YRCW exec Smid to take over at Yellow Transportation

Jeff Berman, Senior Editor -- Logistics Management, 4/1/2008

OVERLAND PARK, Kan.—Maynard Skarka, president of Yellow Transportation, a subsidiary of less-than-truckload transportation and global logistics services provider YRC Worldwide Inc., is retiring from his position, according to a Bloomberg report.

The report indicated that Skarka will be replaced by Michael Smid, president of YRC’s North American Transportation division. Smid has served as president of YRC National Transportation since the company combined its Yellow Transportation and Roadway management teams in January 2007. When YRCW initially made this move, it said it was done in an effort to provide accelerated growth and streamline efficiencies.

Yesterday’s personnel news was preceded by an announcement made in February that YRCW will cease operations at 27 service centers and eliminate 1,100 employees, resulting in charges of $30 million. The affected service centers were two YRCW subsidiaries—USF Holland (six service centers) and USF Reddaway (21 service centers). The company said in a filing with the U.S. Securities and Exchange Commission is part of its $100 million improvement plan for the company, and it followed a January investor meeting, when it said it intended to go forward with a “regional recovery plan.”

Satish Jindel, president of Pittsburgh-based transportation advisory firm SJ Consulting told LM in a February interview that these changes were necessary to remedy what had not been done correctly when YRCW went through restructuring with Dugan and Bestway. “They expanded those two companies out and then expanded the footprint of Holland and Reddaway, and the way they did it has resulted in them having pricing and profitability challenges. What they are doing to some extent is retrieving these regions to the kind of coverage and service they had before all of the [network] expansion they did.”

In a memo sent to YRCW employees that was obtained by Bloomberg, Smid said the following: “Our focus must be to provide the service quality our customers expect while we carefully manage cost and build for the future.” He added that the company is taking steps to augment its current growth trajectory.

Although YRCW is the largest LTL carrier in the U.S. based on sales, with 2007 revenues of $9.62 billion, noted Bloomberg, it lost $56.9 million in the fourth quarter, and YRCW recorded a $736 million quarterly loss.

And a report from R.W. Baird & Company Analyst Jon Langenfeld suggests that the company’s management change does not bode well for business.

“Management changes are yet another sign that operational issues continue throughout the YRCW platform,” wrote Langenfeld. “Issues throughout most of 2007 were confined to YRC Regional…[b]ut 4Q results and these management changes highlight the ongoing issues within the YRC National as well.”

YRCW representatives confirmed these changes for LM in an e-mail.