For the second time in less than four years, YRC Worldwide Inc.'s unionized workers will be voting on a contract as if their livelihoods depended on it.

Leaders of the Teamsters Union, which represents about 26,000 unionized workers at the less-than-truckload (LTL) carrier, on Friday approved a membership vote on the company's proposal to extend the current collective bargaining agreement through March 2019. Ballots will be mailed either tomorrow or Wednesday and will be counted around Jan. 8.

YRC executives and union officials met on Friday both in person in Dallas and by conference call to discuss the contract proposal. During the meeting, YRC executives stressed that the company may go out of business by Feb. 1 unless the company's lenders agree to restructure about $1.4 billion in debt, according to a communiqué from the Teamster dissident group Teamsters for a Democratic Union. Ratification of the labor contract extension is essential to the restructuring effort.

The first principal payment of $69 million is due Feb. 15. Overland Park, Kan.-based YRC said today it expects to save $100 million a year through the contract's provisions and other so-called corporate initiatives.

James L. Welch, YRC's CEO and president of its YRC Freight long-haul LTL unit, said today he was not at the Friday meeting and was unaware of comments made by his executives of such a drastic step. Welch said he remained confident that workers would ratify the agreement, adding that it would be hard to find jobs elsewhere in the LTL sector as well-paying as YRC's. The LTL industry is overwhelmingly made up of nonunion carriers whose compensation is generally below that of YRC and its unionized rival, ABF Freight System Inc.

In late October, ABF's rank-and-file ratified a new five-year agreement that called for wage cuts and productivity improvements that would save the trucker between $55 million and $65 million a year over the contract's life. The agreement narrowed the cost differential between YRC and ABF, which had the LTL industry's highest cost structure, and made ABF more cost-competitive in the eyes of many shippers.

In a filing today with the Securities and Exchange Commission, YRC said that it "may be unable to refinance or restructure" parts of its debt that mature in 2014 without an extension of its current agreement. The rank-and-file's failure to ratify the compact would have a "materially adverse effect on our business, financial condition, and results of operations," the company said.

In 2009, YRC's rank-and-file approved a series of extraordinary contract concessions that helped keep the company out of bankruptcy protection. After close brush with bankruptcy at the end of 2009, YRC appeared to be making slow headway under Welch, who was named CEO in mid-2011. However, the company's struggles have resurfaced, most recently in the wake of a major YRC Freight network restructuring that did not go well. The outcome led to the dismissal of then-YRC Freight President Jeffrey A. Rogers and Welch's assumption of the YRC Freight post.

Under the contract proposal, union workers would receive, in lieu of pay raises, $750 in annual bonuses over the first two years of the extended contract. After that, they would receive net annual raises equal to 34 cents an hour. Vacation pay would be capped at 40 hours per week or 1/58 of annual earnings. Three-week paid vacations would only be available to workers with 11 years seniority.

The first bonus would be paid in early 2014 should employees ratify the contract extension and lenders agree to the debt restructuring, Welch said.

Profit-sharing programs will kick in if YRC Freight achieves a 97-percent operating ratio per year starting in 2015. Workers will share in a larger percentage of profits should the unit's ratio decline further. For YRC's profitable regional units, profit sharing would begin at 94.1 percent. Operating ratio is the ratio of expenses to revenues and is a measure of a transport company's efficiency and profitability. YRC Freight's third-quarter operating ratio stood at 101.2, meaning it spent a little more $1.01 for every $1 in revenue. The company said its ratio in the quarter was impacted by problems surrounding the network revamp. YRC Regional's third-quarter operating ratio stood at 95.5.

In addition, the contract would allow YRC for the first time, to subcontract out 6 percent of its driver work, with supposed protections for all currently employed drivers. Some drivers have voiced concern that the protections would only apply to the originating drivers on a multistop trip. As a result, "relay" drivers, (or those drivers other than the originating driver who pick up loads at various points) could have their work subcontracted out, they warn.

Welch said the use of "purchased transportation," another term for subcontracting, would be confined to markets like Chicago where the company is facing a driver shortage. "We will not use it in place of existing rank-and-file drivers," he said.

Pension contributions, which were suspended in mid-2009 and resumed in 2011 at one-fourth their prior amount, will be fixed at the current levels through the life of the extended compact.

December 5, 2013: Tomorrow Teamster local officials will meet in Dallas to hear directly from company representatives their proposal for a five-year contract extension. 

Management has met with the Hoffa administration’s top freight people, Tyson Johnson and Gordon Sweeton, regarding the proposed contract.

If the local officers approve a proposal to put the issue to the members, a vote could come soon. The IBT constitution requires a majority vote of approval by the 26,000 YRCW Teamsters for any contract extension. Members should have a chance to discuss and evaluate any proposal before it is mailed out for a vote.

On November 20-21, management presented a laundry list of concessions to the IBT Freight Division. Members have reacted with anger, and hope that the proposal will be modified before coming to a vote.

The National Freight Negotiating Committee for the International Brotherhood of Teamsters is scheduled to meet with IBT local union leaders Dec. 6 to review a proposal from YRC Worldwide Inc. to modify an existing restructuring agreement that expires March 31, 2015.  The Teamsters, which represents 26,000 workers at the Kansas-based company, said in a statement Nov. 27 that local union leaders will decide after the meeting whether to submit the proposal to its membership to be voted on in a mail ballot referendum.  Complete details about the proposal haven't been released. Neither the Teamsters nor YRC Worldwide would provide details about the proposal when contacted Nov. 29 by Bloomberg BNA.  “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, chief executive officer of YRC Worldwide and president of YRC Freight, said Nov. 26 in a 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.”

Based in Overland Park, Kan., YRC Worldwide is the holding company for YRC Freight, YRC Reimer (in Canada), Holland, Reddaway, and New Penn.
Talks About Financial Future

YRC Worldwide officials met with Teamsters officials in Dallas Nov. 5 to discuss the trucking company's financial future. The purpose of the meeting, the company said, was to update local and national Teamsters leaders about YRC Worldwide's “recent performance, future prospects, corporate refinancing opportunities and the need to proactively align multiple stakeholders in advance of 2014 debt obligation deadlines.”

YRC Worldwide wants to extend its current contract with the Teamsters for five years from ratification, the company said in a Nov. 12 statement, to “achieve cost savings for YRC Freight, Holland, Reddaway and New Penn.”

Welch said Nov. 6 that a contract extension with IBT beyond the current agreement's expiration in 2015 would be an important step in providing customers with the service they deserve and in “providing our employees long-term job stability, competitive industry-wide wages and outstanding healthcare benefits.”

“In addition to securing the jobs of over 26,000 union employees,” he said, “it will substantially increase the likelihood of a holistic refinancing solution to address the debt maturities in 2014 and 2015.”

Previous IBT Concessions

YRC Worldwide and IBT in July 2011 separately announced the completion of the company's restructuring plan at that time, saying it would provide IBT-represented employees with a 25 percent ownership stake in the company and provide the firm with added financial stability. Prior to the 2011 restructuring announcement, IBT members employed at YRC had agreed to two rounds of concessionary contract modifications, in October 2010.

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.

UPDATED November 27, 2013: The Freight Division has scheduled a two-man meeting for December 6 in Dallas to review proposals made by YRC to extend the current MOU. All locals representing YRC Teamsters have been asked to send representatives for the meeting.

On November 20-21, YRC negotiators presented proposals to the Teamsters Freight Division for a five-year contract extension. While they are not proposing any wage cuts, they are asking for other concessions.

Reports indicate that YRC’s proposals include these:

• Continued annual wage increases in 2015 and beyond, but with no increase in 2014.

• Overtime pay after 40 hours per week, instead of after 8 hours.

• Change H&W language so that a partial week of work will not pay for a full week of H&W coverage.

• Work rule changes, including outsourcing some maintenance and use of outside contractors for certain road work.

Reportedly the IBT Freight Division has not agreed to anything yet, and talks will continue.

YRC management is firm that they need to get an extension with labor cost savings in place soon to be able to re-finance their substantial debt in order to lower interest payments and keep the company on track.

One question that comes up is why can’t YRC negotiate with the banks and the Teamsters simultaneously, so that the banks – who want YRC to keep making payments – could agree to refinance terms at the same time as IBT negotiators agree to submit a contract extension for a vote.

YRC CEO James Welch is taking the case to members, with a DVD mailed to every Teamster’s home. Reportedly the company will follow that by creating a website for Teamsters to access information and the company’s viewpoint.

The IBT constitution requires a majority vote of approval by the 26,000 YRCW Teamsters for any contract extension. Members should have a chance to discuss and evaluate any proposal before it is mailed out for a vote. TDU will continue to post information as it becomes available.

YRC Worldwide Inc. wants a five-year extension of its labor contract with the International Brotherhood of Teamsters, the labor union confirmed during a Monday conference call with its local leadership.

It's unclear what else — if anything — the Overland Park-based trucking company (Nasdaq: YRCW) wants in the negotiations with the union that represents more than 25,000 of YRC’s 32,000 employees.

On Tuesday, the Teamsters for a Democratic Union — a dissident group within the union — published details from a conference call between leaders of local unions and the Teamster’s National Freight Industry Negotiating Committee.

That report said the company seeks more “flexibility” but did not provide specific demands. Vic Terranella, president of Kansas City’s Teamsters Local 41, was on the conference call. He confirmed that little happened on the call.

“Really nothing happened,” he said. “There were no specifics that were shared with us.”

Terranella said the company seems more relaxed now that the union is sitting down to talk about an agreement. He noted that the Nov. 15 deadline the company shared with the union when the two sides met earlier this month in Dallas passed with little fanfare from YRC. The company has said that it has $1.4 billion in debt payments coming due in 2014 and 2015 and that a new deal with the Teamsters is crucial to paying those debts.

There should be further conference calls as the two parties continue to meet, Terranella said. YRC’s next big deadline is Feb. 15, when a $69 million payment comes due. No time lines or additional deadlines were announced during the call, he said.

The Teamsters’ national office in Washington has declined to comment on the negotiations. Representatives of YRC typically do not comment on ongoing negotiations, either.

YRC seeks an extension or an amendment to its current contract with the Teamsters. The two parties' current contract runs through March 2015. YRC has told the union it needs to extend the life of that contract into 2019. The company said an agreement is necessary for it to pay debts incurred under the watch of former CEO Bill Zollars.

The existing labor agreement is based on three rounds of concessions the company and the union agreed on between 2008 and 2010. The union consented to a 15 percent cut in wages, suspension of pension payments and reduced vacation time for members. YRC began to make pension payments again in early 2012 at 25 percent of the rate paid in 2009.

The deal saves YRC an estimated $350 million in labor costs annually. It also gave Teamster employees stock in the company and granted the union the right to nominate two members to the YRC board.

YRC reported its third-quarter earnings on Nov. 12. CEO James Welch said the company was not pleased with the results. The market apparently isn't either. About 2:30 p.m. Wednesday, YRC’s stock price had sagged to $7.30 a share from $10.22 at market open on Nov. 12.

Get a real-time quote here.

Updated November 19, 2013: Talks have begun between YRC and the IBT Freight Division over a five year extension of the contract. Tyson Johnson held a conference call for local union officials today to report on the initial sessions.

Johnson said that no specific demands have been made by either side and that YRC is not asking for additional wage or benefit concessions, but wants more “flexibility.” When questioned on specifics, he said those would come out later and more conference calls would be held. He said the IBT staff and an outside consultant are reviewing YRC’s financial situation. When asked why the two YRC board members appointed by the Hoffa administration have not been helpful regarding YRC plans, he said they had not consulted with the IBT, and avoided further comment on their role.

A week earlier a conference call of officials overwhelmingly approved opening up the contract for the purpose of negotiating the extension as long as there were no new concessions.

YRCW CEO James Welch has made clear he is looking for fast action on extending the present contract until 2019. In today’s call Johnson said he would not let the company dictate a deadline.

The November 12 IBT conference call was just one week after Welch made his case to Teamster locals officials in Dallas on the proposal, and distributed materials. Each local was supposed to meet with YRC members or survey them.

The IBT constitution requires a majority vote of approval by the 26,000 YRCW Teamsters for any contract extension. Members should have a chance to discuss and evaluate any proposal before it is mailed out for a vote. TDU will continue to post information as it become available.

Click here to read Tyson Johnson's memo.

YRC Worldwide Inc.’s negotiations with the International Brotherhood of Teamsters will not be finished by Friday, according to a report filed by Bloomberg.

YRC CFO Jamie Pierson told Bloomberg that he did not expect to see negotiations completed before a Nov. 15 goal the company set when officials met with leaders of the Teamsters Nov. 5 in Dallas. YRC officials have said a deal must be completed soon in order for the Overland Park-based trucking company (Nasdaq: YRCW) to refinance before its debts begin to come due in February.

YRC formally acknowledged it is in “discussions” with the labor union that represents more than 25,000 of the company’s 32,000 employees but has not commented further on the situation. CEO James Welch did not take analysts’ questions on the subject during the company's quarterly earnings conference call.

Representatives of the Teamsters’ national office in Washington have also declined to comment on the negotiations.

YRC is seeking an extension or an amendment to its current contract with the Teamsters. The two parties current contract runs through March 2015. YRC has told the union it needs to extend the life of that contract into 2019. The company says an agreement is necessary for it to pay $1.4 billion in debts that were incurred under the watch of former CEO Bill Zollars which will come due in 2014 and 2015.

The existing labor agreement is based on three rounds of concessions the company and the union agreed on between 2008 and 2010. In those concessions, the union consented to a 15 percent cut in wages, suspension of pension payments and reduced vacation time for members. YRC began to make pension payments again in early 2012 at 25 percent of the rate paid in 2009.

The deal saves YRC an estimated $350 million in labor costs annually. It also gave the Teamster employees stock in the company and granted the labor union the right to nominate two members to the YRC board.

YRC Worldwide Inc. saw its third-quarter revenue increase by $15.9 million from the same quarter the previous year, and operating income dropped by $21.5 million during the same time period.

The Overland Park-based trucking company (Nasdaq: YRCW) brought in $1.253 billion in consolidated operating revenue in the quarter that ended on Sept. 30. That's up from $1.237 billion in the third quarter of 2013. Consolidated operating income was $5.8 million, down from $27.3 million reported in the same quarter last year.

The loss per share was $4.45, compared with a gain of 40 cents a share during the third quarter of 2012.

The report comes as YRC is asking members of the International Brotherhood of Teamsters to extend the two parties' current labor agreement for an additional five years. The current agreement runs through March 2015.

CEO James Welch has told leaders of the labor union that represents more than 25,000 of the company's 32,000 workers that the union needs to sign on to a new agreement soon for the company to be able to pay its $1.4 billion debt, which starts coming due early next year. If the union does not agree to an extension, the company could be staring down bankruptcy.

The current labor agreement is based on three rounds of concessions the company and the union agreed to between 2008 and 2010. In those concessions, the union consented to a 15 percent cut in wages, suspension of pension payments and reduced vacation time for members. YRC began to make pension payments again in early 2012 at 25 percent of the rate paid in 2009.

The deal saved YRC an estimated $350 million in labor costs annually. It also gave the company's Teamster employees stock and granted the union the right to nominate two members to the YRC board.

November 8, 2013: YRC CEO James Welch presented his case to Teamster local officers three days ago for a five-year contract extension, in order to secure new financing.

It was not an easy sell. A number of officers at the meeting in Dallas asked tough questions, on everything from the botched idea to buy ABF to what else YRC will be asking for.

Welch declined to specify anything else the company would request in bargaining, except new language to curb absenteeism. The materials distributed indicate that wage increases may be in the extension deal.

Welch stressed the urgency of the situation to refinance debt at lower interest rates. He requested to open up the contract and get a vote by 26,000 Teamsters as soon as the end of December on a contract extension. The first debt payment is due February 15, for $69 million, and Welch stated that an extension would need to be in place to secure refinancing from banks.

YRCW has delayed by a week reporting third-quarter earnings as it seeks to start talks with the IBT, according to numerous media reports on the situation.

IBT Freight Director Tyson Johnson told local officials to meet with YRC Teamsters, and then report to the Freight Division on whether they should agree to reopen the contract to discuss an extension.

Some locals are distributing the materials from the November 5 meeting to members, which outline the company's presentation.