Pioneer Press, St. Paul, Minn., August 25, 2005, Thursday

Knight Ridder/Tribune News Service
Copyright 2005 St. Paul Pioneer Press (St. Paul, Minn.)
Pioneer Press, St. Paul, Minn.

August 25, 2005, Thursday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: Northwest decision on replacements expected soon

BYLINE: By Julie Forster

BODY:
ST. PAUL, Minn. _ As the war of the words over Northwest Airlines' operations continues between the company and its 4,400 striking mechanics, pressure is mounting on both sides. The next pivotal moment is expected to be an announcement by the company about its plans to hire permanent replacement workers instead of operating with a temporary work force.
Northwest has shown that it is going to restructure the airline by paying its workers less and outsourcing more. The threat of new permanent hires will just put a little more spin on a plan already in motion.
Right now, the airline is operating with a work force of 1,200 temporary replacement workers and 350 licensed managers, along with outside vendors.
On the first day of the strike, the company said it would consider hiring permanent replacements. Current replacements are expected to apply.
On Wednesday, Chief Executive Doug Steenland declined to give more specifics. "We haven't made a decision, and we haven't set a timetable for making it," he said in an interview.
But observers say they believe a decision will come soon.
"The next step will be the permanent replacement of mechanics and cleaners," said Harley Shaiken, a labor expert with the University of California, Berkeley. "That is what Northwest will announce sooner rather than later."
No talks have been scheduled in the dispute, which enters its sixth day Thursday. Mechanics union officials believe that Northwest's operations are struggling far more than the carrier admits. They expect their leverage will improve as those problems mount.
They greet the prospect of a threat of permanent replacements with a shrug. "If they can find mechanics willing to work under the terms that Northwest wanted to pay, more power to them," said Steve MacFarlane, assistant national director of the Aircraft Mechanics Fraternal Association. "We refuse to work under those conditions and we are prepared to walk away and start our lives somewhere else."
Northwest has some incentives to move ahead. A temporary work force, one that lives out of hotels and is bused to work, could lose its motivation, experts say. And the interim operating plan isn't cheap: Northwest has estimated internally it will cost $107 million.
On Wednesday, Steenland painted a rosy picture of the new work force.
He described operations as going well, noting that the maintenance crews are comprised not only of the trained temporary replacements but also of 350 licensed maintenance managers who are key players in making the company's strike contingency plan work.
"That group basically represents the best mechanics that existed in all of Northwest," he said. Over the course of time, mechanics who are "the best of the best" have been plucked off of hangar floors and invited to join the ranks of management. "This is really the dream team of airline maintenance groups."
It has come at a price. In the second quarter, the company spent $20 million training replacement workers on Northwest's procedures and equipment.
"They have a very determined strategy and they are plunking a lot of resources into this," Shaiken said. "Northwest is not going to blink at this point."
Northwest could use an outsourcing company and possibly invite subcontractors to bid on the Northwest maintenance work. The subcontractor would employ the mechanics.
"That is one way that corporations like Northwest can subcontract the labor relations issues as well as the work," said Rebecca Givan, an assistant professor of collective bargaining at Cornell University School of Industrial and Labor Relations.
Yet Northwest and its mechanics union are obligated to continue bargaining even if replacements become permanent. "We are always prepared to do that," said Steenland.
If the company does decide to hire permanent replacements, the strike could continue and the pressure on the airline to settle would not magically disappear. "The picket lines stay up, the publicity stays out there," said Wesley Wildman, a labor attorney and professor of public policy at the University of Chicago Graduate School of Business.
Typically, observers say, before the replacement workers are hired, the company delivers an ultimatum to striking workers. They could say: "You have a week to come back here and declare your strike broken," Wildman said.
At this point, a return to work under the company's new terms seems remote. "The only threat that the replacement worker would have is if we intended to come back," said MacFarlane. "At this stage of the game, Northwest was getting rid of us anyway."
Jitters over Northwest's operations during the strike meant another down day for the stock on Wall Street. Its shares dropped 37 cents, or nearly 7 percent, to close at $5.16 Wednesday. The airline has declined to release daily on-time performance figures, and outside estimates have showed a sharp spike in canceled and delayed flights. Striking mechanics say the airline is covering up a brewing operating collapse.
Steenland painted an optimistic picture of the airline's operations. He said Wednesday afternoon the day's flights were running 80 percent on time. The day's completion rate _ the flipside of cancellations _ was 98 percent as of 4 p.m., up from about 97 percent on Monday and Tuesday.
Plane repairs and grounded aircraft piled up last Friday, the final day of negotiations. Though Northwest is still recovering, it is making the necessary repairs. "The trend lines are moving in the right direction and we feel good about it," he said.
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