YRC Drivers Up Against Big Deadline

Jack Katzenek
The Press Enterprise
December 02, 2013

Logistics conglomerate YRC Worldwide and its workers have been caught between the proverbial rock and a hard place for at least five years. Now the squeeze is getting even more uncomfortable for both sides, and it could soon come to a crisis point for the second time in four years.

YRC Worldwide, the company that owns Yellow Freight, New Penn, USF Reddaway and several other trucking and logistics brands, has asked its unionized drivers, dock workers, mechanics and other employees to make concessions, likely to include forgoing raises and contributions into a Teamsters pension plan, in order to help the company survive another financial crisis.

Teamsters’ National Freight Industry Negotiating Committee leaders will meet with locals that represent YRCW members on Dec. 6 to review a forthcoming proposal from YRC Worldwide that modifies the existing restructuring agreement.

If the Teamsters and YRC Worldwide management do not agree to a deal, the company could be in danger of going under, ending the jobs of some 26,000 employees, including between 1,000 and 1,500 in San Bernardino and Riverside counties

Many retired workers in the Inland area are covered by the company’s medical plan and could lose those benefits.

Teamsters have a contract with YRC Worldwide that runs through 2015. But workers have modified that contract several times, giving up raises and pension payments, to help the company remain solvent.

Now they are being asked to do it again.

Tuesday, Overland Park, Kan.-based YRC Worldwide released a statement saying the company asked for the Dec. 6 meeting to give local labor leaders a proposal concerning their contract and benefits, which they would review and decide on submitting to the membership for a ratification vote.

“This meeting and the subsequent vote, which we believe will be ratified, is another important and positive development in our long-planned refinancing process and the continued implementation of our turnaround plan, James Welch, CEO of YRC Worldwide, said in the statement. “We are grateful to our union and non-union employees who have made significant sacrifices to keep our company moving forward and our customers who have shown solid support in this process.”

A company representative did not return calls to The Press-Enterprise to elaborate on that statement. In a Nov. 12 conference call with equity analysts, Welch said the company needs “a more competitive contract” with the Teamsters.

The current union contract expires on March 31, 2015. An official statement on the union website said “any modification to that would need to be ratified by the affected membership in a secret ballot referendum,” and did not elaborate.

Randy Cammack, secretary-treasurer of Rialto-based Local 63 of the Teamsters and vice president of Joint Council 42, the umbrella group for 144,000 Southern California members, said the union is publicly taking a neutral stance about YRC Worldwide’s request for more contract concessions. Ultimately, the 26,000 workers who are covered by the contract will be the ones making the decision, he said.

Cammack said that there will probably be a lot of mixed emotions on the part of the members, pointing out that six years after the start of the Great Recession, “these are not the best of times” for a blue-collar workers in Inland Southern California.

“The feeling is, and I don’t know how deep that runs, is that people are concerned about being unemployed,” Cammack said.

Union leaders were incensed when, earlier this year YRC Worldwide’s executives said they wanted to buy competing trucking company Arkansas Best. Teamsters, including President James Hoffa, said YRC Worldwide should not be spending on acquisitions when workers’ contracted raises and pension contributions had been mothballed for four years.

Cammack said some of the mixed emotions involve disappointment combined with frustration about the company’s inability to get onto solid financial footing.

“There is anger that the company has not done what it needs to do,” Cammack said. “They’ve made bad decisions.”

YRC Worldwide first ran into trouble with its debt load in 2009. The trouble traced back to a situation that was caused by a period when YRC bought out competing trucking companies in the early 2000s. In 2009 the Teamsters agreed to accept 10 percent pay cuts and to give up the cost-of-living increases written into their contract, accepting stock in the company in exchange for the concessions.

The company almost went under in the last days of 2009. A deal with Wall Street bondholders to exchange corporate debt for stock kept the firm alive.

Earlier this month, a Southern California Teamsters executive said the union has already given YRC Worldwide some $3 billion in deferred wage and pension payments over the past four years in an effort to keep the company going.

According to public records, YRC Worldwide owes its creditors more than $1 billion, money that must be paid in 2014 and 2015.

“That’s debt with extremely high interest rates,” Cammack said. “It’s like the credit card debt you get when you make minimum payments every month.”

The publicly traded company reported on Nov. 12 that it lost $44 million in the third quarter. Management and operational issues, and a shortage of drivers that slowed the company’s network were said to be among the reasons for the weak quarter.

Those problems sent a lot of customers to competitors. Cammack said one reason the Teamsters are handling this crisis in a low-key way is that they do not want to give impetus to other competing freight companies.

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