Details of tentative agreement between YRC and Teamsters are revealed

Following a tentative agreement announced late last week between less-than-truckload (LTL) transportation services provider YRC Worldwide and the International Brotherhood of Teamsters on an extension of the collective bargaining agreement of YRC’s 26,000 Teamsters employees to March 2019, details of the agreement emerged yesterday at a “two-person” meeting of local union officials.

Teamsters officials said that local unions will hold membership votes on January 25 and January 26 at local, adding that local unions will make that voting information available to members. YRC did not issue an official statement.

The Teamsters said that the tentative agreement contains significant improvements over the company’s prior rejected proposal, including:
-employees on seasonal layoff will be eligible for the lump sum bonus;
-the proposed wage freeze for current non-CDL employees has been eliminated;
-the starting rate for non-CDL new hires has been increased with a $1.00/hr annual progression;
-employees subject to the attendance policy will have a “fresh start;”
-the company’s initial proposal to take away a week of vacation from employees with three weeks has been eliminated. Additionally, vacation weeks will be paid at 45 hours/week by the end of the agreement;
-the proposal regarding the use of Utility Employees has been eliminated, and
-restrictions on the use of PTS (Performance Transportation Services) have been specified and protections for members at affected terminals have been improved

As previously reported, whatever road YRC chooses, it’s clear that shippers and its Teamsters employees hold the key to long-term survival of the venerable 90-year-old company whose roots date to the golden age of trucking.
 
YRC officials were stunned after labor pact was rejected by a 61-39 percent margin. That sharp reversal of support from the Teamsters rank and file followed three votes that approved previous wage cuts—by 77 percent in January 2009, 58 percent in August 2009 and 62 percent in October 2010.
 
Within days of the initial rejection, YRC made another appeal to Teamsters leadership. It reached what the company said was a “tentative agreement” with officials of the International Brotherhood of Teamsters on an extension of its collective bargaining agreement to March 2019. But it remains to be seen whether these revisions will pass the rank and file who have sacrificed billions of dollars in wage and fringe benefit concessions, and used the initial vote as a referendum on those past sacrifices.
 
The tentative agreement contains a number of revisions to the company’s previous proposal which address concerns raised by the Teamsters leadership and its members. The previous proposal, which was voted without reaching an agreement with the union was not ratified by the company’s employees.  In contrast, this MOU extension was negotiated with the union.
 
James Welch, chief executive officer of YRC Worldwide, calls the wage concession extension “critical to the future of the company,” and then added an ominous, somewhat desperate, note.
 
“The MOU extension is something our employees can have confidence is the best—and only remaining—path forward,” Welch said in a statement clearly designed for the rank and file.

Welch has made the continuation of those wage cuts until 2019 the linchpin of his efforts to refinance as much as $1 billion in long-term debt. Most of that debt was incurred by a pair of billion-dollar purchases, Roadway Express (in 2003) and USF Corp. (in 2005), engineered by then-CEO William Zollars, who left the company in 2011.

The financial noose is tightening. YRC is facing about $953 million in debt coming due in the next 15 months. It has a $69.4 million bond issue that matures on Feb. 15.  It has $325.5 million of loans due in September and $556.7 million of loans and bonds maturing in March 2015. All told, YRC is operating with more debt than all the other publicly held LTL carriers combined.

“Our members made their voices heard about the company’s initial proposal, and we went back to the company and negotiated significant improvements that will give the members another opportunity to vote on saving this company,” said Tyson Johnson, Director of the Teamsters National Freight Division and Co-Chairman of the Teamsters National Freight Industry Negotiating Committee (TNFINC), in a statement.

In a statement issued yesterday by Teamsters for a Democratic Union (TDU), the dissident wing of the union, John Moses, a representative from Logistics Capital Management, the IBT’s economic advisor on YRCW restructure, said at yesterday’s meeting that YRC will very likely declare bankruptcy if the tentative agreement is rejected, and that financing is contingent upon it passing.