Taking the Hill By Air and Ground
Shift in Congress Favors Labor, UPS Over FedEx

By Del Quentin Wilber and Jeffrey H. Birnbaum
Washington Post Staff Writers
Friday, September 14, 2007

Frederick W. Smith, the founder of FedEx, and Rep. James L. Oberstar (D-Minn.), chairman of the House Transportation Committee, have not been getting along.

A couple of months ago, Oberstar arrived 50 minutes late for a meeting with Smith and then gave Smith just 10 minutes to make his case on pending legislation. After his spiel, Smith said, Oberstar ended the meeting abruptly by saying, "I know all of that, and it doesn't make any difference."

"I was shocked I got treated that way," Smith said. "It was the rudest I've been treated in Congress."

Oberstar said he had been tough but polite and had to cut the meeting short because he had to cast a vote. But, he added, "I guess he's not used to people talking back to him or standing up to him."

The disagreement was more than a clash of personalities. It was also a byproduct of the changed partisan makeup of Congress.

FedEx has long been at odds with organized labor, a close ally of Congress's Democratic majority. For years, Democrats such as Oberstar and unions had been angling for legislation that would open the way for more unionized workers at FedEx.

They finally succeeded in late June when Oberstar's committee approved an amendment that would make it easier for the Teamsters to organize FedEx drivers, a change that the Teamsters had long sought. The amendment is now part of a bill to reauthorize the Federal Aviation Administration, which is expected to come to a vote in the House this month.

The amendment reflects how, as the balance on Capitol Hill tips toward labor, it's specifically tipping toward United Parcel Service, FedEx's larger and more-unionized rival in the package delivery business. "It levels the playing field from our perspective," said Malcolm Berkley, a UPS spokesman.

Both companies are major players in national politics, spending large sums on lobbying and, through their political action committees, on campaign contributions. Among corporations, UPS and FedEx were No. 1 and No. 3, respectively, in PAC giving in the 2006 election cycle.

Each donated roughly a third of its PAC money to Democrats and two-thirds to Republicans in the last election -- a proportion similar to that of many other major companies -- and both have begun to give far more to Democrats this year, which is also a familiar pattern.

But FedEx continues to have rocky relations with Democrats over labor issues. Its ground-delivery unit has been sparring with some of its drivers, who are contractors but want to be treated as full-time employees. FedEx is being sued by scores of its drivers over their status.

The Teamsters want to organize at FedEx, where only 5,000 pilots among more than 200,000 employees and independent contractors in the United States are represented by unions, according to the company. Largely because of federal law, the union faces obstacles at FedEx Express, the company's overnight shipping division, which contributes $22.6 billion of the company's $35 billion in annual revenue. If passed, the amendment would not affect the ability of unions to organize at the company's other units, which are governed by more lax labor laws.

FedEx Express started out as an airline, so, like other airlines, its labor rules are governed by the Railroad Labor Act, a law that prohibits any one group of locally organized employees from crippling the carrier.

UPS, in contrast, began as a trucking company, and for that reason its labor practices are governed by the less-restrictive National Labor Relations Act. More than 200,000 of UPS's 420,000 employees are represented by the Teamsters.

The amendment pending in the House would put FedEx Express truck drivers, maintenance workers and other employees under the same labor law as those working for UPS.

The delivery giants and organized labor have battled over the issue before. FedEx Express briefly lost its airline status in the mid-1990s, but a Republican-controlled Congress reinstated it after a bitter fight with some pro-labor Democrats, including Oberstar. Oberstar said he "vowed at the time" to change the law if Democrats ever took control of Congress. He said he was "offended by FedEx's powerhouse lobbying in 1996 protecting themselves against any future organizing activities."

Oberstar said he was never asked by UPS representatives to push for the change this year, which the UPS spokesman confirmed. "We're not behind that legislation," Berkley said. "It's not something we initiated."

But Teamsters officials worked hard for it, meeting with at least a dozen lawmakers and congressional staffers in May and June. "We kind of blitzed everybody at the last minute," said Fred McLuckie, the union's legislative director.

The union won, he added, largely because Democrats are now in charge. "I don't think this would have happened if there had been a Republican-controlled Congress," McLuckie said.

FedEx's Smith shares that view. "When the Congress changed hands, Jim Oberstar and labor said, 'We're going to overturn this,' " Smith said.

It is not clear how the amendment will do in the Senate, where, because of its narrow partisan split, a combination of Democrats and Republicans is generally needed to pass controversial provisions. Sen. Trent Lott of Mississippi, the chamber's second-ranking Republican and the ranking minority member of the Commerce Committee's aviation subcommittee, called the FedEx amendment "a total non-starter."

"It will not go anywhere," Lott said. "I will throw my body on that mine."

The Teamsters' McLuckie acknowledged that the amendment will have a tough time in the Senate. "FedEx has flown a lot of miles with a lot of members over there," he said.

But no one doubts that overall, FedEx has faced a colder reception -- and UPS a much warmer one -- since the Democrats wrested control of Congress. And the switch "could have profound implications for the industry," said Kenneth P. Quinn, a partner with the law firm Pillsbury Winthrop Shaw Pittman and a former Transportation Department counsel.

On the day in June that the Transportation Committee voted on the FedEx amendment, it also took up a resolution to honor UPS for its 100 years in business. The proceedings quickly turned into a UPS love feast, with lawmaker after lawmaker lauding the company for everything from its commitment to the environment to its good works in local communities.

Several talked about how proud they were to wear a brown UPS uniform when they helped deliver packages for a day -- a standard lobbying tactic for the company. Rep. Nick Lampson (D-Tex.) said he was impressed during his ride-along with a UPS driver that they were delivering packages in a hybrid truck. "In my opinion [UPS] is doing a great job to promote alternative fuels," he said.

"I, too, want to add my remarks to the brown bandwagon here," said Rep. Russ Carnahan (D-Mo.). "I recently got to wear the brown uniform and go on a truck . . . It was a great experience from the company that gives back to our community in St. Louis and the state."

Even Republican Rep. Bill Shuster waxed poetic about how UPS helps small businesses in his Pennsylvania district. "It wasn't until I put on the brown suit and delivered packages for four or five hours that you . . . find out that the UPS driver is part of all those businesses," he said.

Oberstar said it was a coincidence that UPS's 100-year resolution and was scheduled on the same day as the vote on the FedEx amendment. "When FedEx gets to 100 years, we'll do one for them," he said. "Maybe."

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