in individual medical service costs and co-payments. It is also important to note that the coverage of our health care keeps diminishing—less and less important health care services are being covered.

Let’s compare that with UPS mechanics, who are covered by a Teamster-negotiated contract. What do they pay per month for insurance? NOTHING.

At FedEx, we pay 10 percent for prescriptions plus deductibles. At UPS, the company pays 100 percent of all medical costs and prescriptions.

FedEx retiree insurance is around $800 per month, and will continue to increase to over $1,200 per month in 2010. And they pay 10 percent for all prescriptions.

A UPS retiree pays $50 a month for medical coverage, and 10 percent for all prescriptions.