YRCW, Teamsters reach tentative agreement for employees covered under National Master Freight Agree

OVERLAND PARK, Kan.—Less-than-truckload transportation services provider YRC Worldwide said today it has reached a tentative agreement with the International Brotherhood of Teamsters to modify terms of its current labor agreement for company employees covered under the National Master Freight Agreement.

YRCW officials said that details pertaining to the agreement are expected to be available next week after further discussions with labor leadership, adding that the modified agreement will be voted on by the nearly 35,000 YRCW Teamster employees. YRCW also said that the proposed changes of this tentative agreement are “designed to reduce the company’s cost structure and preserve operating capital.”

YRCW and the Teamsters said late last month they would meet to modify the terms of the current labor agreement for its employees covered under 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.

The objective of that deal was to modify the labor agreement for YRCW employees covered by the National Master Freight Agreement. YRCW said at the time that the agreed upon contract included: 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.  

This news follows a video announcement YRCW Chairman, President, and CEO Bill Zollars made to customers last month in which he said that the company’s pension requirements saddle the company with an unfair disadvantage in a crowded and competitive LTL marketplace. He added that its objective in this situation was to fix the pension fund with assistance from the federal government, as opposed to a bailout and federal financial aid.

Teamsters Freight Division Director Tyson Johnson said in a statement that while this agreement is a tough situation for YRCW and its Teamster members, it should also send a message to the LTL industry players that are slashing prices in an attempt to force YRCW out of business that YRCW will have the resources to remain in business for the long haul.

And this tentative agreement comes at a time when YRCW’s fiscal difficulties in a down market for the entire LTL industry have been under the microscope by several industry analysts, with some suggesting it could potentially go out of business.

“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.

And 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.

“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