Running head: NEGOTIATION CASE STUDY REVIEW 1

Negotiation Case Reviews

Rondeeda Magby

Student, Chemeketa Community College

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This paper reviews two cases of negotiations and what resulted or did not result from the

negotiations. The first case is about the negotiations of Southwest Airlines and the Aircraft

Mechanics Fraternal Association (AMFA). The second case is about Amazon and the city of

New York. Both cases did not or have yet to negotiate a resolution.

Case #1 - Southwest Airlines Sues Mechanics in Labor Dispute (Zach Wichter, March 1,

2019). This article in The New York Times comes after four years of failed negotiation of

contracts for mechanics who are members of the Aircraft Mechanics Fraternal Association

(AMFA).

Negotiations have been on-going for several years. “The mechanics of AMFA union have

cited safety concerns of farming out approximately 75% of the maintenance work to

international third-party vendors.” (AMFA National & Amfa, 2019). The AMFA mechanics are

concerned that Southwest may be putting passengers at risk by participating in “cheap Labor” by

un-licensed, un-certified, international workers, as well as eliminating the mechanic positions

here in the states. “These foreign outsourcers are not required to be certified by the FFA and are

not subject to the drug and alcohol testing as required in the United States.” (Congressman John

Garamendi Introduces the Aircraft Maintenance Outsourcing Disclosure Act, 2018).

Additionally, surprise inspections of international facilities are difficult due to the distance.

Mechanics in the United States must have an assortment of certifications and licensing by the

FFA and are subject to unplanned on-site inspections by the FFA.

Southwest Airlines claims that the mechanics participated in an intentional, illegal

slowdown. “The Carrier said its mechanics took an unusually high number of planes out of
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service in recent weeks, a move seen as a negotiating tactic in a contract dispute.” (Zach

Wichter, March 1, 2019).

Negotiations have been dragging out over the past several years. At one point, the airline

had proposed to delete the entire section in the contract which restricts outsourcing without the

union’s consent. According to the airline, the union became combative and disrespectful and

prevented an agreement, so they decided to continue their outsourcing efforts.

The AMFA had revealed their focal point in making their stand against using unqualified

foreign mechanics to perform work that must be performed by certified and licensed mechanics

in the United States. The AMFA also contended that the airline was sacrificing safety of its

passengers in lieu of cheaper labor and that most mechanics have not received any type of raises

in the past four years.

Mediation failed to produce an agreement, and both sides are still at an impasse. The

airline sent Justin Jones, Vice President Tech Ops Planning and Performance to the mediation.

Mr. Jones made a presentation and then failed to return after the break. Mr. Jones had no

authority to negotiate as well and effectively stalled the negotiations.

In January 2019, AMFA submitted a proposal to Southwest which was a change in

economics only. AMFA stated, “We fully expected to receive a counterproposal – that’s how it

works when you’re involved in a negotiation where a deal is the ideal outcome.” (AMFA

National & amfa, 2019)

To date, mediation will continue, but both sides appear to be unmoving and unwilling to

concede any willingness to come to an agreement.

Case #2 - Amazon thought its plans for a New York HQ campus was in the bag. (“Seven

Negotiation Lessons from Amazon’s HQ Disaster in Queens”, 2019)

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The state of New York would have seen an approximate increase of 25,000 plus jobs

paying in excess of $100,000 each with all the ancillary economic benefits. (“Seven Negotiation

Lessons from Amazon’s HQ Disaster in Queens”, 2019)

This plan was supported by the mayor and governor of New York, but the deal had

unanticipated opposition. Decide-Announce-Defend-Abandon, (DADA), is the style of

negotiation used by Amazon which presents frank take-it-or-leave-it demands. This style of

negation often does not produce results compared to more traditional back and forth negotiations.

Amazon had planned to split its headquarters between Queens, the city of New York, and

Arlington, Virginia. Many critics were local politicians. Due to paying Amazon, “They argued

that it is absurd for city and state taxpayers to subsidize one of the world’s most valuable

companies, owned by the world’s richest man, with as much as $3 billion in taxpayer money.”

(Jackson, 2019). Billions of dollars in tax breaks were offered as an incentive to Amazon.

Negotiations were held in private, causing suspicions to arise. Opponents felt that any

deal reached with Amazon should have been transparent and undergo the regular review process.

Once Amazon was faced with opposition they immediately pulled out as is the negptiation style

of DADA negotiation.

Amazon failed to earn enough support in this multi-party deal. They narrowly and

secretly negotiated without by-in, public support, and Amazon failed to build a winning coalition

against any opposition. Amazon instead focused on making the deal secretly and in fact, had still

been trying to seal the deal the day before they officially pulled out of the deal.

According to Rep. Alexandria Ocasio-Cortez, “Today was the day a group of dedicated,

everyday New Yorker’s and their neighbors, defeated Amazon’s corporate greed, its worker

exploitation, and the power of the richest man in the world.” (Leskin, 2019.)
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Jeff Bezos of Amazon abruptly decided to cancel the project which blindsided the mayor

and governor who thought the deal was made pending the drafting of the language of the deal.

Amazon failed to gain public trust and appeared to be big money requiring the locals to

give them more money just for their presence and a promise of jobs. Those opposing felt that

although more jobs would have been a given, that they were being held for ransom by paying an

exaggerated amount of money for Amazon to set up shop in their city. Labor unions opposed the

Amazon deal due to their concerns about the companies poor working conditions and Amazon’s

opposition to unions.

Others feel that the opponents should look more closely at the long-term effects of

rejecting this deal. “If there is no economic opportunity, there are no jobs.” “If there are no jobs,

there is no tax revenue, and without taxes, jobs and opportunity, New York will no longer be first

among cities.” (Jackson, 2019)

The public opposition was probably a bad deal for New York in the long run. A full

realization of the effects of the loss of potential jobs, tax revenue, and opportunity may never be

known. Amazon will find other, more willing locations to do their business and will probably not

feel near the effects of the dead deal as will New York.

Amazon’s take-it-or-leave-it negotiation strategy did not sit well with the residents who

would have had to pay the richest man in the world with the world’s richest company to be there.

Amazon could have hired a relationship manager, negotiated openly instead of secretly, and

thought more about pie-expansion. Had Amazon worked with the public to determine what

would motivate them to accept the deal, there may have been a way to expand the pie.

Alternatively, those officials who represent the people could have opted to include and educate
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the public. They could have taken feedback about what would persuade for their support and

willingly accept Amazon.

In summary, both cases appear to have a lack of individuals who want to negotiate. In the

Southwest airlines case, the airline has clearly determined that the risk of international

outsourcing is worth the cost savings of the outsourcing. The AMFA mechanics union seems to

have no leverage or bargaining power against this, but they are still working with mediation to

finish the contract negotiations. Amazon held private meetings to make a deal but once the

public gave no support, Amazon cancelled the project. Amazon came into the negotiation

utilizing the DADA style of negotiations so once opposition seemed strong, they cancelled the

deal.
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References

Wichter, Z. (2019, March 01). Southwest Airlines Sues Mechanics in Labor Dispute. Retrieved

from https://www.nytimes.com/2019/03/01/business/southwest-airlines-mechanics-

lawsuit.html

AMFA National, & Amfa. (2019, January 31). The Real Cost Of Southwest Airlines Using

Foreign Outsourcing Of Heavy Maintenance. Retrieved from

https://medium.com/@AMFANational/the-real-cost-of-southwest-airlines-using-foreign-

outsourcing-of-heavy-maintenance-712f68c6057b

Congressman John Garamendi Introduces the Aircraft Maintenance Outsourcing Disclosure Act.

(2018, June 08). Retrieved from https://garamendi.house.gov/media/press-

releases/congressman-john-garamendi-introduces-aircraft-maintenance-outsourcing

AMFA National, & Amfa. (2019, February 11). Delay and Distort: The Truth About What

Really Happened During Our Negotiations With Southwest. Retrieved from

https://medium.com/@AMFANational/delay-and-distort-the-truth-about-what-really-

happened-during-our-negotiations-with-southwest-38a03928cd73

Seven Negotiation Lessons from Amazon's HQ Disaster in Queens. (2019, March 08). Retrieved

from https://hbswk.hbs.edu/item/seven-negotiation-lessons-from-amazon-s-hq-disaster-

in-queens

Jackson, K. T. (2019, February 12). New York Needs Amazon. Retrieved from

https://www.nytimes.com/2019/02/12/opinion/amazon-hq2-new-

york.html?action=click&module=RelatedCoverage&pgtype=Article®ion=Footer
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Leskin, P. (2019, February 15). Amazon was having official talks with city officials just the day

before it canceled the New York HQ2. Retrieved from

https://www.businessinsider.com/amazon-negotiating-hq2-deal-day-before-canceling-

nyc-2019-2