A committee of local Teamster leaders approved a new tentative agreement with YRC Worldwide. The committee also recommended that members accept the agreement when they vote on it at local meetings to be held on January 25 and 26. The vote will be conducted by secret ballot.
Members rejected a previous YRC offer by a vote of 61 percent to 39 percent. The offer, made without bargaining with the union, would have extended the current contract through 2019, kept in place concessions members agreed to in 2009, and implemented new concessions.
The new agreement is an improvement over the earlier offer but still contains substantial concessions that were in the original offer.
“No one wants concessions,” said Jim Hoffa, Teamster general president. “But with a yes vote, at least we live to see another day, and I’d urge (members) to do that.”
YRC Worldwide, a holding company that operates the largest less-than-load freight hauling business in the US, is facing financial difficulties, which by all accounts is the result of poor executive decisions.
According to Forbes, YRC’s difficulties are the result of “ill-fated moves to expand the company through aggressive acquisitions.”
The buying binge began in 2003 when Yellow Transportation merged with Roadway and culminated in 2008 with purchase of freight companies in China.
The acquisitions left YRC Worldwide with a heavy debt load, which along with a sluggish economy dampened profits. The last time that the company turned a profit was 2007.
The company’s fortunes seemed to be on the mend recently. While profits remained negative, business had picked up, and by 2013, the outlook was good enough that the company sought to buy one of its leading competitors ABF.
But the deal fell through.
At the time of the acquisition attempt, ABF was in negotiations with Teamsters on a new agreement.
Hoffa called the acquisition attempt a sign of YRC’s “arrogance,” which, he said, originally got the company in trouble. He called on YRC to restore worker wages and benefits before it sought to buy other companies.
Even though the deal fell through, YRC’s CEO James Welch told the Kansas City Business Journal that the attempted acquisition demonstrated the financial strength of the company.
But it soon became clear that Welch’s boast was more bluster than fact.
Payments on more than a $1 billion in debt acquired by YRC to finance previous acquisitions were coming due in 2014 and 2015, and YRC announced that it didn’t have the cash on hand to make the payments.
It sought to refinance the loans, but lenders demanded that the company seek further concessions from Teamster members before they would agree to the loans.
In November, the company proposed an offer to extend the current agreement with modifications through 2019. The offer kept wages at 15 percent below wages in Teamsters national transportation master agreement, established lower pay for new hires, increased worker health care expenses, and allowed YRC to continue contributing 75 percent less to the workers’ pension fund than other trucking companies included in the Teamsters’ national transportation master agreement.
It also reduced vacation time, expanded outsourcing, and implemented work rule changes including changes to the company’s attendance policy.
After the workers rejected the offer, YRC began to bargain with the Teamsters, and the tentative agreement is the result of that bargaining process.
The original offer provided for $0.34 an hour raises in 2016, 2017, and 2018, for drivers–which would keep their pay 15 percent below the master agreement–but dock workers, clerical workers, and other non-drivers received no raises.
The tentative agreement extends the wage increase and lump sum payments to all union workers.
It also improves the attendance policy originally offered by the company, restores some of the proposed cuts to vacation time, improves the proposed wage reductions for new hires, modifies the company’s original proposal for outsourcing work, and includes layoff protections.
In addition, the tentative agreement bars the company from making further acquisitions without the union’s approval.
The agreement leaves in place the higher health care costs, reduced pension contributions, and a wage structure 15 percent below the one in the master agreement.
Local Teamster leaders who recommended approval were under tremendous pressure to do so. They were told by the Teamsters’ economic adviser that if the agreement is rejected, YRC will likely declare bankruptcy.