LTL news: YRC makes plans to streamline operations
October 27, 2011
Earlier this week, less-than-truckload transportation services provider YRC Worldwide (YRCW) took steps to augment operations of its national operations of YRC, its largest subsidiary.
In a memo sent by YRC President Jeff Rogers to the entire YRC organization, Rogers outlined what he described as a series of organizational changes designed to streamline and improve YRC’s efficiency, with its primary priorities being to simplify, focus, and execute.
“Providing reliable, damage-free service is the highest priority for our YRC team,” wrote Rogers. “To help us achieve that goal and improve our ability to execute, we are consolidating our geographic divisions from four to two. The West Division will cover markets from the west coast up to and including Chicago, Kansas City, and Dallas. The East Division will cover everything eastbound.”
Rogers added that by design the majority of sales and operational areas will remain intact, with most terminals aligning with the current operational areas while sales territories will be served by the same account executives
And he also stated that with these changes, come executive appointments, including: Bill Anderson leading the East Division operations team as Division Vice President, Operations and Dirk Abernathy as East Division Vice President, Sales; and Dan Gatta leading the West Division operations team as Division Vice President Operations, and Don Horning as West Division Vice President, Sales; Mark Olszewski will continue to lead the YRC Reimer Mexico and Puerto Rico teams; Don Pabst at Vice President, Equipment Services; John Colbern as Vice President, Engineering; and Brian Thompson as Vice President, Pricing.
“This [news] is exactly why the change in leadership was needed and is good for the company,” said Satish Jindel, president of Pittsburgh-based SJ Consulting. “In spite of some things that went wrong under Zollars’ leadership, the company focused on some of the financial issues it was faced with on a short-term basis aside so the new team under Welch is now able to put more focus on the business side of things, as opposed to financial and banking-related changes. Zollars said all along that what the company needed was to turn a profit rather than turning to people that were sick and tired of giving it to the company.”
And Jindel said with a focus on having a management team in place that is driven and selected with the objective to help the rank and file—whether they are drivers or dockworkers or salespeople—and to go to customers and show them the level of determination they have to making the company a better run organization and get that extra shipment or two from customers that it had before and regain what they had, given its tremendous losses in the $3 billion to $4 billion range over the last several years.
To regain even 5 or ten percent of shipments it lost during that period could go a long way, he said, and a focus on pricing and handling only profitable freight are well-suited for a carrier because of the market conditions, concerning capacity and supply balances that are in place. This sets the table for YRCW to have a profitable fourth quarter and not have to rely on outside sources for cash infusions to stay afloat.
In September, YRC parent company, YRCW, completed its long-awaited financial restructuring. company shareholders unanimously voted to have YRCW common stock diluted, according to media reports.
This news followed a $500 million restructuring announced in July, which included a new $400 million lending agreement.
Before the restructuring, YRCW had 48 million outstanding shares. After the restructuring, it has 1.9 billion shares, meaning former shareholders will own just 2.5 percent of YRC. The other 97.5 percent is now owned by new shareholders comprised of lenders, bondholders, and labor union members, according to Reuters.
When the restructuring was first announced in July, YRCW officials said it would enhance the company’s liquidity and provide a “runway for the continued growth in revenues and earnings.”
In the second quarter of this year, YRCW reported a net loss of $39 million on $1.257 billion revenue, compared to a net loss of $10 million on $1.119 billion revenue in the second quarter of 2010, which included an $83 million after-tax benefit.
YRCW’s third quarter earnings release is scheduled for Friday, November 4.
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