O F F I C E R S
R E P O R T 2004
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In the four years since our last Grand Lodge Convention, the airline industry in North America rode the extremes of the business cycle, hitting a peak in 2000 and experiencing catastrophic decline in the wake of the September 11 attacks. The lackluster performance of the economy since 9/11 has hampered the recovery of the airline industry, affecting thousands of IAM members. In response to this turmoil, the Strategic Resources Department has greatly expanded the services it provides to our Transportation Department and our airline District Lodges. From research and analysis to direct assistance at the negotiating table and consultation with special projects and initiatives, Strategic Resources has made it a priority to serve our transportation members. Knowledge is Power To win, you have to be prepared. By having made the necessary investments in capacity, knowledge and expertise regarding the airline industry, Strategic Resources can provide services in-house that other unions must pay high-priced outside consultants for. Since our last convention, we have greatly improved the systems we maintain to track wage trends in the airline industry and have employed more sophisticated tools to track industry developments and the financial condition of the carriers where our members work. By doing this, we stay one step ahead of the employer and our members are better off as a result. Whether it’s providing financial and economic analysis or lending expertise on specific contract issues, Strategic Resources supports negotiators as they fight to protect IAM contracts and win improvements during tough times and in good times. We have provided support in almost every airline negotiation that has occurred since our last convention, including TWA, United, US Airways, Southwest, Northwest, PSA, Piedmont, Aloha, Hawaiian, Air Canada and Air Wisconsin to name a few. Retirement Security Pension and benefits are a key area where our in-house expertise pays off for our airline members. As recently as our last convention, the vast majority of airline pension plans were fully-funded or had assets in excess of what was required to pay all future benefits to our members. Since that time, the decline in the stock market and historically low interest rates combined to undercut the financial health of many pension plans both inside and outside the airline industry. This deterioration forced companies to make contributions at a time when they could least afford to do so. Working together, Strategic Resources helped our airline Districts weather what pension experts have called the “Perfect Storm” holding carriers accountable for the pension promises. When District Lodge 142 was dealing with a plan termination at Alitalia, Strategic Resources conducted analyses to ensure that our members would get every penny they were due. When Northwest Airlines proposed a risky plan to fund its pension plans with Pinnacle Airlines stock, we went with District 143 to the Department of Labor to testify on behalf of our members and to fight for needed protections. And when US Airways, United, and Hawaiian all went into bankruptcy, we helped Districts 141 and 141M protect our members’ pensions under the most trying circumstances. In fact, thanks to the skill of the negotiators and the strength of the IAM National Pension Plan, Fleet Service Employees at US Airways actually improved retirement benefits while the company was in bankruptcy! These are just a few examples of how the knowledge we bring to the table produces results for our members. Fighting Outsourcing When it comes to job security in the airline industry, the first and last line of defense is a strong Scope clause. The IAM has been the most effective union in Transportation labor in defending our members’ work with the tightest Scope clauses in the industry. But the IAM has also been at the forefront of the labor movement in developing strategies to deal with the quickening pace and pressures of outsourcing. Strategic Resources’ “capital strategies” initiatives have been an effective tool in this arena. At the request of the Transportation Department, Strategic Resources found outside investors to put together a plan to re-open the Indianapolis Maintenance Center after United Airlines abandoned the base in bankruptcy, throwing 2,000 of our members out of work. As the trend in the industry toward more and more outsourcing of heavy maintenance continues, the IAM has targeted resources to “following the value chain,” helping to make sure that third-party overhaul establishments do not undercut the pay, benefits or job security of our airline members. Strategic Resources has also provided support to our airline Districts looking to keep work in-house and bring more work in. The department assisted District Lodges 141 and 141M secure a grant from the Federal Mediation and Conciliation Service to support these efforts at USAirways and United Airlines. Looking ahead In the years since our last convention, the airline industry has faced many challenges such as terrorist attacks, new security requirements, financial turmoil, SARS and the steady pace of technological changes as exemplified by on-line booking, kiosks and more. The industry regularly experiences extreme ups and downs. But, the effects of the business cycle aside, the airline industry continues to grow. As our economy grows and incomes rise, so does the demand for air travel. And as the industry climbs out of the trough, new challenges lie ahead, mergers, new technology, the rise of new competitors and others that remain unknown. Strategic Resources will continue to play a role as part of the IAM team fighting for our airline members and will continue to develop new tools, resources and knowledge to fight the battles that are yet to come.Capital Strategies The Strategic Resources Department continues to expand its activity in capital strategies, in part, through the coordination of the IAM’s participation in shareholder initiatives and other corporate governance campaigns. Labor’s role in corporate governance and shareholder activity is based on the notion that workers need a voice as owners of assets set aside for their retirement in pension and savings funds. As the IAM faces a new corporate world today, shareholder initiatives allow us to mobilize our membership around corporate governance issues and apply additional leverage on companies as we seek conditions that are in our member’s best interests. Strategic Resources has strengthened working relations with other interested parties in an effort to build support for shareholder initiatives. Strategic Resources has fostered relationships with Taft-Hartley pension funds and public employee pension funds to strengthen support for our initiatives. The combined assets of these funds exceeds $1.7 trillion! Additionally, Strategic Resources has working relationships with investment firms and money managers in this effort. Strategic Resources has also become involved in the corporate governance regulatory environment by pressing the Securities and Exchange Commission (SEC) to improve rules and regulations. The SEC has brought forth several proposed rules in response to the corporate misconduct and fraud that has surfaced in the past few years. Strategic Resources continues to participate in efforts to win meaningful reforms in these newly proposed rules and regulations that will strengthen our hand in this area in years to come. |
