Teamster members rejected a contract extension offer from YRC Worldwide, the nation’s largest less-than-load freight hauling company. The offer would have extended concessions that members agreed to six years ago until 2019.
Of more than 19,000 members who voted, 61 percent voted no while 39 percent voted yes. More than 150 Teamster locals across the nation participated in the vote.
“The Teamsters Union believes in democracy and we’ve let the democratic process take its course,” said Tyson Johnson, director of the Teamsters National Freight Division and co-chairman of the Teamsters National Freight Industry Negotiating Committee (TNFINC). “Our members have made huge sacrifices to keep this company alive and a majority made the decision not to sacrifice anymore.”
YRC officials said that the concession extension was needed so that the company could secure refinancing for an unsustainable debt load, which according to Bloomberg News, is the result of “acquisitions and what (YRC CEO James) Welch called ‘numerous missteps’ before he took the job in 2011.”
Had union members voted to extend the contract, slated to expire in 2015, it would have meant maintaining a 15 percent wage reduction agreed to in 2009 and that the company would continue to pay 75 percent less in pension contributions than is required by the Teamster’s National Master Freight Agreement.
The Press Enterprise reports that the concessions have cost workers $3 billion in lower wages and pension deferrals.
The company’s offer contained even more concessions including reduced vacation time, higher health care costs, work rule changes, and expansion of the company’s ability to outsource work.
“Our members have sacrificed billions of dollars in wages and pension benefits over the past five years, and yet the company has been unable to recover from the disastrous policies of the previous management,” said Jim Hoffa, Teamsters General President and Co-Chairman of TNFINC.
Before the vote, which was held by mail in December and January, the company made a direct appeal to workers to accept its offer.
According to the Kansas City Star, the company mailed a DVD to Teamster members in which Welch said that workers needed to accept the offer to secure refinancing and “save all our jobs and our company.”
A yes vote would have save YRC $100 million a year.
The company has been trying to refinance nearly $1 billion in debt that comes due in 2014 and 2015.
In December, it secured $300 million worth of refinancing and was looking to secure more in January.
The loans according to YRC are contingent on workers accepting an extension of the concessions that they have already made.
The company’s future is now uncertain. Its stock price has dropped, Standard & Poors put the company’s credit rating on watch “with negative implications,” and bankruptcy has not been ruled out of the question.
But one company that provides market analysis is less pessimistic about the company’s outlook.
Zacks Equity Research on January 15 issued a brief analysis saying that YRC’s “earnings estimates have actually been moving higher,” which leads Zacks to rank YRC Worldwide as a Rank #2 (Buy) and to see company shares moving “higher in the weeks ahead.”
Nevertheless, YRC has been shaken by its workers’ no vote, and the company is apparently seeking a revote.
The Kansas City Star reports that YRC has told workers to contact Teamster leaders and urge them to agree to a revote.
Teamster negotiators on January 16 informed YRC that the union would not conduct a revote on the same proposal that members rejected.