TOM BEARDEN: It began with cheering in a parking lot across the street from the Northwest Airlines maintenance base in Minneapolis.
UNION LEADER: As of right now, AMFA is on strike
TOM BEARDEN: After years of futile negotiations and months of preparation by the airline and by members of the Aircraft Mechanics Fraternal Organization, or AMFA, the long anticipated strike was on. Within minutes, picket signs went up at the airport terminal and on the streets surrounding the maintenance hangers. The strikers knew their futures were on the line.
UNION LEADER: The world is watching us. We're going to do what we have to do, if it means taking this company into bankruptcy, if it means taking this company down.
TOM BEARDEN: Northwest's final contract offer to the mechanics included laying off 2,000 workers and reducing everyone else's pay by 25 percent. Labor relations vice president Julie Showers.
JULIE SHOWERS: We told them very clearly from the beginning that these were not negotiations as usual, that the company absolutely had to realize $176 million in savings.
TOM BEARDEN: Kevin Horgan repairs aircraft flight instruments.
KEVIN HORGAN: I've given 17 hard years for this company. They've been a company of takers; they have underestimated and underappreciated their workforce. A majority of us are fed up with that. We've been treated unfairly in the last round of concessions. I honestly think I could give half of everything I make and we still would not be able to compete because of the climate.
TOM BEARDEN: The next morning the picket signs were still there. But despite noisy support from passing motorists, so far the strike has had little effect on airline operations. That's because the pilots, flight attendants and most other airline personnel did not honor the picket lines and went to work as usual. The nation's fourth-largest airline also hired 1,500 mechanics to replace the 4,400 striking union members, hoping they will be able to keep its fleet in operating condition for the immediate future.
NORTHWEST EMPLOYEE: It looks like we're going to operate from 9:00 to 9:00.
TOM BEARDEN: The Professional Flight Attendants Association, which represents nearly 9,500 Northwest flight attendants, is operating a strike information center, even though their members voted against authorizing a walkout. Volunteers are there to answer member's questions about whether they should cross picket lines, a decision Bob Krabbe says is up to each individual. Krabbe says Northwest's plan is to divide and conquer the unions individually.
BOB KRABBE: They've already asked us for $143 million in wage concessions; they haven't explained those wage concessions yet. We're all very curious to see how they came up with that number because the numbers don't seem to add up. They've come to us and told us they want to take a good chunk of our flying away from us. If Northwest has its way, the only flying that will be the exclusive flying of the current flight attendants is within and between the 50 United States. If Northwest were able to do this, literally thousands, literally thousands of good paying American jobs will be going overseas.
TOM BEARDEN: Northwest rejects the assertion that it's trying to bust unions, but Showers says the airline will pursue concessions from the other union groups in the future.
JULIE SHOWERS: Certainly we in labor relations will now turn our attention to those discussions and move to complete the next three rounds of bargaining as quickly as possible. Our goal with those unions, as it was with AMFA, will be to reach a consensual agreement that's fair to our employees and still allows the company to achieve the overall labor cost restructuring that's necessary.
TOM BEARDEN: There is another reason that Northwest's largest union isn't honoring the mechanics' picket lines. Robert DePace runs the International Association of Machinists Local, which represents ticket agents, ramp workers and clerical personnel. The IAM used to represent the mechanics, too, until they bolted to AMFA.
ROBERT DE PACE: It's a bitter history. You know, when the mechanics left the IAM, I believe it was in 1999, it was a bad divorce.
TOM BEARDEN: Recently, in a strongly worded letter to AMFA, DePace said his members haven't forgotten what he called the "derogatory, despicable remarks at IAM members, " DePace said AMFA "tried to insult us by calling us bag smashers, lowlifes, ramp apes and knuckle draggers." DePace said AMFA members have never tried to work with the others union groups since the split, and says AMFA doesn't have the financial resources to support a long walkout.
ROBERT DE PACE: And we felt that if we were part of this strike, it would be the IAM and other unions paying for it. To me it's difficult to put your membership out on strike when you don't have money to sustain it.
TOM BEARDEN: Do you think AMFA has the power to kill Northwest Airlines?
ROBERT DE PACE: No, not without the support of the other unions. No.
TOM BEARDEN: Engine mechanic and AMFA member Dave Latch thinks Northwest management wants bankruptcy. He and his co-workers were picketing the main entrance to their former workplace.
TOM BEARDEN: Do you think this will kill Northwest Airlines?
DAVE LATCH: I think it's going to be an excuse for them.
TOM BEARDEN: Excuse, what do you mean?
DAVE LATCH: An excuse for whatever reason they do go bankrupt, they're just going to blame it on us, instead of working with us. They're just going to use it as an excuse.
TOM BEARDEN: Back at the airport, Lorraine Skoglund and her extended family had just arrived from San Diego for a family reunion.
TOM BEARDEN: How was your flight today?
KELLY PERRY: It was nice. It was a good flight.
LORRAINE SKOGLUND: Left on time, smoothest flight I've been on.
TOM BEARDEN: But like many other passengers, Skoglund and granddaughter, Kelly Perry, were worried about whether things will go as smoothly for their return flight next week. She said they had too much money invested to be able to afford buying tickets on another airline if things go downhill.
LORRAINE SKOGLUND: With all of us, the tickets were $405 apiece.
KELLY PERRY: And there's five of us, so it's a lot of money.
TOM BEARDEN: AMFA and Northwest management have no further negotiating meetings on their schedules. Many strikers say they know they don't have a future with Northwest no matter how the strike turns out, but say they'd rather go down fighting.
GWEN IFILL: Ray Suarez takes it from there.
RAY SUAREZ: For some analysis on the strike and its implications, I'm joined by Harley Shaiken, a labor expert at the University of California at Berkeley. And Peter Cappelli, professor of management at the University of Pennsylvania's Wharton School of Business. Professor Cappelli, when one of the major unions at a big carrier goes out, doesn't that usually ground the carrier for as long as the strike lasts?
PETER CAPPELLI: You know, it used to ground the carriers back in the period of regulation. The carriers would decide not to fly, just shut down. I think more recently in more recent decades they've decided they can't shut down, they die very quickly if the income stream stops from passengers. So for the last fifteen or twenty years or so, carriers have tried to operate during strikes; if it's a big strike they just eventually shut down. But they've been trying for a while. RAY SUAREZ: Does it look to you like the union, the AMFA charge that Northwest was getting ready for this strike and may have even wanted this strike, does it look plausible?
PETER CAPPELLI: Well, you know, in these collective bargaining things here, there's a lot of posturing, there's a lot of bluffing, there's a lot of gamesmanship going on. You certainly would want to look like you're going to try to operate through the strike, even if you don't think that can you, you'd like to persuade the union that you're willing to give it a try, that you think you can get through this, maybe even break the union in the process, even if you don't think you can.
You know, I think another scenario here is what the carrier is really doing is using the threat of bankruptcy against, as part of the negotiations here, that is trying to persuade the union that if they don't come back, sit down and agree to these terms, the carrier will go bankrupt, it will go to a bankruptcy judge and hope it got what USAir got early in the year and that is the ability to pretty much avoid the union contracts if the union doesn't agree to what the company wants.
So that's I think really the gamesmanship that's going on here, and the ultimate threat, even more so than trying to operate through the strike.
RAY SUAREZ: Professor Shaiken, in labor/management confronting training replacements isn't all that unusual, but is it's new for the airline industry?
HARLEY SHAIKEN: It's not new for the airline industry. But this extent of training, and training these many workers is quite new. Northwest has been training people for 18 months; they trained 1200 or so mechanics, they trained 1500 flight attendants, whom they haven't used.
And I think more to the point, they've recently issued a report to their board indicating that they were prepared on training and on seeking to fly through the strike, to spend upwards of $100 million. I think preparations on this scale is very new even in this industry.
RAY SUAREZ: Recently British Airways was ground at Heathrow by sympathy walkouts. This time, other unions did not follow the mechanics out. Why do you think that happened?
HARLEY SHAIKEN: I think it was critical for British Airways that those sympathy walkouts absolutely shut the airline down. Here it's a complicated situation. The principal union involved, the allied -- or the AMFA, is a union that split off from the machinists and is accused of raiding the members of other unions and has very, very hostile relations with some of the other unions in the industry.
Now, AMFA went into this wanting to rely on their skills, and with a lot of courage; it's a scrappy union. But it may have been short on the longer range strategy, and I think that the whole issue of solidarity and laying the basis for a more concerted attack against the company, not just among the other unions but with the broader public more generally, was something that was lacking here, and under those circumstances AMFA is in a vulnerable position right now.
RAY SUAREZ: Well, you suggest the mechanics might not have a long range strategy. What about Northwest, can they keep up operations at this pace for long?
HARLEY SHAIKEN: Well, that's a bit unclear. AMFA is arguing that the next week to ten days are going to be critical. Clearly, Northwest has suffered, although this is very much a public relations war for both sides. By suffered I mean that they've canceled effectively one out of the every five of their flights. By that I mean that they've went a week or two early to their post-labor day schedule, which is 17 percent lighter than their summer schedule has been.
Beyond that they have had late flights, et cetera. But Wall Street is cheering their action, their stock price went up by 34 percent last week. People keep booking Northwest flights. And while they've had a lot of late flights, they've had their planes in the air. So it's an open question what's going to happen, but Northwest has put a lot of money and a lot of effort into seeing that they fly through this strike.
RAY SUAREZ: Professor Cappelli, what do you think about that, the idea that Wall Street is cheering at the same time; does the public have a different set of worries if its airline mechanics, the guys and gals who fix the planes who are out on the picket line?
PETER CAPPELLI: Right. I think, you know, for the carrier's perspective, they obviously have a real problem, they're bleeding money, they've all bled money, they've bled money since deregulation. At the moment if you look across the world, this isn't just a U.S. problem, the airline industry is sick. There are only three carriers in the world that have bond ratings above junk status.
So if you're a manager trying to run this industry or one of these carriers, what do you do? They lean on their unions frankly not because unions are really the problem here, they lean on them because they can't think of anything else to do.
Why don't they lean on the oil companies that are raising their fuel prices, they don't lean on them because they can't think that it's going to do any good to lean on the oil companies. But they lean on the unions because they can and it works. You can get concessions out of your unions, and if you get them at one carrier then they spill over to another carrier and I think, you know, frankly from the union's perspective this very much is a race to the bottom. If one union makes concessions, the others have to.
Back to the question you were asking earlier about the unions cooperating with each other, the unions have never cooperated with each other in this industry, even back to the period of regulation, they never, pretty much almost never supported each other's strikes; their interests are very different. And the lack of cooperation has obviously hurt them. But I think from a Wall Street perspective, you think what could they do, well, it can't hurt to cut union wages, it's got to help. And I think in the short term it does.
The problem comes when the other carriers get the same concessions. You get this crazy situation in the airline industry at the moment, it's not the low cost carriers that are beating up the industry, it's the big carriers beating each other up. Southwest Airlines, which is seen as the low cost carrier, now has the highest paid pilots in the industry. Delta, which is the carrier probably in the most trouble, is largely nonunion. USAir, which is a carrier that's almost completely unionized, now has the lowest cost structure in the industry. Try to make sense of this, it's not an especially rational industry at the moment.
RAY SUAREZ: So Professor Shaiken, if you're a unionized worker in another industry or indeed at another carrier, should you be watching this confrontation with some trepidation?
HARLEY SHAIKEN: Oh very much so. I think any unionized worker and many nonunion workers have a really stake in what's taking place here. At issue is a larger question. How does a company compete often in a fiercely competitive environment? Does it compete with its workers or does it compete at its workers' expense? I think that's the fundamental issue that's going on here.
One step below that is the whole question of outsourcing, that's a central question here. The mechanics or the maintenance workers at Northwest had 10,000 workers in the year 2000. They're down to 4400 now. And Northwest wants to slice that in half yet again. Beyond that is the whole conduct of what these negotiations were about.
We're used to collective bargaining being where both sides come in with different positions, and a compromise results at the end. Something very different, as Miss Showers, the vice president of labor rests at Northwest mentioned early on, these were not any ordinary set of negotiations. The company came in with a fixed position and in effect gave its employees the choice of the guillotine or death by a thousand cuts. If that's the choice --
RAY SUAREZ (interrupting) And, Harley Shaiken, we're going to have to end it there.
HARLEY SHAIKEN: -- then we see what took place.
RAY SUAREZ: Thanks a lot for being with us.
HARLEY SHAIKEN: Thank you.