New Economic Era (02:02)
With the American economy headed toward a crisis labor and management were locked in a battle. In 1983 Eastern Airlines was heading toward economic ruin. Voices from both sides comment on the cultural of the corporation at that time.
Machine Workers Fight Back (02:14)
Bitter wage negotiations escalated for ten years between Eastern Airlines and its three unions. In 1983 deregulation triggered a financial crisis. Labor and management faced the destruction of the company and the loss of 38,000 jobs.
Francis Cabot Lowell (02:11)
Self destructive conflict at Eastern Airlines had been going on at American companies since the beginning of the wage system and the first arrangements between workers and owners in America's early factories.
New Industrial Order (01:46)
In 1926 Fritz Lang's "Metropolis" presented a vision where workers were factors of production with no reason to care about anything but their wages. Most American union leaders never sought a voice in running factories.
Post War Economy (02:05)
World War II made the American economy stronger and brought 30 years of prosperity that the country mistook for a permanent condition. The affluence of the 50s and 60s covered the conflict between labor and management.
Era of Competition (02:06)
In the 1970s and '80s, Japan, Germany, Taiwan, and South Korea invaded American markets. Eastern Airlines began to unravel in 1978. Deregulation brought over 100 new nonunion carriers to the market with low labor costs and low ticket prices.
Eastern Airlines Financial Conditions (02:36)
In September of 1983, Continental Airlines, led by CEO Frank Lorenzo, declared bankruptcy citing high labor costs. Labor groups were infuriated when it used Chapter 11 to void its high priced union contracts. Unions refused to take a pay cut.
Competing Under Deregulation (03:30)
The labor war at Eastern Airlines was seen as a battle between Machinist Union leader Charlie Bryan and CEO Frank Borman who bought a record number of fuel efficient planes. Eastern had to lower ticket prices as debt kept rising.
Radical Labor Proposal (03:02)
Charlie Bryan rose to power by working his way up the union hierarchy at Eastern Airlines. He was elected president of the machinists union in 1980 on a platform to end wage concessions. In 1983 he proposed a financial stake in the company.
Progressive Labor Plan (02:53)
In December of 1983, Borman, and Bryan announced Eastern's new labor pact, the details of which are described here. Traditional business leaders find this way of management threatening.
Scientific Management (02:26)
Eastern Airlines' new accord broke with American industrial tradition. Today most American firms are still unconsciously guided by the legacy of Frederick Taylor who believed in a strict division of responsibility.
Tapping Employee Potential (03:27)
When Frank Borman assumed command at Eastern Airlines in 1975, he abolished executive perks and helped his workers unload baggage. He was not eager to sacrifice power. Under the new agreement workers ran the field at Logan Airport.
Eastern Airlines under New Deal (01:42)
In 1982 Al Marescalchi handled baggage. After the 1983 agreement, he planned the loading of planes, checked weight in baggage compartments and coordinated with flight control. The new deal gave employees an incentive to work harder.
Fostering Shop Floor Entrepreneurship (03:27)
Machinists could buy back wage cuts by inventing ways to improve productivity. Jobs could be done in house if they were done cheaper than outside contractors. Machinists gained access to Eastern Airline's financial records.
New Financial Crisis in 1985 (02:05)
Eastern's program of machinist/labor cooperation was a success. Motivated mechanics, executives, pilots and flight attendants invented ways to save the company over $100 million. Two years later fare wars sent the airline into a tail spin.
Rekindled Labor Wars (02:31)
There were no established procedures for jointly handling the new crisis at Eastern. By 1986 a management consultant recommended Chapter 11 bankruptcy to void union contracts. Banks threatened to put the airline into default.
Motion to Sell Eastern Airlines (02:30)
Since declaring Chapter 11 Frank Lorenzo had expanded his empire. Texas Air owned Continental and New York Air. Eastern approached him in part because unions feared his hardball tactics. Bryan and the machinists held out on wage cuts.
Market Place Rules (01:51)
After the sale to Texas Air Frank Lorenzo's new management team laid off 2,000 employees and threatened pay cuts up to 60 percent. Charlie Bryan was banned from Eastern property. Frank Borman resigned.
New Economic Era (02:13)
Since the sale of Eastern Airlines, workplace cooperation has been largely ignored. Managers have sought profits while neglecting the potential of America's workforce. The country faces the choice to continue in its old ways or reinvent the corporation.
Credits: Collision Course (01:32)
Credits: Collision Course
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