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Mechanics say Northwest's opening proposal could mean long, difficult talks ahead
by Jeff Horwich, Minnesota Public Radio
November 19, 2004

Seeking to get costs down to compete in a difficult airline environment, Northwest has brought a controversial new contract proposal to its mechanics union. (MPR File Photo)

Earlier this month, pilots with Eagan-based Northwest Airlines approved a deal to save the carrier $300 million a year. The nation's fourth-largest airline needs to turn its books from red to black, as carriers around it slide toward bankruptcy. With the pilots in-hand, Northwest has brought specific proposals to a second major union -- its mechanics. But top union officials say with the offer Northwest put on the table, talks will go nowhere fast.

Eagan, Minn. — Back in early 2003, Northwest management laid out a goal to save $173 million a year from its mechanics and aircraft cleaners. It was part of a bigger plan to shave almost a billion dollars in annual costs at the airline. The mechanics and cleaners union said it was not feeling generous, and that's where things stood -- until last week, when union and company negotiators finally sat down to start on a new contract for the mechanics.

Jim Atkinson, president of the Aircraft Mechanics Fraternal Association Local 33 in the Twin Cities, says if Northwest was hoping for a quick deal, its opening "attack" -- as he calls it -- has made that all but impossible.

"It's unfortunate they didn't come out with a more reasonable offer," he says. They continue to ask, 'Let's get it done, let's go ahead with negotiations.' Yet they come out with something like this that leaves you no room to even look at anything."

	Local 33 President Jim Atkinson

Atkinson does not speak for the union negotiators, who keep their public comments to a minimum. But he does represent about two-thirds of Northwest's 5,400 mechanics and cleaners.

The opening proposal does not address possible wage cuts -- those numbers will come later. But it does, for example, suggest new restrictions on sick leave and holiday pay, and eliminates bereavement leave for the death of a grandparent.

And it gets at a particularly sensitive issue for mechanics: The right of Northwest to have its planes repaired by third-party companies in the U.S. and overseas.

Atkinson says the amount of such outsourced work is capped now at 38 percent.

"I guess we don't know exactly what they mean" in the proposal, Atkinson says. "If their intention is just to get rid of the cap or just to modify it to a higher percentage -- either one is unacceptable to us."

Atkinson says he had expected a tough opening stance from Northwest. But he says this proposal contains one surprising item that strikes at the union itself: Northwest proposes that mechanics be allowed to decline union membership, making the airline a so-called "open shop."

To union officials, these are fighting words. But to Northwest, it is the reality of the changing industry around them. Low-cost competitors like JetBlue operate union-free, which helps keep pay and benefits lower and offers complete flexibility on things like outsourcing.

In general, Northwest's message to employees and the press has been: "look around." Low-cost airlines, as the name suggests, generally pay less -- giving them an automatic leg-up on older airlines like Northwest. Other major airlines have entered bankruptcy, giving them legal backing to slash jobs and pay in order to survive.

Northwest doesn't comment to the media about labor negotiations. But CEO Doug Steenland addressed the matter in a message to employees early this month.

"We need to view all this with the perspective of what's going on at other large airlines," he said. "The latest news is that United announced today that it will seek another $725 million in labor reductions from its employees and has announced its intentions to eliminate its defined benefit pension plans."

Those cuts -- which are still being appealed -- included a nine percent wage cut for United mechanics. After bankruptcy, a typical employee at US Airways now makes about the same as at many low-cost carriers. Piper Jaffray airline analyst Joel Denney says Northwest needs to keep pace.

"It's at this point critical for the airline to continue getting additional cuts," Denney says. "They're not able to raise their fares enough to cover the cost of fuel and everything else. They've got to find a way to reduce their costs to get to profitability."

At an average salary of $70,000 dollars, Northwest mechanics are among the highest paid in the industry. Union officials say that's partly because of seniority; for obvious reasons, the airline hasn't hired a lot of new mechanics lately. They also say the efficiency of this highly trained workforce saves the airline money in the long-run.

But Northwest says without some major cuts, there might not be a 'long-run' to look forward to.

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