On Capitol Hill and in the court of public opinion, airline mergers have been getting a chilly reception.
At a House Transportation Subcommittee hearing held last week to examine the proposed Delta-Northwest merger, Transportation GVP Robert Roach, Jr. declared: “A Delta-Northwest merger will eliminate jobs, reduce choices for passengers, further deteriorate customer service, trigger additional senseless mergers, make millionaires even richer, and most importantly, do nothing to address the problems of a failing industry.”
The judgment of lawmakers and industry analysts, who normally support airline management, has been equally grim. Below is a sampling of opinion drawn from recent testimony at four congressional hearings:
“The inescapable lesson of 29 years of deregulation is that mergers and a reduction in competition are likely to lead to higher fares, a deterioration of service, and financially weakened survivors.” Rep. James Oberstar (D-MN).
“Mergers have been good for airline executives, but not so good for consumers and employees.” Rep. Jerry Costello (D-IL).
“Airline mergers have a checkered track record, rarely delivering on expected gains and usually creating labor unrest and service disruption.” Philip Baggaley, Managing Director, Standard & Poor’s Ratings Services.
“If there is one thing that we have learned from the long history of antitrust, it is that efficiencies are easy to assert, difficult to achieve, and rarely of the magnitude that their parties – in their self-interest – claim.” Albert Foer, President, American Antitrust Institute.
“Delta/Northwest and other mega-mergers can not be justified by synergies and improved efficiencies.” Hubert Horan, Airline industry analyst and consultant.
“There are amalgamations that make economic and public policy sense but…this is not one of them.” Aaron Gellman, Professor, Northwestern University’s Transportation Center.
“There are powerful reasons why these mega-mergers would be harmful to consumers, and would solve none of the industry’s most serious problems.” Kevin Mitchell, Chairman, Business Travel Coalition.
Links to the complete testimony from all witnesses and archived video can be accessed at www.goiam.org/mergers.
Machinists, business leaders and state officials gathered at the Connecticut state Capitol last week to announce that the Connecticut General Assembly is sending a letter to President Bush urging him to reconsider the U.S. Air Force’s decision to award a $40 billion aerial refueling tanker contract to the European Aeronautic Defence and Space Co. (EADS).
“We call upon you to halt the contract process for the United States mid-air refueling tanker, and we strongly urge you to immediately and vigorously investigate the proposed outsourcing of taxpayer-funded jobs, its impact on the American economy and the procurement process that made possible this transfer of billions of dollars to foreign entities,” states the letter, which was signed by 177 of 187 members of the legislature.
“We are all tired of watching our jobs streaming overseas and devastating our future,” said District 26 Directing Business Representative Everett Corey. “Having our Government and our taxpayer dollars pay for it is even more appalling.”
The Air Force’s decision not to award the contract to Boeing could impact as many as 44,000 U.S. aircraft and aerospace workers at hundreds of primary and secondary contractors in more than 40 states. Connecticut stands to lose more than 4,000 jobs at Pratt & Whitney in addition to numerous jobs at smaller vendors and suppliers.
Roughly 50 members of IAM Local Lodge 2738 in Montreal voted overwhelmingly to ratify a four-year agreement with Weir Canada, securing a $500 signing bonus and wage increases of 3.5 per cent in the first year and three percent in each of the remaining three years.
The members, who manufacture mechanical equipment, will also see monetary improvements for external work, more equitable distribution of overtime and improvements on retiring bonus.
Members of IAM Local Lodge 412 in Cornwall, ON have ratified a four-year agreement with Bolger Steel Fabrication Ltd., securing wage increases of four percent in the first year, three percent in the second and third years and two percent in the fourth year. The contract also provides an increase in the employer pension contribution and improvements in vacation time.
In Montreal, twenty members of IAM Local Lodge 1660 ratified a three-year agreement with ABB Incorporated, providing wage increases of 3 percent each year. Other agreement highlights include increased vacation days and increased layoff compensation.
Finally, in Sherbrooke, QC, two years after their initial contact with the IAM, workers at A & R Belley Transport have joined the Machinists. The 17 newest members of IAM Local Lodge 922 consist of truck drivers and fork lift operators at two locations in Quebec City and Sherbrooke.
By a unanimous vote, 40 members of Local W356, in Adel, GA, who build wooden crates at the Elberta Crate and Box Company facility in Avon Park, FL, rejected a contract offer from the company with annual wage rates that did not even meet the 2007 federal poverty level for a family of three.
“There are workers in Bainbridge, GA, who do the same work, for the same company, who earn about $1.30 per hour more,” said Leon Blocker, President of District W-2. “They have safer work conditions and hot water in their bathrooms. There’s no excuse for treating these Florida workers worse than the workers in Georgia.”
Besides livable wages, safety on the job is a key issue for the workers in Florida. Last year the company lost more than 298 worker days in productivity because of accidents on the job. “If the employer would stop violating the law and start to work with us, we could lower their accident rates, reduce some of their costs and improve productivity,” said Blocker.
In addition to the substandard contract offer, the National Relations Labor Board will hold a hearing on Aug. 4 to consider numerous charges levied by the IAM of discriminatory and hostile activities in the workplace.
In a move that could have a devastating impact on the U.S. aerospace industry, China has announced that it has formed the China Commercial Aircraft Co with an initial investment of $2.7 billion. China aims to build a 150-seat aircraft by 2020 to compete with Boeing and Airbus.
In numerous forums, the IAM warned U.S. policy makers for nearly a decade that China is developing a globally viable commercial aircraft industry. On each of these occasions, the IAM stressed the significant role that outsourcing, offsets and technology transfers would play in the development of China’s emerging aerospace industry.
News of China’s leap into the commercial aircraft industry comes as China has surpassed the United States in a highly-regarded measure of high tech competitiveness.
Manufacturing and Technology News reports the Georgia Institute of Technology’s bi-annual “High-Tech Indicators” found that China improved its “technological standing” by 9 points over the period of 2005 to 2007, while the U.S. rating dropped 6.8 points.
Tentative agreements were reached Friday, May 23, for TCU-represented Amtrak clerks, on board service workers and ARASA product line supervisors. The terms now go to the involved members to review and vote on: Ratification packets are being mailed today and ballots must be returned by June 27 to be counted.
“I am very pleased that we are finally able to bring this difficult bargaining round on Amtrak to a successful close,” says TCU International President Bob Scardelletti. “These three contracts bring TCU members solid wage increases with no work rule changes, identical to those reached by all other crafts on Amtrak for the period covered. I strongly urge ratification.’
The contracts extend from January 1, 2005 through December 1, 2009. Wage increases and employee health insurance contributions are identical for this period to all the contracts previously ratified earlier this year by every other craft on Amtrak. There is full retroactivity back to the first wage increase on July 1, 2005; the retroactive pay will be paid in one 100 percent installment. There are no work rule changes.
Click here (http://www.goiam.org/uploadedFiles/TCUnion/Signing_tentative_agreement.pdf) to see photos taken at the signing of the tentative agreements.