BNA Daily Labor Report: IBT, YRC Agree to Modify Freight Agreement

December 2, 2008: The International Brotherhood of Teamsters has reached an agreement with YRC Worldwide Inc. that it said will provide the company with “economic relief that will protect the jobs and retirement security of tens of thousands of Teamsters,” the union announced Nov. 28.

Leaders of local unions that represent workers from each of the company's subsidiaries will discuss details of the tentative agreement at a Dec. 3 meeting, IBT said. If the local leaders approve the new plan, members will be asked to ratify the agreement next month.

Currently, YRC's IBT-represented employees are covered by the National Master Freight Agreement. In February 2008, IBT members ratified NMFA, which called for a general wage increase of $2.20 per hour over term for full-time employees, while increasing employer contributions to health, welfare, and pension funds by $5 per hour worked over the life of the contract (28 DLR AA-1, 2/12/08). The NMFA was set to expire March 31, 2013.

The five-year NMFA covers some 40,000 drivers, dockworkers, clerical employees, among others, at YRC's subsidiaries, including Yellow Transportation, Roadway Express Inc., USF Holland, and the New Penn Motor Express.

“I believe our freight members understand the terrible economic conditions that are battering the trucking industry,” Hoffa said. “We are facing the worst economic environment since the Great Depression. We all need to work together to get through this period of uncertainty. This agreement will help protect tens of thousands of our members' jobs. Failing to act now would be a grave mistake.”

The union said in a statement it will preserve the “hard fought wages, working conditions and benefits that are the core of NMFA” while providing economic relief to “protect the jobs and retirement security of tens of thousands of Teamsters.”

The union declined to comment any further on details of the new contract until after the discussion talks take place.

Meanwhile, the rank-and-file organization Teamsters for a Democratic Union issued a Nov. 26 statement saying wage concessions should be anticipated.

“Freight Teamsters can expect wage concessions,” Teamsters for a Democratic Union said in a statement. “On a Nov. 24 conference call with local officials, IBT President James Hoffa and Secretary-Treasurer Tom Keegel indicated that they are ready to give wage concessions because union auditors agree that the company needs help to survive. They also indicated there will be no concessions on pension or health and welfare contributions.”

Tough Economic Times for Trucking.

According to the union, the economic realities that face YRC Worldwide and the trucking industry include the following:

• Most of the for-hire trucking industry is now entering the third year of a recessionary downturn.

• As the largest independent less-than-truckload carrier, YRC Worldwide has felt the recession most acutely, as lower volumes have been reported at virtually all national carriers.

• Independent consultants to YRC have determined it is questionable whether the company can generate enough cash to survive in a prolonged downturn.

“This agreement will help the company get through this deepening recession and protect the jobs and health, welfare, and pension benefits of our freight Teamsters,” Tyson Johnson, director of the Teamsters National Freight Division, said in a statement. “This is a very difficult time for our members, but this agreement will protect the livelihoods of our members and their families, which is our number one priority.”

YRC: Seeks More Competitive Cost Structure.

Bill Zollars, president and CEO of YRC Worldwide, said the decrease in profits and cash flow have impacted the company's ability to pay down debt from operating funds, and “the modification to the agreement ... will establish a more competitive cost structure allowing us to accelerate our market share recovery and capitalize on opportunities for future growth, while at the same time, defending the long-term prospects and job security of our employees.”

“We have already taken a number of steps to strengthen our financial position and improve both our profitability and our competitiveness, including the continued successful integration of Yellow Transportation and Roadway, the exchange of equity for notes through private transactions, modification of our non-union pension and retirement plans, sales of excess properties and, most recently, the commencement of a $100 million tender offer to purchase outstanding notes,” Zollars said. “While these efforts have been effective, the worsening macroeconomic crisis in America and the increasingly critical state of our industry mean that we must take additional measures.”

Headquartered in Overland Park, Kan., YRC Worldwide employs about 58,000 people.

By Alicia Biggs

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