FedEx Needs You… Not the Unions
Jun 9th, 2009 | By Andrew Snyder | Category: Stock Market InvestingAfter a pro-labor Congress took over Washington and the fall of Detroit, the nation’s largest employers are doing all they can to keep unions at bay. FedEx (NYSE:FDX) has unveiled a campaign like no other.
If you want to run a multi-billion dollar international conglomerate these days, you had better have a few high-ranking friends in Washington. If not, this administration appears ready to do anything and everything it can to wipe you and your shareholders out.
The battle that is brewing between United Parcel Service (NYSE:UPS), FedEx (NYSE:FDX) and Capitol Hill is a perfect example.
While the two companies have business models that are very similar and are direct competitors with one another, their respective labor forces look quite different.
Because it started as an airline, FedEx and its nearly 100,000 hourly workers fall under the rules laid out by the Railroad Labor Act, a law designed to keep the nation’s skies and rails running smoothly despite labor disputes.
But UPS, on the other hand, must follow a different set of rules, the National Labor Relations Act (NLRA). Instead of forcing a synchronized nationwide vote to unionize, the NLRA allows workers to unionize one hub at a time, a much easier task.
Spreading unions like cancer
FedEx obviously knows the horrific damage that could be done to its bottom line if unions start calling the shots. That is why the company is preparing to spend millions of dollars promoting its “Brown Bailout” campaign designed to make current legislation, the FAA Reauthorization Act of 2009, appear to be designed solely to benefit, or bail out, FedEx’s chief rival, UPS.
In addition to the Web site, brownbailout.com, revealed today, get ready to see online ads, radio spots and television campaigns promoting the company’s lobbying initiative.
With few friends willing to fight for FedEx in a labor-friendly Washington, the company is hoping you and I will do some letter writing and phone calling. The company is hoping taxed-out taxpayers will buy the “bailout” message and join FedEx in a political battle.
As investors, FedEx is one to watch. While it is not in full-blown panic mode just yet, the company’s business model is likely about to change in a big way.
Already this year, the company is lagging Big Brown in share price performance. Over the past six months, shares of UPS are down by about 10%. Meanwhile, FedEx has lost over 20% of its value.
If union bosses start calling the shots and FedEx loses access to its cheap labor force, expect the divergence to grow even larger. There is a reason FedEx is spending billions and fighting so hard. It has a lot to lose.
As I told TFN Strategic Trader subscribers this morning, the market as a whole is a dangerous short position right now, but there are select stocks well worth selling now and buying later.
FedEx is a strong candidate.
A rough economy, surging fuel prices and political headwinds could stir big trouble.
Source: FedEx Needs You… Not the Unions
Advertisement
At Hot Stock Confidential , we've averaged over 32% gains in just 26 trading days
42% on Nymox Pharmaceutical Corp....
23% on Emergent BioSolutions Inc....
38% on the first half of our position in a U.S. refiner...
26.68% on Synta Pharmaceuticals...
How's your favorite financial newsletter working out for you?
Hot Stock Confidential = Damn Good Stocks.
Learn more...