Hey Fred, Take Ownership of the Debacle

[MrFedEx]

Yes you, Mr. Smith. You've made a sheetload of promises, most of them as hollow as your head. The stock got pumped-up on your hype, and now people are starting to figure your lies out. That means not only Wall Street, but your formerly faithful employees. It's hard to put a dollar value on it, but having a workforce that no longer cares makes a big difference in the bottom line.

Your plan to gut Express and replace us with low-IQ "bots" looks good on a spreadsheet, but only pencils-out if you get an acceptable amount of productivity from our replacements. Maybe that will happen, maybe not. But for now, you've got a bunch of people who'd love to see your head on the end of a stick.

Consequences....get ready for yours.

 

[ManInBrown]

Amen. Smith

 

[fred can shove it]

Bingo!

 

[thedownhillEXPRESS]

Couldn't agree more.

 

[IsItME]

Anyone that thinks this company is going to have sustainable performance and a robust stock is stupid. They can't cut fast enough to offset the economy, the failure and the rampant stupidity. The quality employee will be wiped out and replaced with low paid garbage. Of course, service will suffer and the company will eventually fail. This giant pig will win regardless because of his personal wealth but it looks miserable every single time he shows his stupid face. When's the last time he's looked marginally satisfied with his life? He's pathetic, he got his.

 

[Bailey4]

I agree with IsItMe. There is not going to be some giant leap of growth. It is obvious that FedEx corporate has been actively pursuing many ways to switch FedEx Air shipments to Ground. Why.....It inflates the Ground numbers and makes it look like more new company growth than there really is and Fred makes more per piece on top of it. I think he can't grow Ground on its own merits to so to fill his Ground network, he is pushing Express customers to Ground in as many ways as possible. Call it lining his pockets one last time before he gets too old and steps down.

All the while we get the usual...don't worry about the buyouts.....we have a cost cutting plan in place that will come to fruition by 2016. Ha....I bet you do and it doesn't involve buyouts for couriers. But I bet it does include a good reduction couriers. Hence... all the jargon about ......all you have to do is improve your stops per hour "little lamb" so we can cut as many of you as possible. And then, when we give the last of you, some junk split route we will be sure you never seen the dinner hour again or your house except when no one else is home. You should be thankful to have a job. Already, reemerges the old...any route not above 95% will be check ridden and prosecuted. Funny I notice how the SPH numbers of the "manager favorites" (manager favorite= those who will cheat or have too much "intel" on management) routes and those low paid newbies always stay lower even if they have a teeny tiny area to cover compared to the others. And I notice that the routes who are coming in under 95% had a recent jump of a stop or so in their goals that the manager calls corporate standards. Give me a break do you think we can't do math or measure the total distance our routes cover. If you look at the SPH goals in our station you will find the favorites are given all the stops to ensure they can make their SPH on the delivery and pick up sides and the rest are just waiting for their SPH numbers to be inflated so the manager can say they are not making goal and gotta go. Oh, yeah and the changes to the favorites route are already starting ...to ensure that they will be allowed to remain in the station along with manager until they both get picked off.

Never mind seniority, that is such a joke that this company respects it one bit. This place is like a never ending episode of "survivor". They pick on whoever is has highest seniority but least connected until they can drive them out. Why...all because they make a few more meager peanuts than the courier next to them. You would think at least they could muster the decency to respect the seniority of the full and part time people who work for them. I get tired of their never ending charade that we are so protected and what a top notch company they are if you give them all you got. I look at how they treat those with seniority and think as I move up the seniority ramp that will be me......closest seat to the door....not even the best seat on the Titanic......but just closest seat to the door.

The company service. Just try typing in a Google search and you will find plenty of Fedex stories. FedEx haters. I read those stories and many are Ground services and you can tell it from the content but the customer does not seperate us. So Congrats Fred...you have blurred the line between the companies which appears to be dragging the FedEx reputation right of a cliff. But you will have your money so never mind the legacy of FedEx .....it will eventually implode and you will be forgotten. No one is going to remember you just because you had a pocket full of money.

 

[MrFedEx]

Anyone that thinks this company is going to have sustainable performance and a robust stock is stupid. They can't cut fast enough to offset the economy, the failure and the rampant stupidity. The quality employee will be wiped out and replaced with low paid garbage. Of course, service will suffer and the company will eventually fail. This giant pig will win regardless because of his personal wealth but it looks miserable every single time he shows his stupid face. When's the last time he's looked marginally satisfied with his life? He's pathetic, he got his.

Giant Pig Smith. It has a nice ring to it. I still kind of like Rat Bastard Smith and Dear Beloved Leader Smith, but you've got me leaning toward the pig deal.

 

[thedownhillEXPRESS]

I like Middle Class Jobs Destroyer Smith personally....

 

[MrFedEx]

I like Middle Class Jobs Destroyer Smith personally....

Yes, but he's a Job Creator, so don't be a Commie and criticize him, OK? After all, whatever he says on FOX News is taken like the gospel by the Right Wing faithful.

IsItME and Oat 44 make some great points. Yes, Fred is always going to be extremely wealthy and he has it made, but Express is never going to be the great profit generating machine he envisions. The restructuring is not going to reinvent the wheel because it's going to take more people to get the job done. DRA is not going to live-up to expectations, which means that it might take 1.4 or 1.7 or 2.0 FTEs' to do what one skilled and proficient FTE did before. Even if that new courier only makes $15 per hour and never gets OT, they will still be relatively inefficient.

Fred is spending huge money on new planes and vehicles, which will take many years to recoup. It's a great idea to replace the 727s' with 757s' and 767s', but that needed to be done a long time ago. All of those new Nissans, Econolines, and Sprinters replaced W700s' that still had a lot of life in them in most cases. It's pretty clear how Fred intends to pay for all of this, and that's by cutting labor costs, the way he's always done it. On other words, we will be making the sacrifices that bring Express up-to-date, even though it was poor management that kept the company from keeping-up with the times and the competition.

We keep hearing that Express volumes are flat and/or declining. So where are the revenue increases going to come from? Yes, a more fuel-efficient fleet will save money, but they are still several years out from eliminating the 727, so what is going to fill those new planes? Since few care about customer service or Sales Leads, there isn't likely to be much growth in the overnight sector. FedEx isn't providing the level of service big-time shippers demand, and the new breed of courier isn't likely to provide it. The only way to truly increase service is to throw more PT DRA couriers at the problem until they get everything off on time, which negates all of those supposed savings anyway. DRA will only work if you have dedicated delivery couriers and dedicated pickup couriers, which means a basically PT workforce. Talk to your local dispatcher if you don't believe this statement. DRA is a disaster for the PU side of operations because it doesn't take pickups into account...only deliveries. Dispatchers are pulling their hair out trying to work around this, but it's an inherent fatal flaw in the DRA system. More inefficiency.

I know R1a and others think that DRA will make most of us redundant, but so far that isn't being proved. What is concrete right now is the fact that Fred is spending a ton of money when he is supposed to be saving it. Long-term, savings will be realized, but Wall Street doesn't think long-term. They want results right now, and they aren't going to be happening IMO.

I foresee a new Express with fuel-efficient planes and right-sized vehicles that are going to be running around half-full. That won't be very profitable, especially when it requires more hourlies (albeit PTers) to do the job. In other words, the restructuring will be a failure.

 

[vantexan]

Yes, but he's a Job Creator, so don't be a Commie and criticize him, OK? After all, whatever he says on FOX News is taken like the gospel by the Right Wing faithful.

IsItME and Oat 44 make some great points. Yes, Fred is always going to be extremely wealthy and he has it made, but Express is never going to be the great profit generating machine he envisions. The restructuring is not going to reinvent the wheel because it's going to take more people to get the job done. DRA is not going to live-up to expectations, which means that it might take 1.4 or 1.7 or 2.0 FTEs' to do what one skilled and proficient FTE did before. Even if that new courier only makes $15 per hour and never gets OT, they will still be relatively inefficient.

Fred is spending huge money on new planes and vehicles, which will take many years to recoup. It's a great idea to replace the 727s' with 757s' and 767s', but that needed to be done a long time ago. All of those new Nissans, Econolines, and Sprinters replaced W700s' that still had a lot of life in them in most cases. It's pretty clear how Fred intends to pay for all of this, and that's by cutting labor costs, the way he's always done it. On other words, we will be making the sacrifices that bring Express up-to-date, even though it was poor management that kept the company from keeping-up with the times and the competition.

We keep hearing that Express volumes are flat and/or declining. So where are the revenue increases going to come from? Yes, a more fuel-efficient fleet will save money, but they are still several years out from eliminating the 727, so what is going to fill those new planes? Since few care about customer service or Sales Leads, there isn't likely to be much growth in the overnight sector. FedEx isn't providing the level of service big-time shippers demand, and the new breed of courier isn't likely to provide it. The only way to truly increase service is to throw more PT DRA couriers at the problem until they get everything off on time, which negates all of those supposed savings anyway. DRA will only work if you have dedicated delivery couriers and dedicated pickup couriers, which means a basically PT workforce. Talk to your local dispatcher if you don't believe this statement. DRA is a disaster for the PU side of operations because it doesn't take pickups into account...only deliveries. Dispatchers are pulling their hair out trying to work around this, but it's an inherent fatal flaw in the DRA system. More inefficiency.

I know R1a and others think that DRA will make most of us redundant, but so far that isn't being proved. What is concrete right now is the fact that Fred is spending a ton of money when he is supposed to be saving it. Long-term, savings will be realized, but Wall Street doesn't think long-term. They want results right now, and they aren't going to be happening IMO.

I foresee a new Express with fuel-efficient planes and right-sized vehicles that are going to be running around half-full. That won't be very profitable, especially when it requires more hourlies (albeit PTers) to do the job. In other words, the restructuring will be a failure.

Isn't the plan to increase profit by pushing Express shippers over to Ground? It isn't revenue they are looking to increase as much as it is profit, which takes less revenue with Ground freight to produce more profit. Further savings are realized by not paying as much OT at Express. We are still a ways off from them having all components in place.

 

[DontThrowPackages]

Isn't the plan to increase profit by pushing Express shippers over to Ground? It isn't revenue they are looking to increase as much as it is profit, which takes less revenue with Ground freight to produce more profit. Further savings are realized by not paying as much OT at Express. We are still a ways off from them having all components in place.

So you hire 2 PTers to cut OT from one FT employee? Uniforms, insurance, training, vacation time, sick days? How much is it really about OT and more about just making the Overnight division all PT'ers? Never made sense to hire so many people only to create work for them to do. I don't buy it.

 

[barnyard]

Interesting that your most profitable volume is ground. Exact opposite at UPS. Air is by far and away our most profitable.

 

[MAKAVELI]

Interesting that your most profitable volume is ground. Exact opposite at UPS. Air is by far and away our most profitable.

It's because of the contractor scam that pays low wages, no benefits, and no ot paid to the drivers.

 

[Ricochet1a]

Interesting that your most profitable volume is ground. Exact opposite at UPS. Air is by far and away our most profitable.

It is because the labor involved in the pickup-delivery of Ground is so grossly under-compensated in comparison to even Express Couriers. If the Ground 'sham' were to be eliminated and their pay rates were to come up to at least Express levels, then the margin per piece would fall so dramatically, that Express would end up having the higher per piece margin.

It is what happens when labor is utilized which isn't compensated anywhere near what the real productivity would support. Also, a business model which circumvents the intent of labor law in regards to establishing a 'balancing mechanism' between labor and employer via the potential use of unionization - also facilitates the unexpected situation where Ground service yields a higher margin per piece than if that same piece went through Express.

 

[bbsam]

R1a, I think you overstate this. For Ground drivers to be compensated at Express levels would drive our profit marginbfeom 17.7% to1% over the last quarter? Seems a bit exaggerated.

 

[Ricochet1a]

R1a, I think you overstate this. For Ground drivers to be compensated at Express levels would drive our profit marginbfeom 17.7% to1% over the last quarter? Seems a bit exaggerated.

If Ground were to IMMEDIATELY increase the compensation of ALL drivers by 50% (what would be needed to be in parity with Express compensation), the final margin per Ground package would PLUMMET.

You can plug in any number you want, but if you have a situation where a Ground driver is getting off 800 pieces a week (and being paid $600 to do it), then were to increase the compensation by $300/wk (making total compensation equitable with Express levels), that would be a direct hit to margin on each package. If revenue and all other costs were held constant, final margin to FedEx would fall by 37.5 cents per package - resulting in the Ground margin per package falling UNDER that of Express'.

Ground's profitability is SOLELY due to the under compensated labor being used there - not to some inherent systemic efficiency or management expertise. If the IC model were to be declared inappropriate tomorrow, Ground would go from being the profit center of FedEx, to being a serious drag on overall FedEx profitability, which would most likely result in FedEx eventually getting out of the non-air package movement business. If for nothing else, to get rid of an opco that would be 'contaminated' with organized labor which could act as an inducement to the wage employees in the remaining opcos to organize themselves.

 

[bbsam]

R1a the numbers matter. Do you assume the worst? Do you assume all drivers are worked 12 hours a day?

 

[Ricochet1a]

R1a the numbers matter. Do you assume the worst? Do you assume all drivers are worked 12 hours a day?

Plug in ANY numbers you want. Number of hours worked to get off the packages isn't a variable in determining margin (given the use of a 'salary').

If revenue and all costs EXCEPT labor are held constant - the labor cost for drivers increases by 50%, the final margin to Ground will drop - so significantly so that the margin per package will be lower than Express. (This is all assuming that Ground would have to increase 'payments' to the ICs - or would their margin 'eat it'?)

Even if your drivers are only worked 8 hours a day - it doesn't matter. It is a MACRO level analysis, not an IC level analysis.

If Ground drivers (company wide) were to have their compensation increased by 50% (bringing them to parity with Express Couriers), the final margin per package for Ground (assuming they 'juggled the numbers" to ensure IC margin is held constant) would decrease. You can use whatever numbers for illustration you want, but margin would fall so dramatically, that FedEx would seriously reconsider whether it would be worth it to be in the ground package movement segment.

If Ground were to lose use of the IC provisions through court action, FedEx would SERIOUSLY reconsider whether it would keep Ground in operation. FedEx knows damn well that if the IC model were to be thrown out, the drivers of Ground (now employees and not helpers of contractors), would be organized in a few months and FedEx would be looking at not only increased labor expense, but the specter of having a wage employee labor union within FedEx. FedEx simply WON'T allow that to happen to contaminate the rest of FedEx. Ground would be dropped like a hot potato.

UPS is able to 'pull it off' through economy of scale. FedEx Ground is able to pull it off through under compensated, misclassified labor. In the event that FedEx would lose its ability to use the IC provisions of labor law, Ground wouldn't be 'forced' out of business, but FedEx wouldn't tolerate a marginally profitable opco with organized labor in it - FedEx would drop it to preserve the other opcos.

 

[vantexan]

So you hire 2 PTers to cut OT from one FT employee? Uniforms, insurance, training, vacation time, sick days? How much is it really about OT and more about just making the Overnight division all PT'ers? Never made sense to hire so many people only to create work for them to do. I don't buy it.

No, they didn't hire the PTers just to cut OT. In the very near future there won't be enough work for those FTers. I'm just guessing, but the emphasis will be on part-timers, and eventually the remaining FTers will lose their 35 hr guarantee. I think they'll want at least a percentage of the station to still be FT, but the Labor Dept says FT is 30 hrs or more. This gives them some flexibility when they need to work people longer, such as Peak. But while hiring 4 PTers right now doesn't look smart, pretty soon there will most likely be alot less FTers because I'm guessing quite a few will throw their hands up in disgust and quit. They'll need those extra people. Not to mention some of those PTers might not last long.

 

[vantexan]

It is because the labor involved in the pickup-delivery of Ground is so grossly under-compensated in comparison to even Express Couriers. If the Ground 'sham' were to be eliminated and their pay rates were to come up to at least Express levels, then the margin per piece would fall so dramatically, that Express would end up having the higher per piece margin.

It is what happens when labor is utilized which isn't compensated anywhere near what the real productivity would support. Also, a business model which circumvents the intent of labor law in regards to establishing a 'balancing mechanism' between labor and employer via the potential use of unionization - also facilitates the unexpected situation where Ground service yields a higher margin per piece than if that same piece went through Express.

Just heard from a former coworker that a new Ground/HD facility is being built along I-20 in east Texas. FedEx seems pretty confident that they will keep their System in place.