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Hey Fred, Take Ownership of the Debacle
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<blockquote data-quote="Ricochet1a" data-source="post: 1112313" data-attributes="member: 22880"><p>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. </p><p></p><p>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'. </p><p></p><p>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.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 1112313, member: 22880"] 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. [/QUOTE]
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