American Airlines 'Insources' Maintenance Work
MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
Outsourcing is a well known business practice. American companies cutting costs by sending labor intensive jobs overseas. Unionized workers in this country often take the brunt of those changes. Well, here's the story of one big company, America Airlines, that's trying an experiment with its unionized mechanics. Instead of shipping their jobs to South America, the company is trying to turn them into a profit center.
From Dallas, NPR's Wade Goodwyn reports.
WADE GOODWYN: For much of their history, American Airlines and its workers have had a seriously dysfunctional relationship. Collective bargaining sessions at American Airlines were battles that could end up with the president of the United States threatening to intervene.
But all that changed in 2004, when the airline found itself just weeks away from bankruptcy. In order to survive, American and the 27,000 members of the transportation workers union had to start over.
Mr. CARMINE J. ROMANO (American Airlines): First of all, we had to both agree that we were willing to run our business together - very difficult.
GOODWYN: Vice president Carmine J. Romano is in charge of American Airlines' aircraft maintenance facility in Tulsa, the largest in the world. At first, Romano was wary of the idea that the only way to avoid bankruptcy was to start sharing his power with his union workers, but a deal was worked out.
The 6,000 mechanics in Tulsa agreed to a significant cut in salary, benefits and vacation. In exchange, the workers would have equal input in running the operation. Two years into it, the veteran company vice president is a true believer.
Mr. ROMANO: It's so much more powerful because now we have a workforce that is basically working with us, making decisions together, and when we go and implement, it's a much quicker success.
Mr. DENNIS BURCHETTE (TWU Local 514): When I have my union meetings now, and I've got 200 guys in there, instead of complaining about management, they sound like business people. And I tell them, I said look what they're doing to us. They're changing us down here. We used to cuss management, and now all we do is talk about business.
GOODWYN: Dennis Burchette is president of TWU Local 514. Two years ago, American told the union it wanted to cut the time it took to do a major overhaul in half. Romano promised Burchette if the mechanics could pull it off, nobody would lose their job. Burchette says his guys went to work.
Mr. BURCHETTE: The workers did it. The workers designed a model, top to bottom. They designed it all, and then it was up to the leadership here at the base to pull the trigger and say let's go ahead and do it.
GOODWYN: The mechanics completely redesigned the way their work was organized. Instead of 800 mechanics working 25 days, now an overhaul is accomplished with just 450 mechanics working 13 days, and the cost has been reduced by 55 percent, too.
Mr. STEVE GLIME (American Airlines): This is the pulse line. This is our MD-80 heavy check overhaul hangar. We have four positions here. It comes into the first position for three days.
GOODWYN: Manager Steve Glime proudly shows off one of his seven overhaul lines for the mainstay aircraft for American, the MD-80. It's a little like Santa's workshop. A jet rolls in and is descended upon by dozens of elves dressed like aircraft mechanics.
(Soundbite of machinery)
GOODWYN: In the next hangar over, jet engine mechanic Dale Olah(ph) shows off the massive new hardware American installed to make it easier to move the engines around.
Mr. DALE OLAH (American Airlines): And this system here is called is called a gantry rail system. It's a system that we designed. A couple of AA mechanics sat down and drew this up, and it was a dream thing for us. We never thought it would be built.
GOODWYN: But to the mechanics' amazement, it was built. Most of these mechanics have been here decades, and because of the size of American's fleet, past and present, they know how to overhaul lots of different types of airplanes. This expertise is what American Airlines executives are banking on as it tries to become a permanent service provider to other airlines. American's mechanics have now gotten their turnaround time so fast even some South American airlines have begun flying their jets to Tulsa for overhaul.
Mr. GERMAN AFROMOVITCH(ph): (Synergy Groups): The resources that a company like American Airlines has to provide maintenance, they are second to none. They came up with the formula that was not only very competitive in price but was very efficient in deliveries, timing, etcetera, You know?
GOODWYN: German Afromovitch is the chairman of Synergy Groups, an energy company which owns four South American airlines including Avianca and Ocean Air.
Mr. AFROMOVITCH: We are very, very happy. As a matter of fact, we are sending our planes from Avianca. Avianca does its own maintenance here in Bogotá, but we don't have the capacity that American has.
GOODWYN: So instead of sending American work to South America, South America is sending jets to American, turning the outsourcing equation on its head. American Airlines says it now has 50 customers and expects to bring in $100 million in third party revenue in 2007. The target for 2008 is $175 million in revenue. That's music to jet mechanics' ears.
Wade Goodwyn, NPR News, Dallas.