by Edward F. Fischer
Sometimes it is best not to cut corners. Bargain hunting for a plastic surgeon, say, does not make much sense. You just might get your money’s worth. So too with airline mechanics. Looking through small, thick windows at the workers scurrying around my plane in preparation for take-off, I hope that they are all well fed and happy, the sort of loyal and devoted employees who always double-check that troublesome hydraulic joint.
Thirty thousand feet up, halfway across the Atlantic, a little peace of mind seems well worth an additional $10 on an $800 ticket. So it is with great interest that I have been following Northwest’s labor dispute with its mechanics union. Recent rumors of an impending bankruptcy add to the tense standoff, now in its second week. Northwest officials have encouraged comparisons with Eastern Airlines, whose mechanics went on strike in 1989 in a dispute that was still unresolved as the airline flew its last flight in early 1991, in a veiled threat to their workers. Pilots, whose pension funds would suffer the most in a bankruptcy, have eagerly bellied up to the negotiating table to take more pay cuts. But the Aircraft Mechanics Fraternal Association sees this as a fight not just for immediate job security but also for the continued viability of labor unions.
If Northwest prevails, the company will have rewritten the rules of labor disputes, sewing up an already uneven advantage by taking away labor’s last great weapon, the strike. Industry leaders have watched Northwest with envious eyes as the airline stands down its union while keeping its planes in the air. The feat results from an elaborate, semi-covert scheme that received a nod from the White House and involved training a shadow workforce, many experienced mechanics laid off by other airlines, on abandoned airplanes in the Nevada desert.
There are reports of safety issues, and the FAA is investigating, but Northwest continues to fly a more-or-less regular schedule. Northwest may indeed be able to break the union through a combination of replacements and the threat of bankruptcy. But the airline should be careful what it hopes for. At the heart of the dispute is outsourcing major maintenance for its aircraft, already common practice for budget carriers. United Airlines recently announced that a Beijing company will take over its Boeing 777 maintenance and Northwest hopes to follow suit.
Saving a few million dollars a year in maintenance costs appeals to the airline as its struggles against increasingly fierce competition and rising fuel prices. But Northwest officials should be thinking not of Eastern Airlines but of ValueJet, the budget carrier that failed following the spectacular 1996 crash in the Florida Everglades and the uncovering of negligence that led up to it. ValueJet was a product of the ephemeral 1990s, with everything possible, including maintenance, contracted from outside companies.
Outsourcing can be a great thing–look at how India and China provide low-cost products to Americans while transferring technological skills that will allow them to move up the economic value chain. But outsourcing can also be dangerous, as the ValueJet experience shows, because the employees feel little connection to the company they are doing the work for. Northwest, and other employers, should recognize the value in having workers who are connected to and committed to the company. Rather than alienating its employees, it should accept that its fixed costs will always be higher than Southwest’s. They will not be able to compete on price alone, but I suspect there are quite a number of people like me who are predisposed to pay a bit more on an airline where I know the pilots and mechanics are well-paid and happy with their jobs.
We need a new social contract with workers, but not of the sort Northwest executives envision. For their part, mechanics and their union need to be more flexible, more willing to go with the ups and downs of the company and industry rather than just play positional politics. In fact, most workers would be willing to make sacrifices to help their companies when risks and rewards are more evenly shared, when they do not feel like they are being fleeced as those on the executive floor cash out. Northwest executives do not have the moral authority to make such requests.
CEO Doug Steenland received over $4.5 million in total compensation last year, and he and three executive vice presidents recently split over $1 million in a “phantom stock” trade. If workers share in the bounty of fat years, and if they see management take meaningful cuts in lean times, they will be willing to make sacrifices. And they will be more likely to double-check those pumps before we take off.
Edward F. Fischer is an economic anthropologist whose current research looks at labor relations in Germany.