Media
Media
The wage cut, on top of a 10 percent wage giveback approved earlier this year, would last until 2013. Together with the pension freeze, the givebacks would save struggling YRCW approximately $900 million a year, according to figures compiled and analyzed by Logistics Management.
If approved in a membership vote by approximately 50,000 current and furloughed Teamsters who work at YRC companies, the additional pay cut (approximately $1.16 per hour) will go into effect immediately after ratification. The pension termination period will begin July 1 and end December 31, 2010; the contractual health and welfare contribution increase due on August 1 will be reduced to 20 cents per hour.
YRC Teamsters make about $20 an hour. They’ve already given back $2.32 an hour in the earlier concession. With this new 5 percent request, that makes a $3.48 an hour concession made by rank-and-file YRC workers.
Give that the average age of a Teamster at YRC is about 60, the pension freeze is even harder to swallow, according to Ken Paff, organizing for Teamsters for a Democratic Union, the dissident wing of the 1.4 million-member union.
The temporary pension termination is the biggest item, a cut of $7.60 per hour in pension contributions for the first year of the 18 months, and $8.20 for the latter part of 2010. That averages to $7.73 an hour, according to Paff. There also is an additional 20-cent an hour cut in welfare payments.
Ballots are expected to mailed out Friday. They are going to approximately 50,000 current workers at YRC, including about 18,000 currently laid off or furloughed. Whether it passes is problematic, Paff said. The earlier round of wage cuts passed by an 82-18 percent majority. YRC has lost approximately $1.8 billion in its last nine operating quarters. Its second-quarter earnings report is expected the last week of July.
“It’s up to the members but they face a tough choice,” Paff said. “This is a bigger concession than most members expected. We want to maintain a strong union voice in freight for the future. But the union’s lack of organized has backed the members into a corner.”
Paff said in dollar terms, the pension freeze is the biggest issue for Teamsters rank-and-file members, followed by the 5 percent wage cut and then health and welfare third in priority.
Under terms of the agreement reached in principle by Teamsters freight committee leaders, the union gained an appointee to YRC’s board of directors, a corporate turnaround expert in place at YRC and the ability for members to obtain more stock options.
Additionally, some of the job protections advocated by TDU were added to the tentative agreement: extending recall rights to 10 years; return of office work from India; “card check” rights to organize all units at all terminals; some form of “snap back” clauses; and some limit on work subcontracted out through YRC Logistics. The details have not been disclosed regarding all of these provisions.
Late last month, YRCW and the Teamsters agreed to modify the National Master Freight Agreement.
In January, YRCW Teamsters employees voted to modify the current labor agreements for employees of YRCW subsidiaries Yellow Transportation, Roadway, USF Holland, and New Penn in various positions, including drivers, dockworkers, and clerical workers, among others.
Earlier, Teamsters at YRCW said at the time that the agreed to a 10 percent reduction in all wages paid, inclusive of scheduled increases; the suspension of cost of living adjustments (COLA) for the remaining life of the contract; and in exchange for agreeing to a wage reduction, Teamsters employees will receive a 15 percent ownership stake in YRCW, with contributions to the health, welfare, and pension plans to continue as previously negotiated.
“YRCW is looking at all avenues to keep the company alive,” said Satish Jindel, president of Pittsburgh-based SJ Consulting. “It does not mean YRCW is going to be shutting down tomorrow, but it does not mean they are out of the woods and on a path to recovery. This gives them a few more days and weeks of extra life and how they perform in that time will determine whether things continue or come to an end.”
Jindel added the amount of cost savings from the tentative Teamsters agreement is will determine whether YRCW’s lenders will support the company long enough to let it handle future shipments.
YRCW, like most LTL carriers, has had a difficult 2009 to date. In the first quarter, it recorded a $257.4 million loss, with tonnage at its national and regional units down roughly 29 and 22 percent, respectively. Part of its quarterly decline was attributed to $65 million in estimated costs for the Yellow-Roadway integration, with the units now operating under the new YRC brand name.
A report from David Ross, an analyst at Stifel Nicolaus, indicated that second quarter volumes at YRC National were down 40 percent year-over-year. YRCW is struggling under a mountain of debt stemming from its 2003 purchase of long-haul rival Roadway Express for $1.1 billion and in 2005 of regional LTL carrier USF Corp. Ross has estimated YRCW, which will do about $7 billion in revenue this year, has approximately $1.427 billion in total debt, including about $728.5 million owed to its consortium of banks.
“Shrinking to prosperity has never worked in the LTL business, yet YRC is attempting to be the first to pull it off,” wrote Ross. “We do not know, when we wind down 2009, whether the company will still be operating as it is today, operating in a different/smaller form, or closed for good.”
YRCW said that as of May 31, its cash and cash equivalents, excluding restricted cash of $61 million, was $155 million compared to $151 million at April 30, 2009. And it also said the aggregated cash balance and available unused capacity under the credit agreements was $242 million as May 31, 2009, compared to $221 million at April 30, 2009.
Source: Logistics Management
qq.com