How Northwest hijacked Minnesota

Fewer jobs. More debt. And more outsourcing.

Kurt Kulschar knew he was going to lose his job long before the layoff notice actually arrived in April 2003. Kulschar was a member of the Airline Mechanics Fraternal Association (AMFA) and an employee of Northwest Airlines, where he had watched co-workers get the notices for several years. He survived two rounds of layoffs--a big one following 9/11, and a smaller round the airline blamed on decreased traffic with Asia following the outbreak of SARS. Even though Kulschar, who is in his mid-30s, had been with the airline for eight years, he knew he didn't have enough seniority to survive a third round.

Strictly speaking, Northwest's contract with its mechanics doesn't allow for layoffs, so the airline had invoked a clause called force majeure. The provision allows for exceptions to the contract in the event that a "greater force" introduces unforeseeable and unavoidable complications: natural disasters, acts of God, and, unfortunately for Kulschar, war.

Technically, the Iraq War was the reason Kulschar was being laid off. But like most of the mechanics working in the hangars at Minneapolis-St. Paul International Airport, he believed the real issue was the financially troubled airline's plan to increase the amount of maintenance being done overseas by cheaper, nonunion workers.

There were things Kulschar could have done to avoid immediate layoff. He could have accepted reassignment to a less desirable Northwest facility, perhaps at New York's La Guardia airport. But it would only have postponed the inevitable, and maybe not for more than a few weeks. Kulschar's heart wasn't in it. "When it ended, I was nine months on the third shift," he recalls, most of it over a nasty winter. "It was cold, and when those hangar doors open, it gets colder. You're climbing around in aircraft, moving them; it's physically demanding."

Far from being glorified grease monkeys, airline mechanics are highly trained. Kulschar went $40,000 into debt to earn a bachelor's degree in aviation technology. He holds a commercial pilot's license, a dispatcher's license and, most important, an airframe and power plant license, which makes him personally responsible for the safety of the passengers on every plane he declares airworthy. It's such a heavy responsibility that federal law requires licensed mechanics to report safety issues, even repairs not completed to their satisfaction.

"I'm still accountable for repairs I did over the eight years I was there. There are 747s flying over the Pacific right now that I worked on. My A&P number is on them," he says. "A voice inside me said, 'That's it.' I saw the direction management wanted to take it. I saw where it was going. Northwest knew from the way the seniority list runs they lost a lot of good guys."

Northwest has laid off 4,100 AMFA mechanics since 2002--1,900 of them in the Twin Cities. That's 40 percent of the maintenance workforce, a much bigger hit than the airline's other unions have taken. Another 900 mechanics will be cut before the end of the year. Many of the laid-off technicians have found new careers. Their cross-training in electrical engineering, structural engineering, pneumatics, hydraulics, and other high-tech specialties has made them attractive to Minnesota's expanding medical device manufacturing industry, hospitals, refineries, amusement parks, and other employers. Unfortunately, few are earning anything near the $50,000 to $70,000 a year with benefits that they made at Northwest.

The losses don't just affect the mechanics. In the last 15 years, Minnesota taxpayers have repeatedly been asked to help the hometown airline. The rationale each time was to keep good jobs here. In 1991 and again in 1994, Northwest promised to maintain 17,883 jobs in the state and to create 2,000 more mechanics' positions in northern Minnesota in exchange for massive taxpayer-funded bailouts.

The vast majority of the mechanics' jobs never materialized, however, and the airline's employment is now well below the agreed-upon level. More than half of Northwest's current maintenance spending is with outside firms. With the demolition of one of its Twin Cities hangars later this year, even more work may be outsourced. The airline already performs heavy maintenance on its larger jets in China and Singapore. If industry analysts are correct, in coming years many more planes could be serviced in India and in Central and South America.

Northwest's argument is that without massive cuts to the cost of labor, it can't survive skyrocketing fuel costs, much less compete with low-cost competitors employing nonunion workforces. The airline notes that the trend is industry-wide and says its outside contractors are held to the same high standards it has for the mechanics it employs.

"We are forced to compete with low-cost carriers on price," says Northwest spokesman Kurt Ebenhoch. "We are also forced to compete on cost, and one way low-cost carriers achieve low costs is by outsourcing maintenance. Some outsource all of their heavy maintenance, and the standards are the same no matter who does it and where it's done."

But a growing chorus of voices, including AMFA, federal regulators, and the self-styled architect of the 1991 bailout, U.S. Rep. James Oberstar (D-Chisholm), say maintenance is the wrong place to look for fat to cut. Two federal studies have found that outside contractors don't get enough scrutiny.

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