By Jamie St. Laurent, Corporate and Financial Research Analyst, Teamsters
I attended the shareholders meeting and found some of Fred Smith’s statements incredulous, to say the least. Here are some of the more ‘memorable’ moments I found looking through the transcript, which can be found online here.
“Because of the severer economic contraction, they have made tremendous sacrifices in the past year, often with pay cuts, lower hours, suspension of our 401(k) match, but in spite of all of that, they still delivered on our Purple Promise to make every FedEx experience outstanding for our customers.” (p. 5)
- Learning from last year’s mistakes, this year Fred made sure nobody forgot that the Purple Promise is only for customers
“For example, UPS and its allies are trying to disrupt FedEx Express operations by changing the Railway Labor Act, under which Express has been classified since it began operations in 1973.” (p.6)“We at FedEx will continue to take a strong stand for trade equality in the marketplace, and healthy competition that benefits consumers everywhere. To do anything less is to slow America’s economic recovery.” (p. 6-7)
- What Fred is referring to is the Express Carrier Employee Protection Act, which he opposes because it would get rid of FedEx’s special deal. The legislation would properly classify FedEx Express’s ground workforce under the correct labor law, which would make it easier for these workers to form a union.
- And second of all, if that statement regarding trade equality were true, then FedEx would be in favor of leveling the playing field and competing fairly with all other package delivery companies.
“Our pension plan is well-funded.” (p.7)
- Which pension plan? The Defined Benefit plan you decided to cut? The 401(k) plan you cut the match to? This is not a very reassuring statistic!
- If the truth be told, one of the reasons FedEx discontinued the Defined Benefit plan was to avoid having to make public the fact that it is actually underfunded. Reporting to workers affected is a requirement of the Pension Protection Act that FedEx obviously did not want to be covered by or adhere to.
“When that occurred [passing of the Pension Protection Act], any prudent management recognized that the potential to have a catastrophic condition of illiquidity was a risk that simply could not be tolerated.” (p.9)
- Fred is completely putting the blame on the federal government in explaining why the Defined Benefit plan was ditched, making it sound as if keeping the plan would have been an unacceptable business risk. This statement completely misstates the facts, which are that FedEx wanted to cut its exposure and put all of the risk on the employee in planning for their retirement security. By avoiding being covered by the Pension Protection Act, FedEx also avoided the transparency to employees that is required by the act. After the meeting, a FedEx manager seemed to buy into this argument, trying to argue with attendees that the government had forced FedEx to get rid of the Defined Benefit plan. Do a lot of people really believe this???
“The only reason the pick-up and delivery operations of FedEx Express exist are to pick up and put things on airplanes.” (p.10)
- Once again, the argument of a package overnighted from Washington, DC to Baltimore. Did that really go on a plane??
“…we’ve said very publicly we could no longer, nor could any other airline or any railroad continue to invest in that business, because we would have gone all the way back to the 19th century, and all of the lessons that were learned.” (p.10)
- More scare-mongering on the RLA Express Carrier Employee Protection provision. It would not affect any other railroad or airline, and would not catapult FedEx back to the dark ages. Passage of our legislation would simply put them on an equal playing field with the way things are already done for everyone else!
“As to whether you have a union or not, that’s your decision, and the other aircraft mechanics. Nobody has ever said anything to the contrary. You have the perfect right to seek union representation and that’s the law, and we respect that. If you want union representation, and your fellow mechanics want union representation, that is your legal right to choose that.” (p. 11-12)
“I love our AMTs.” (p.13)
- Sure you do, Fred. Sure you do. You love us all so much, you have cost us hundreds of thousands of dollars in retirement income, raised our insurance costs while cutting coverage, taken away our incentive plans, eliminated our 401k matching contributions, improperly classified most of us under the wrong labor law which summarily limits our rights to Freedom of Association.
