LTL news: Report suggests YRCW and Teamsters are negotiating on a pension contribution reduction
June 09, 2010
Less-than-truckload freight transportation services provider YRC Worldwide is currently seeking pension cuts with the Teamsters, according to a report from the website of Teamsters for a Democratic Union.
YRCW officials declined to comment on this development.
In 2009, YRCW Teamsters took a 15 percent wage concession for a 15 percent ownership stake in the company, as well as an 18-month pension contribution freeze and a reduction in health and welfare contributions. YRCW executives said at the time this deal was inked that these measures would save the company $45 million per month through the end of 2009 and increase to roughly $50 million per month in 2010. This agreement requires YRCW management to resume full participation in the pension plans on January 1, 2011, according to the TDU.
TDU reported that YRCW and the Teamsters are “discussing the possibility of [YRCW re-entering Teamster pension plans at a greatly reduced contribution rate.”
The TDU report also said that on August 1, 2010 the National Master Freight Agreement employer contribution rate will increase to more than $8 per hour, which represents about $40 million per month—or nearly $500 million annually—in added employee compensation.
Ken Paff, the national organizer for TDU told the Central Penn Business Journal that current pension contributions are $7.60 per hour. And the TDU report said the Teamsters are considering giving YRC a break on the pension cost so that an amount lower than $8 per hour would be contributed.
“If the International Union decides to give YRC additional relief from compliance with the contract pension language on January 1, there will have to be another national vote of YRC Teamsters to approve the deal,” the Teamsters said.
This news follows a May announcement made by YRCW in which it said that joint committees representing International Brotherhood of Teamsters leadership and YRCW management are being formed to address the company’s competitiveness and re-entry into union pension plans.
“The self-help recovery that the company and union accomplished together has stabilized the business and put us back on the path to success,” said Bill Zollars, chairman, president and CEO of YRC Worldwide, in a company statement issued on May 24. “As customers continue to increase their business with YRC Worldwide, and the company returns to profitability, these efforts will provide further momentum as we focus on additional improvements to solidify the company’s industry leading position.”
Despite reports of business picking up, YRCW has been challenged over the course of the recession, losing more than $2 billion over the last 12 operating quarters. For the first quarter of 2010, YRCW reported a quarterly net loss of $274.1 billion, with operational revenue at $1.06 billion down 30 percent annually.
And earlier this year, it completed its debt-for-equity exchange in which it received tenders—or offers—for roughly $470 million and represents about 88 percent of its outstanding notes. And as previously reported by LM, YRCW’s financial condition has been under scrutiny due to the debt-for-equity exchange, coupled with difficult LTL market conditions, spurred on in large part by excess capacity and pricing issues.
Various industry analysts have commented that YRCW is taking the necessary steps to stay afloat.
“YRCW is looking at all avenues to keep the company alive,” said Satish Jindel, principal of SJ Consulting in a recent interview. “It does not mean YRCW is going to be shutting down tomorrow, but it does not mean it is out of the woods and on a path to recovery.”
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