This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Unions Are a Victim of Their Own Success at the Nation's Airlines April 26, 2003 By STEVEN GREENHOUSE Strange as it may seem, the unions representing tens of thousands of workers at American, United, Northwest and other airlines have been taking such a pounding partly because they have been so successful. The pilots, the machinists and other airline unions have obtained some of the highest wages in organized labor in decades past, helping push their airlines' operating costs so high that the airlines became vulnerable to downturns and more recently the emergence of low-cost upstarts like JetBlue. As a result, many airlines have pressed their unions for concessions to stay afloat, and that has raised questions about whether other industries, seeing the airlines' success in squeezing labor costs, will adopt similar "accept concessions or else" tactics. Probably not, said Richard W. Hurd, a professor of industrial and labor relations at Cornell University. "The airline industry will only become a model for other industries that end up in economic trouble," he said. "If other industries face serious economic problems in the coming months, the demonstration effect of the airlines could have some impact." But other labor experts said the tough stance taken by airlines could embolden companies in many industries to throw down the gauntlet to labor, especially when the economy is weak and a Republican president has shown little sympathy toward unions. "A concessionary atmosphere in any industry always threatens to bleed over elsewhere," said Harley Shaiken, a specialist on labor issues at the University of California at Berkeley. Airline unions, meanwhile, must wonder whether they will ever be able to recapture their strength of yesteryear. That will hinge in large part on whether they can succeed in forming unions at new airlines like JetBlue and ATA. To have success, organizers will have to the make the case that unionization does not necessarily mean heavy financial losses or bankruptcy. "Unions can say, `Look at Southwest Airlines, they're fully organized, they have a productive relationship with the unions and they've been the most profitable airline,' " Professor Hurd said. Southwest is Exhibit A for the unions' argument that high wages and benefits do not necessarily doom airlines. Indeed, they argue strenuously that labor costs are just one of the many reasons for the financial woes at United, American, Northwest and US Airways. Those airlines have expensive hub-and-spoke structures, and air traffic has been hurt badly by the Sept. 11 terrorist attacks, the war in Iraq and the spread of sudden acute respiratory syndrome. But there is no denying that high labor costs can push otherwise inefficient airlines over the edge. In many ways, the airline unions are following the path of steel and auto workers, who from the 1950 through 1970's had the most powerful unions, securing wages that were the envy of most Americans. Companies like U.S. Steel, General Motors and Ford could easily afford to pay hefty wages because they dominated their markets. But the very success of those unions helped push the operating costs of those companies so high that it opened the door wide to lower-wage foreign competition, which for the last two decades has severely pressured steel and auto companies and their unions. Similarly, the success of airline unions raised airline operating costs, opening the door to lower-cost competitors like JetBlue. "Wages are clearly a factor in the troubles that the steel and auto industries had, but wages were not necessarily the defining factor," Professor Shaiken said. "It's easy to make wages the culprit, but wages did not give you problems like the Ford Pinto. Wages did not give you the failure of the steel industry to modernize. But high wages may have worsened other problems." The airline unions, like the steel and auto workers, are far weaker than in their heyday. But like the others, the airline unions hope to avoid the scrap heap by cooperating with employers, perhaps by granting concessions, to keep them competitive. At American and United, the pilots, machinists and flight attendants approved billions of dollars in labor savings because they were eager to rescue their companies and their jobs. "In times of trouble, American industry comes to unions to seek their help and almost always when the need is real, the unions give it," said Julius Getman, a labor law professor at the University of Texas. "This has happened in industry after industry. Of course, as industries get weaker, the unions in those industries get weaker, too." Some industry experts say the airlines can learn from the steel and auto industries. Labor relations in those industries were often rancorous, but when competition from imports caused a wave of plant closings and layoffs in the 1980's, unions joined with steel and auto companies, as never before, to work together to increase productivity and quality. "Those industries went from having a very adversarial labor-management relationships to being much more cooperative," said Paul F. Clark, a professor of labor studies at Penn State University. He said that increased labor-management cooperation would be vital for saving several airlines from oblivion. But he said the executive bonuses and special pensions that American Airlines promised its top executives had badly undercut labor's willingness to cooperate with management. "It was a critical point in labor relations, and what American Airlines did was probably the worst thing they can do at the worst time," he said. "If the airlines can move to a more cooperative relationship with labor, that can play a big role in pulling them out of this tailspin." http://www.nytimes.com/2003/04/26/business/26LABO.html?ex=1052387476&ei=1&en=ab604a488f38c846 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company