Logistics News and Analysis: YRCW reaches tentative deal with Teamsters
John D. Schulz, Contributing Editor -- Logistics Management, 8/1/2009
OVERLAND PARK, Kan. — 
OVERLAND PARK, Kan.—Less-than-truckload transportation and logistics services provider YRC Worldwide (YRCW) wants an additional 5 percent wage cut, an 18-month pension contribution freeze, and a reduction in health and welfare contributions from its 30,000 active Teamsters employees as part of its fight for survival.
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 freeze would run through December 31, 2010; and 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 and 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.
Given that the average age of a Teamster at YRC is about 60, the pension freeze is even harder to swallow, according to Ken Paff who organizes for Teamsters for a Democratic Union, the dissident wing of the 1.4 million-member union.
The temporary pension termination is the biggest item. This would mean 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 out to $7.73 an hour, according to Paff. In addition, there is a 20 cents per hour cut in welfare payments.
Ballots were mailed out on July 17. Whether it passes is problematic, Paff said. The earlier round of wage cuts passed by an 82-18 percent majority.
“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 organizing has backed the members into a corner.”
Paff said that 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 are third in line in terms of priority.
“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 that they’re 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.”
YRC has lost approximately $1.8 billion in its last nine operating quarters. It is saddled with approximately $1.43 billion in debt, mostly because of its purchase of rivals Roadway Express in 2003 and USF Corp. in 2005.
Jindel added that the amount of cost savings from the tentative Teamsters agreement will determine whether YRCW’s lenders will support the company long enough to let it handle future shipments.
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