May 16, 2013: YRCW board member Harry Wilson is getting paid $250,000 per month, since February 2013, and may get a lot more. Wilson was appointed to the YRCW Board by the Teamsters Union leadership.

We’ve all heard the expression "follow the money."

This information is tucked away in a February YRCW filing with the Securities and Exchange Commission. The filing states that, "On February 20, 2013, we entered into an Advisory Agreement with MAEVA Group, LLC ("MAEVA"), a company owned and controlled by Harry Wilson and of which Mr. Wilson is Chairman and CEO. Mr. Wilson is a Series A Director of the Company appointed by IBT."

The filing goes on to state that, "The Advisory Agreement calls for MAEVA to provide advisory, analytical, consulting and other services to us in connection with one or more potential transactions and/or other strategic initiatives that we may elect to pursue from time to time." As compensation for its services, MAEVA is entitled to receive $250,000 per month (starting February 1) for at least the next four months plus potential completion fees not to exceed $5.5 million in the aggregate.

We have not been able to learn what "strategic initiatives" Mr. Wilson is working on for this fee, but we note that YRCW's big "strategic initiative" in this period seems to be the clumsy bid to buy ABF for $461 million.

Since Wilson was appointed to the Board by the Hoffa administration, surely Hoffa can explain what this lucrative consulting is all about, and if it has any possible relationship to the plan for a company which cannot live up to the Teamster contract to go on a buying spree.

Click here to access the filing made by Wilson with the S.E.C.

And click here to read an article by DC Velocity on this issue.

Less-than-truckload (LTL) carrier YRC Worldwide Inc. said today it had made a preliminary proposal to acquire Arkansas Best Corp., a deal that ostensibly would include its unionized LTL division, ABF Freight System Inc.; its nonunion expedited transportation business; its truck brokerage operations; and other units.

According to a source close to the situation, a preliminary offer of $18 per share was—and may still be—on the table for Arkansas Best.

The source said it was unclear if the proposal was an all-cash deal or a combination of cash and other financing instruments. In less than a week, Arkansas Best's stock has jumped from $10.33 a share to close at $16.71 per share today, up $1.36. At current share prices, the company's market capitalization stands at slightly more than $394 million.

As of March 31, YRC's liquidity—which includes cash, cash equivalents, and available funds under a $400 million asset-based loan—was $214.8 million, the company said when it released its first-quarter results earlier this week.

The recent surge in Arkansas Best stock coincided with a May 3 announcement that ABF and international leaders of the Teamsters union had agreed on a tentative five-year contract containing an undetermined level of wage and benefit concessions. ABF, which has the highest labor cost structure in the LTL industry, has stressed for months that it needs to bring its labor expenses in alignment with its rivals, many of whom are nonunion, in order to remain competitive.

YRC CEO James L. Welch implied in a statement today that he and YRC will not take no for an answer. "Our board and management believed then and believes now that the combination of Arkansas Best and YRC would be in the best interests of all employees, customers, and shareholders of both companies," he said.

Fort Smith, Ark.-based Arkansas Best said last night that Welch met with CEO Judy McReynolds on March 22 at Arkansas Best's headquarters to discuss a possible combination. Arkansas Best said in its statement that YRC approached it in late March with an interest in exploring a possible deal only for ABF, which accounts for roughly 80 percent of Arkansas Best's revenue. However, Arkansas Best said it told YRC in early April that ABF had other issues on its plate and that "considering a transaction with YRC was not appropriate at that time." The companies have not talked since then, according to the statement.

Today's statement from Overland Park, Kan.-based YRC took on a slightly different tenor, seeming to suggest that Arkansas Best was receptive to a transaction. According to the statement, McReynolds discussed the proposal with her company's board of directors, but Arkansas Best declined to enter into talks with YRC because the "timing was not right to consider such a transaction."

Neither company would comment beyond their respective statements.

Labor in Limelight

Organized labor will play a critical role in determining the future of any YRC-Arkansas Best combination or if a deal has any future at all. Word of the CEO discussions and the possible acquisition by YRC leaked out as ABF and the Teamsters are trying to consummate a new five-year collective bargaining agreement. Labor and management are currently operating under the second of two one-month extensions to the existing five-year contract, which originally expired March 31. The current extension expires May 31.

According to the source, Teamster officials bargaining with ABF were unaware until recently of any high-level discussions over a possible transaction. By the time they were notified, contract talks were at an advanced stage, according to the source. Neither the 7,500-member ABF rank-and-file or officials of Teamster locals representing the workers knew of YRC's interest in their company before news of it appeared last night on DC Velocity's website. A spokesman at Teamsters headquarters in Washington declined comment.

Officials of the various Teamster locals are scheduled to meet the week of May 20 to review the contract proposal. Should the local leaders approve it, they will then need to sell it to a scrappy and independent group of rank-and-file workers. Three years ago, they rejected a contract offer that called for significant concessions similar to what union workers at YRC granted the company to keep it afloat. The rejection came after Teamster leaders approved the deal.

There are several scenarios in play at this time. The rank-and-file could choose to accept the proposed contract. Union members could also reject the contract proposal, and both sides could return to the bargaining table. If that happens, the existing contract could be extended again for an agreed-upon time period. Alternatively, operations could continue without a contract, although such a move would be dicey because the union could call a strike without notice on or after June 1.

In the current environment, however, there is another factor to consider: A rejection by the rank-and-file would likely send Arkansas Best's stock falling, which ironically would make it cheaper for a potential suitor to buy the company. It could also make Arkansas Best's board and management more willing to sell because they may see little hope of making a significant change in their labor cost structure.

Arkansas Best said it was "very pleased" with the May 3 agreement. It noted that ABF Teamsters would remain the best paid in the LTL sector. However, the source said the tentative contract didn't deliver the magnitude of concessions that management wanted.

In mid-2009, YRC's rank-and-file agreed to a series of extraordinary concessions calling for 15-percent wage cuts and an 18-month suspension of the company's pension contributions. YRC resumed contributions in 2011, but at levels 75 percent below what it was contributing prior to the 2009 deal. Full pension payments are set to resume in 2015.

The agreements sparked a lawsuit by ABF against the Teamsters and YRC alleging the deals were struck outside of the main collective-bargaining agreement governing the trucking industry, and they should be made null and void. Despite several setbacks, ABF has continued with its suit.

In return for the givebacks, the Teamsters were given the right in 2011 to name two directors to YRC's board. One is Douglas O. Carty, co-founder and chairman of Switzer-Carty Transportation Inc., a Canadian company specializing in school bus transportation services. The other is Harry J. Wilson, a former financier who today is chairman and CEO of Maeva Advisors LLC, a New York-area company that holds itself out as a non-traditional corporate restructuring concern.

YRC Worldwide Inc. (NASDAQ: YRCW) confirms that it had made a preliminary proposal to acquire Arkansas Best Corp.  In response, President and CEO Judy McReynolds stated that she had shared the proposal and discussed it with the company's board of directors but declined to enter into talks with YRCW because "timing was not right to consider such a transaction."  James Welch, chief executive officer of YRCW, said, "Our board and management believed then and believes now that the combination of Arkansas Best and YRCW would be in the best interests of all employees, customers and shareholders of both companies.  We remain committed to continuing the great strides we have made at YRCW."

About YRC Worldwide

YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., is the holding company for a portfolio of successful brands including YRC Freight, YRC Reimer, Holland, Reddaway, and New Penn, and provides China-based services through its JHJ joint venture. YRC Worldwide has one of the largest, most comprehensive less-than-truckload (LTL) networks in North America with local, regional, national and international capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence. Please visit www.yrcw.com for more information.

Less-than-truckload carrier YRC Worldwide, Inc. approached Arkansas Best Corp., the parent of ABF Freight System, Inc., in late March with an interest in buying the Arkansas Best LTL unit, but was subsequently rebuffed, Arkansas Best said tonight.

In a statement e-mailed to DC Velocity, Arkansas Best said YRC expressed an interest in "exploring an acquisition of ABF," which accounts for about 80 percent of Arkansas Best's total business. YRC CEO James L. Welch met March 22 with Arkansas Best President and CEO Judy McReynolds at Arkansas Best's headquarters in Fort Smith, Ark., to discuss a possible business combination.

However, Arkansas Best told YRC in early April that a "transaction with YRC was not appropriate at that time," Arkansas Best said in the statement. ABF said it was too focused on contract negotiations with the Teamsters union, as well as "other strategic and operational initiatives" to seek an involvement with YRC at the time, according to the Arkansas Best's statement.

Arkansas Best has not held subsequent discussions with YRC, the Fort Smith, Ark.-based company said.

A copy of the statement is also being filed with the Securities and Exchange Commission.

In a March 25 letter to McReynolds, Welch wrote that YRC's board and management is "very supportive of our desire to work with ABF in an attempt to move a transaction forward. We think our indication of consideration is appropriate and meaningful for the shareholders of ABF."

The letter's contents contained no details about what a possible combination might look like. Welch told McReynolds that YRC "has spent a considerable amount of time thinking about both the strategy and strategic initiatives for our company." He provided no specifics in the letter.

A representative of Overland Park, Kan.-based YRC was not available to comment.

Last Friday, ABF and national leaders of the Teamsters union agreed on a tentative five-year labor contract. The agreement must still be approved by leaders of Teamster locals representing about 7,500 rank-and-file workers, and then by the rank-and-file itself.

May 6, 2013: There will be no strike or lockout by mechanics at YRC who are in the International Association of Machinists (IAM), but some of the mechanics are not jumping for joy.

The contract was voted down in Chicagoland by 69-24, and was voted down nationally as well, but the national vote to strike was not carried by enough of a margin, so the contract was implemented at some 15 terminals.

The mechanics took cuts similar to those in the YRC Teamster contract. Their pension benefits were spared, but they took a 15% pay cut, gave up two weeks of vacation pay, and other concessions.

A steward told us that the Chicago mechanics feel good about the solidarity they received from rank and file Teamsters who pledged to honor picket lines, and said they will be there for the Teamsters in the future.

UPDATED May 16, 2013: The "2-person" meeting for officers from all freight locals will be Monday, May 20, in Chicago. After that time information should be available -- and TDU will post the tentative contract.

If YRC Worldwide Inc.’s stock price is any indicator, Wall Street is pleased with the company’s recent performance.

Bloomberg named the Overland Park less-than-truckload carrier (Nasdaq: YRCW) as one of its top 10 stocks to watch after it announced a positive operating income of $9.9 million in their first quarter earnings report on Friday.

It's the first time the company posted a positive operating income in the last six years.

The firm’s stock hit a 52-week high on Friday, jumping up to $11.60 a share from a market open of $9.89 a share. The previous high was $9.60 a share.

Around 11:30 CDT, the stock had receded back to $10.34 a share.

See a current stock price.

May 2, 2013: The International union continues to bargain with ABF, and it looks like a tentative agreement may come soon. We will continue to provide any information available so that members can make an informed decision in the vote.

Most supplements have been settled; others are being finalized.

In a conference call today with union officials, lead negotiator Gordon Sweeton said the International union is working to keep members’ pension and health and welfare benefits intact. Sweeton directed local unions not to take any strike votes.

A deal may be in the offing. Stay informed. Stay united. 

Join TDU's Freight network: No Freight Concessions. Click here to send us a message and click here to sign up for email updates.

Less-than-truckload (LTL) transportation services provider YRC Worldwide (YRCW) said this week that the network optimization—or change of operations—plan, which was submitted in March to the company’s union leadership, has been formally approved.

YRCW officials said that that the network optimization is a key component of YRC Freight’s strategy to continuously improve customer service by reducing the handling of shipments and excess time in transit.  And it added that the transportation team and network engineers at YRC Freight will implement the enhancements over the next several weeks.

“Our network team identified opportunities for us to further align customer service and operating efficiencies,” said Jeff Rogers, president of YRC Freight, in a statement. “New network densities, load factors and direct routing of shipments will make this network optimization the foundation of our continued performance improvement initiatives in 2013.”

YRCW said these changes, once implemented, will serve as another step in YRC Freight’s efforts to continuously improve customer service, optimize linehaul density and load average, reduce empty miles and reduce shipment handling.

According to a copy of the proposed change of operations released by Teamsters for a Democratic Union (TDU), the proposals include:
-consolidating 29 end of line terminals into existing terminal locations;
-reducing end of line road domiciles;
-reducing distribution center locations by 3, utilizing existing capacity to create density for more network direct loading;
-reversing specified road primaries;
-establishing a new relay operation in Staunton, Va. to reduce system miles; and
-adding additional sleeper runs to the Jackson, Miss. road domicile

In an interview with LM, YRCW CEO James Welch said that when he took the reins as CEO in late 2011 YRC Freight had a network that was way too large for the amount of business being done.

“When they put Yellow and Roadway together, in my mind, they did a very poor job of sizing the network for its business levels,” he said at this week’s National Shippers Strategic Council (NASSTRAC) Annual Conference in Orlando. “What we had was a network that was more expensive than it needed to be in which we handled our customer’s freight too much. It was as efficient as it needed to be from a linehaul standpoint. This change does not reduce any of our coverage from a service standpoint. It merely puts us in a better position to improve our density and allows us to load more direct trailers, as an example, which, in turn, gives us the opportunity not to transfer as much of our customer’s freight as we were.”

Welch explained that there is a lot of power and efficiencies to be gained by doing that, coupled with the fact that YRC Freight was able to alter its distribution center network and be configured in a sensible fashion from a density standpoint.

“We think we are going to come out of this on the other side as a better operating company, with our customers being better serviced,” he said.

TDU said that these proposed changes would result in the loss of 760 dock, cartage, shop, and office jobs, with a loss of 542 road jobs at the terminals being consolidated and conversely there would be 639 cartage and 343 road jobs added at other terminals for a net loss of 230 jobs.

In February, YRCW reported that in 2012 the company reported a positive annual operating income for the first time in six years.

YRCW’s consolidated operating revenue for 2012—at $4.851 billion—was down 0.4 percent compared to 2011, but its consolidated operating income increased $162.3 million to $24.1 million, including a $9.7 million gain on asset disposals, marking its first positive annual consolidated operating income in six years. And it reported that 2012 consolidated operating revenue at $4.869 billion and a consolidated operating loss of $138.2 million, including an $8.2 million gain on asset disposals. EBITDA for 2012 at $241.2 million represented an $82.0 million improvement over 2011.

Following the second and third quarters, which saw operating profits of $27.3 million and $15.5 million, respectively, which represented the first time in four years that YRC, the second-largest LTL carrier behind FedEx Freight, posted two straight quarters of operating profit, the fourth quarter made it three straight quarters of operating income growth at $30.0 million. Fourth quarter consolidated operating revenue at $1.169 billion was down 3.6 percent annually.