Representatives from ABF Freight System Inc. of Fort Smith and the International Brotherhood of Teamsters union are scheduled to sit down Tuesday in a hotel conference room in Kansas City to undertake a high-stakes labor contract negotiations.
One of the nation’s largest trucking companies, ABF says the company has to cut labor costs to compete in the marketplace, including with its chief unionized rival, YRC Worldwide of Overland Park, Kan.
The International Brotherhood of Teamsters, which represents about 7,500 ABF workers, hasn’t released its proposal. But Teamsters for a Democratic Union, a group within the Teamsters, has posted on its website that the union will ask the company to continue current pension, health and welfare benefits and for a $1-per-hour wage increase each year for two years.
The negotiations also come after two years of court battle, still going on, over a current labor contract involving ABF and the Teamsters.
ABF complained in its 2010 lawsuit that the Teamsters and YRC Worldwide enacted concessions for the Kansas company that violated a 2008 national labor contract, designed to apply equally to YRC and ABF.
ABF has estimated the concessions translate into $350 million per year in savings for YRC.
Officials with ABF and the Teamsters declined to be interviewed, saying they didn’t want to speak publicly before negotiations begin.
A statement posted on the union’s website Friday said, “The company is expected to bargain aggressively and will seek to save money on labor costs, but the union is prepared to counter the company’s arguments and will stress the bigger picture,” including costs for management labor as well asTeamster labor.
In announcing third-quarter financial results in November, Judy McReynolds, president and chief executive officer of the trucker’s parent company, Arkansas Best Corp., stressed the importance of these negotiations.
“The most significant costs affecting ABF are associated with our union labor contract,” she said in a news release. “ABF’s next labor agreement offers an opportunity for us to work together with the Teamsters and our employees to ensure that ABF is viable in the marketplace and able to grow jobs and effectively compete for additional, profitable business.”
Teamsters for a Democratic Union, a group within the larger union that posts updates on bargaining issues, sizes up union members’ thinking. “TheABF Teamsters want no concessions. No going backward. They’re not looking for the moon, just looking not to go backward,” said Ken Paff, national organizer for the Teamsters for a Democratic Union in Detroit.
He expects the company will focus on cutting wages, benefits and pensions. Both sides, Paff predicts, would like to reach an agreement well before the current contract expires March 31.
The dispute centers on financial troubles dogging two of the biggest U.S. trucking companies in a difficult economy.
Arkansas Best is ranked as the nation’s 13th-largest trucking company.ABF is its largest subsidiary, specializing in less-than-load shipments that combine two or more shippers’ goods into the same truck. The parent company has about 10,800 employees and owns 3,989 tractors and 20,209 trailers, according to Transport Topics, an industry trade journal.
YRC Worldwide is the fourth-largest trucker in the nation, and also specializes in less-than-load services. It has 32,000 employees, 15,602 company-owned tractors and 51,636 trailers.
Both companies were part of a national labor contract for their industry, known as the National Master Freight Agreement. It was signed in 2008 and will expire at midnight, March 31. In 2009, ABF claims, the Teamsters and YRC inked the first round of concessions to benefit the Kansas trucking company, which was teetering on bankruptcy.
In a suit filed in November 2010 against the Teamsters and YRC subsidiaries, ABF said “the International Brotherhood of Teamsters, who in the midst of the most troubled economic times since the Great Depression, granted substantial economic and financial concessions to some, but not all, employers” who were part of the bargaining agreement, known as the National Master Freight Agreement.
ABF has asked for compensatory damages from the defendants.
The International Brotherhood of Teamsters has called the ABF lawsuit “ridiculous.”
ABF has taken its case to the U.S. Court of Appeals, appealing a lower court dismissal of its complaint.
Meantime, both trucking companies have struggled in a down economy. Arkansas Best’s third-quarter profit was down, $6.5 million compared with $12.3 million for the third quarter of 2011. Arkansas Best stock closed Friday at $9.06, up 3.5 percent from Thursday. It has traded between $6.43 and $22.79 in the past 12 months.
YRC Worldwide reported an operating profit of $3 million for the third quarter, improved from a $25.1 million loss for the same period in 2011. YRC stock still lags behind the year, closing Friday at $6.83, up 2 cents from Thursday, with a 52-week trade range between $4.56 and $14.80.
As contract talks begin next week, both sides also know an accord at the bargaining table may not translate into action.
In 2010, ABF and the International Brotherhood of Teamsters leadership agreed to a 15 percent reduction in gross wages and mileage rates for ABF union workers. Rank-and-file members voted it down.
“The members will have the last say,” said Paff, of Teamsters for a Democratic Union. “We are interested in halting a backward slide.”