Will YRC seek extension on labor union concessions?

Austin Alonzo
Kansas City Business Journal
October 29, 2013

Members of the International Brotherhood of Teamsters are preparing to meet with company leadership from YRC Worldwide Inc. in Dallas, and the topic on everyone's mind is concessions.

Late on Monday, the Overland Park-based less-than-truckload carrier (Nasdaq: YRCW) sent out a statement calling Teamster leadership to meet in Dallas on Nov. 5. The statement said company leadership will be on hand to discuss the company's "recent performance, future prospects, corporate refinancing opportunities and the need to pro-actively align multiple stakeholders in advance of 2014 debt obligation deadlines."

The statement also pointed out the upcoming deadline for the current agreement between the company and the labor union that represents 25,000 of the company's 32,000 employees. That agreement, based on a series of concessions that cut Teamster wages and stopped pension payments, runs through March 2015. It saves YRC more than $350 million in labor costs annually.

Representatives of the Teamsters' national office in Washington, D.C., declined to comment on the situation. However, other members of the union think the meeting may touch on the topic.

Vic Terranella, president of Kansas City's Teamsters Local 41, who is going to the meeting in Dallas said he received official communication from the union on Tuesday announcing company leadership will be at the meeting to speak directly with local Teamster leadership. Otherwise, he said, he hasn't heard anything official.

There have been rumors swirling that YRC is looking to extend that current agreement for two more years through March 2017.

"But that's just talk on the streets," Terranella said.

Terranella said he doubts YRC will discuss concessions during the meeting, because he thinks the company would not begin negotiations by addressing the locals rather than the Teamster's National Freight Industry Negotiating Committee negotiators.

Ken Paff, the national organizer for Teamster dissident group Teamsters for a Democratic Union, said "insiders" informed him YRC is going to look for a five-year extension of current wage and pension freezes as part of a wider effort to refinance the company. That would extend the current agreement through March 2019.

Paff said he believes the meeting is being called so company leaders can "present their case" directly to the union. He said he thinks a five-year extension would be a "very hard sell."

Representatives of YRC were not immediately available to comment on whether or not further concessions will be discussed, or considered going forward.

The market has not reacted positively to the meeting call. Since the company made the announcement, the company's stock has fallen from $11.16 a share at close of market on Monday to less than $9.40 a share about an hour before close of market Tuesday.


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