LTL news: YRCW to meet with Teamsters about NMFA agreement
Jeff Berman, Group News Editor -- Logistics Management, 6/26/2009
OVERLAND PARK, Kan.—Less-than-truckload (LTL) transportation services provider YRC Worldwide (YRCW) said this week it plans to meet with the International Brotherhood of Teamsters to modify the terms of the current labor agreement for its employees covered under the National Master Freight Agreement.
YRCW officials said these meetings “will address alternatives to help reduce the company’s cost structure and preserve operating capital going forward.”
"Entering into discussions with the Teamsters is another important step in our overall plan to strengthen our financial position during this difficult economic climate,” said Bill Zollars, Chairman, President and CEO of YRCW, in a statement. “We have made progress with various stakeholders, including our pension plan trustees and our bank lending group, to modify agreements, and we are grateful to the Teamsters for their willingness to consider further adjustments to our contracts to help reduce our cost structure and enable us to be competitive with others in our industry."
In January, YRCW Teamsters employees—numbering roughly 40,000—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 this 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.
In related news, on June 18 YRCW finalized an agreement with the Central States Pension Fund in which it said it will “provide certain of the company’s real estate as collateral in lieu of making contribution payments during the second quarter,” with the estimated contribution payment deferral to Central States being approximately $83 million. YRCW added that this agreement requires the company to repay the deferred contributions over a three-year period beginning in January 2010.
Central States is the largest of YRCW’s International Brotherhood of Teamsters ("IBT") multi-employer defined benefit pension funds, representing 58 percent of the company's monthly pension funding obligations, according to YRCW officials. YRCW is also finalizing discussions with its other IBT multi-employer pension funds to join as participants in this same agreement. Currently, the company has deferred about $50 million related to these other funds.
And in May the Central Pennsylvania Teamsters Pension Fund announced its intention to “freeze” new pension accruals for YRCW participants from June 1 until the end of 2009, according to the Teamsters Web site. Under this premise, the Teamsters said no new benefits will accrue to members, although it does not affect already earned pension credits of eligibility for benefits.
And the Western Conference Teamsters Pension fund—the next largest one next to Central States—recently removed YRCW out of its fund, according to an industry source that declined to be identified.
“It is real shaky with YRCW,” said the source. “All these funds have trust agreements with YRCW, and they have their own rules they have to follow, because they are governed by the labor department and the pension protection act [among others].”
This news follows a video announcement YRCW Chairman, President, and CEO Bill Zollars made to customers earlier this 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.
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.
In recent weeks, YRCW has made multiple executive changes for its sales, marketing, operations, finance, technologies and service, and YRC Logistics as part of what it called a new functional organizational structure.
Stephens Inc. Analyst Thom Albrecht wrote in a recent research note that YRCW's financial situation continues to deteriorate to the point where it is reasonable to assess the prospects of a Chapter 11 bankruptcy filing.
Some possible options for YRCW to raise cash cited by Albrecht, include: selling its logistics division; shutting down USF Holland, the largest part of YRC Regional, which does $1-$1.2 billion in annual revenue; raising equity; and selling New Penn, a northeast-based LTL division that serves 11 states.
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.
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just go out of business already..........let all these lazy teamsters regret all the damage they did to their own company.........
teamster hater - 2009-28-6 11:49:00 EDT
