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FedEx Parting Calls for a Party

July 1, 2013

Sometimes a cigar is just a cigar, but to all who have played a part in the grand story of FedEx, the Boeing 727 is not just an airplane.

So when the last of FedEx’s fleet of aging but venerable  727 workhorses made its final run on June 21,2013, it was an event made for  fans and fanfare. It was a video moment;  mental scrapbook fodder for hundreds of current, former and retired employees.

When the last 727 rolled toward the hanger for the last time, it was heralded by  blasts from two water cannons, a ceremonial bagpiper, and hundreds of uplifted phones snapping pictures. The day’s climax was preceded by hours of laughter, live music, volumes of finger food, memory-laden speeches,  oohs and ahhs over kids and grandkids, and the easy camaraderie of people who have something special in common.

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Every corporate dream has to start somewhere.

When Federal Express launched a new era in logistics, commerce and communications from Memphis on April 23, 1973, the company owned 14  sporty, French-made executive jets, Dessault Falcon 20’s .  Each could carry a maximum of 6,200 lbs. of cargo and travel up to 1700 nautical miles in favorable conditions. The first night, 186 packages were handled in the  hub.(Tonight, it will be about 3.4 million worldwide.)

Federal regulations on airlines and in the banking industry placed heavy restrictions on what the new cargo line could do, deliver and fly. When deregulation in 1977-78 opened up world markets to FedEx,  three-engine Boeing 727’s became the company’s mainstay. The 727’s could carry 40,000 lbs. of cargo (nearly seven times that of the Falcons) and fly up to 2700 nautical miles nonstop.

The 727  made all the difference for a young company with global dreams.

FedEx start-up stories can be heard wherever folks gather for good times in Memphis – in bars, backyards, and the chicest soirees.   Stories about the  lean times. About the scrappy, “ragtag” group that sometimes had to use their own credit cards to gas up the planes. About the hole in the office floor overlooking the hanger. About the time when Fred Smith made payroll by jetting off to Las Vegas with the company’s last $5,000 and winning at blackjack. The early times were fraught with drama but  the corporate culture abounded with passion, energy, humor, grit, and tenacity.

CorporateTaxDodgers062913

Corporation-bashing is all the rage in some circles today. Capitalism is Michael Moore’s new whipping boy. No corporation is perfect, made up as they are of us fallen humans. But all companies have values, good or bad, stated or implied. Fred Smith and his original team  wove a corporate culture of respect for both the customer and the employee team. The principles conveyed in the company mantra “People-Service-Profit” always put people first.

If we take care of our people, the philosophy goes, they will deliver great service to customers, resulting in a profitable enterprise. That’s the culture that has won FedEx a place in Fortune magazine’s Best Companies to Work for Hall of Fame and annual recognition as one of America’s – and the world’s – Most Admired Companies.

fedex family house

Today, FedEx is a special blessing to Memphis  and the 28,000 FedEx team members based in Tennessee (primarily in Memphis). Memphis has benefited from the people and profits of FedEx in innumerable ways. As a rule, FedEx corporate philanthropy has been pegged at a minimum of one percent of annual pre-tax profits. In 2011, it gave away 1.5% of $3.14 billion (you do the math) to projects all over the world, including a long list of Memphis organizations such as Youth Villages, United Way, MIFA, LeBonheur Children’s Hospital, Memphis Botanic Gardens, and FedEx Family House. Consider that the next time you read a one-sided news story about the “evil” of corporations like FedEx who use legal strategies to avoid overpayment of taxes.  Maybe it’s just me, but I’d rather FedEx use its profits to create more jobs and give directly to worthwhile charities than filter them through the I.R.S.

But I digress. We were talking about planes.

fedex planes - 2 sizes

Retiring the last of the 727’s marks another significant change in the nature of the company. The phase-out of 727’s began in 2007, part of a fleet modernization program that is replacing 727’s, MD 10’s and MD 11’s with Boeing 757’s, 767’s and 777’s. The newer planes consume far less gas, have larger cargo capacities, and are  far more  cost-efficient and earth-friendly. These efficiencies are a necessary response to global markets’ growing preferences for cheaper, less expensive ground transport (think UPS) over FedEx’s premium, overnight services. The next chapter for FedEx also includes a trimmed down workforce. The 727 retirement ceremony occurred just weeks after a generous buy-out program aimed at employees with at least five years of FedEx experience attracted 3,600 participants. The buyout is expected to reduce the company’s annual expenses by $600 million.

FedEx is known for hiring the best and the brightest from all over the world. The 727 retirement event highlighted the international diversity of FedEx employees and the company’s demographic impact on Memphis. The blazing sun moistened faces of many hues. The crowd’s dominant wardrobe of sundresses and khakis was punctuated by the occasional sari. People chattered in accents from Sudan to Southaven, renewing friendships, revealing future  plans, recalling favorite FedEx stories.

fed ex  crowd

It was at once the face of Memphis and the face of the world.

At one time, FedEx operated the largest fleet of 727’s anywhere. The final flight for FedEx on June 24th also marked the retirement of all 727’s in U.S. domestic service, the  end of an era. For FedEx, it is the beginning of a new and exciting chapter.

FedEx is the quintessential American success story.  Time and again, the company has faced crises and failure (remember Zap mail?) yet soldiered on to another round of success. Sounds a bit like Memphis history to me. (Yellow fever? Massive floods? The King assassination?)

Here’s a plan. What if Memphis took a page from Fred Smith’s book?  What if we created a vision and a plan to make the vision happen? What if we applied to our plan the principles of people first, and service to one other, and work that would lead to prosperity for all? What if we only elected our best, brightest and wisest to lead us? What could Memphis be under that scenario?

I’m game if you are.

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7 Comments leave one →
  1. July 1, 2013 9:11 pm

    It’s progress, but I’m still sorry to see them go. The 727 is one of the more elegant shapes in the airliner world – even if they do smoke like an eighth grader out behind the gym. 😉

    • July 2, 2013 4:00 pm

      Ahh, yes, I recall the image vividly. (Are we dating ourselves, Bill? Do 13-year old wannabe hipsters still smoke? Anybody?) Thanks for commenting!

  2. Travis Lewis permalink
    July 1, 2013 9:20 pm

    Great article, Eve. Thanks for sharing it with us. Travis Lewis, C3

  3. July 1, 2013 11:42 pm

    Let’s face it. Fed-Ex is a superior company, especially when it comes to taking great care of their employees and also when it comes giving to charities. Let go ahead and praise them for all this! And these new planes will be far more effective by saving fuel cost across the board for the company. But this only a short-term bandage at best. To illustrate, Fed-Ex will still not decrease over all emissions into the skies. Thus, the current and future emissions rate by Fed-Ex planes, along with other airlines, will still fill our skies with deadly fumes; and these flights are nearly nonstop as it is. Meanwhile cancer rates will continue to soar higher than ever before as the demand for transporting all goods and services continues to go higher. However, real soon, no airline will be able meet their demands. And Fed-Ex is not the only industry with this same problem, as shipping goods and services by any means is reaching peak costs, with few benefits. Across oceans, whereby football-field-sized ocean liners that are also polluting the sky and all of the water, both fresh and salt water, 24 hours a day, 7 days a week, it is a far worse off senario than it is for the airlines. It seems as if the entire transportation industry, including ground services, is now spending a dollars worth of energy to transport a dimes worth of merchandise; and all that is going to be left for us is the waste byproducts that seem to be killing us all off in one way or the other. Now add this serious problem to the depleting of our worlds forest…and what we have here is little or no oxygen for us to breath. Perhaps these corporations are not as personally responsible as we might think, but when we all know about these ongoing problems and they have been clearly pointed out for several decades, and little or nothing has ever been done about it, then we can blame these corporations for not making massive changes to their business practices. Besides, the rising price rate of commercial fuel cannot be overcome by Fed-Ex long-term; and if they cannot drive down this cost, say for their overnight delivery services, then they may soon go out of business anyway. Maybe this will finally save our world after all. Let’s face this then, Fed-Ex is not competing that well with other companies like UPS who is focusing mainly on ground services; far cheaper than Fed-Ex currently provides. And, if all the airlines continue on in this same path, then all of these airlines may have to shut down at least all of their tourism based flights. This shut down process seems to already be happening as you read this comment that I am making. This is not a comment based on fear mongering, but a comment based on fact finding. Now pay close attention to the facts that are found and the fear will be more tolerable…maybe even eliminated, as the problems will be naturally resolved as these business begin to shut down.

    • July 2, 2013 4:18 pm

      Thanks for commenting, David. I didn’t elaborate on this in the post, but for the record, FedEx’s fleet modernization program has a principal goal of reducing fuel costs and lowering carbon emissions. Goals include reducing carbon emissions from aircraft by 30 percent by the year 2020 and sourcing at least 30 percent of jet fuel from alternative fuels by the year 2030. Extensive measures are also being taken to reduce delivery vehicle emissions. It’s tough to figure the balance between the benefits of global commerce and its environmental impact. Always good to see major corporations like FedEx take their environmental responsibilities seriously.

  4. July 2, 2013 4:01 pm

    Oops, big typo on Zap mail corrected. Where is my copy editor????

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