YRC Worldwide Inc. has shrunk its corporate headquarters staff from around 2,000 to less than 400 as the company tries to streamline its operations.

CEO James Welch told analysts at the Deutsche Bank 2012 Aviation and Transportation Conference on Thursday that most of the holding company's employees are in accounts receivable after he shifted sales, information technology and other back-office responsibilities to YRC’s subsidiaries.

"The holding company is very skinny compared to what it used to be," Welch said. "We kind of have a joke around Overland Park that we just want to be squatters on the 10th floor and an insignificant part of that building and put the energies, the resources, toward the operating companies."

The overall number of employees working for YRC Freight, the company's national long-haul subsidiary that shares space with YRC Worldwide (Nasdaq: YRCW), has increased, absorbing some of the workers from the holding company and from operations shuttered in other states, officials said.

YRC officials also said they are experiencing the same economic slowdown that has led competitors ABF Freight System and FedEx to warn in recent days of disappointing quarterly numbers.

However, they added that their regional carriers are less exposed to the sluggish economy and that they have ways to further cut costs and improve efficiency.

"We fully anticipate that the investments that we're going to make, not only in the handheld devices we're rolling out by the end of the year but also the investments in training, will help us," CFO Jamie Pierson said.

It was YRC's first conference call with analysts since November as Welch, who joined the company after last summer's reorganization, and his staff worked to right a ship almost scuttled amidst the sluggish economy and heavy debt levels.

Welch told the audience that his team's efforts to push more of the day-to-day operation decisions to the subsidiaries has borne fruit with improved customer service and operations.

For example, YRC is making deliveries within company standards 80 percent of the time, compared with 62 percent last year.

That success is allowing the company to increase its rates and try to win back customers who defected to other carriers in recent years.

"You've got to give good service to make this thing work," Welch said.

Pierson acknowledged that YRC Freight recorded a 3.3 percent decline in daily freight tonnage in the second quarter compared with a year ago. But he said that came as the company sought to eliminate less profitable business.

The company's regional businesses — Holland, Reddaway and New Penn — reported a collective 4.4 percent increase in volume during the same period.

Fort Smith-based ABF Freight System will again appeal to the U.S. Eighth Circuit Court of Appeals (St. Louis) a dismissal of its $750 million lawsuit against the Teamsters and other parties.

The appeal marks the second attempt by ABF Freight — the largest subsidiary of transportation holding company Arkansas Best Corp. — to seek another chance at a day in federal court.

ABF employs around 10,000, with roughly 7,600 of those falling under a collective bargaining unit represented by the International Brotherhood of Teamsters.

On Nov. 1, 2010, Arkansas Best Corp. — the parent company of ABF Freight System — filed a lawsuit seeking the $750 million in financial damages from alleged violations of a National Master Freight Agreement (NMFA) by the International Brotherhood of Teamsters and others.

The NMFA, implemented April 1, 2008, was designed to cause equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters.

YRC received three rounds of wage and benefit concessions from the Teamsters, with the most recent announced Nov. 1 that includes up to $350 million annually through 2013. Previously, the Teamsters voted to approve a 15% pay cut among unionized YRC drivers. ABF has been unable to receive similar concessions from the union.

On Dec. 16, 2010, Judge Wright (Eastern District of Arkansas) dismissed the suit for lack of subject matter jurisdiction. On April 12, 2011, attorneys for ABF presented their case in the United States Court of Appeal for the Eighth Circuit (St. Louis) as to why the court should overturn a lower court ruling. On July 6, the Eighth Circuit ruled in favor of ABF. The 17-page ruling issued by the three-judge panel included several comments that favored the ABF argument that the lawsuit should be heard in the district court.

But on Aug. 1, Wright again dismissed the lawsuit, saying that ABF had failed to “exhaust the NMFA grievance procedure.”

ABF officials said Thursday they still believe their case has merit.

“ABF Freight System, Inc. filed a notice of appeal in its ongoing lawsuit against the International Brotherhood of Teamsters and various YRC subsidiaries, again seeking review in the United States Court of Appeals for the Eighth Circuit (St. Louis). We continue to believe in the strength of our case, which concerns repeated violations of the National Master Freight Agreement by the IBT and YRC,” the company noted in its statement. “The suit was originally filed in November, 2010, and successfully appealed once already, as the higher court ruled that the district court had erroneously dismissed the case. The timing of this next appeals process is uncertain but is expected to take many months.”

Galen Munroe, a spokesman for the Teamsters, said he doubted the Teamsters would issue a statement on ABF’s decision to appeal.

ABF recently notified the Teamsters that it will not negotiate a new labor contract under the NMFA.

August 22, 2012

Frank Rogers, YRC
Local 41, Kansas City

When Hoffa, Johnson and Sweeton proposed the first round of concessions at YRC, some of us did some research. Our wages have not kept up with the cost of living, even before the concessions. And there never was any real "shared sacrifice."

Good Teamsters fought in the streets and some sacrificed their lives for the standards that we as Teamsters enjoy today. We at YRC are now working under a substandard contract because our elected union officials have not done what they have been elected to do: to maintain our wage/compensation packages and freight contract, yet they have taken raises for themselves.

Now, more than any other time in our history is the time for us, the rank-and-file members of this, the greatest union in the world, to rise up, stand united and demand that our elected union officials do what they are paid to do: fight for us, our families and our future.

UPDATED August 24, 2012: Some members are hearing from reports in industry journals that ABF has made a bargaining change. The answer is clear: the ABF bargaining split from YRCW happened in 2007, so zero has changed on that front.

What has changed is that since the 2008 contract, on three occasions YRCW was given concessions, and the 2010 concessions extended the YRCW contract until 2015. While YRCW Teamsters will be impacted by the ABF contract, that impact is indirect.

In 2008 the IBT first bargained with YRCW, then held ABF to the same deal, under threat of a strike.

Now the IBT is going to negotiate with ABF, but the negotiations and contract will have far-reaching implications for YRC Teamsters, UPS Freight Teamsters, our ability to organizing trucking in the future, and certainly our pension plans.

The future of freight is on the line. Solidarity among freight Teamsters is crucial.

International Union Surveys Locals on ABF Contract

August 22, 2012: In late August the International Union sent a survey to all freight locals, asking the principal officer or freight BA to respond to 11 questions about the upcoming contract.

Some questions are fairly standard. Other questions anticipate concessionary bargaining (for example, do you think it would be better to give concessions to ABF on wages or benefits?). One question asks if the union has handled the freight industry problems appropriately; but the only option other than agreement was that the IBT should have given more concessions to help the companies.

No word yet on a when a survey will go out to Teamsters working in the industry.

On Aug. 13, ABF sent the IBT a letter requesting negotiations "at your earliest availability."

ABF Lawsuit Dismissed, Focus on Negotiations

ABF's lawsuit against the Teamsters Union and YRCW, demanding concessions similar to what the IBT granted to YRCW companies, was dismissed on Aug. 1 by federal district judge Susan Webber Wright.

Now the focus for the future of the NMFA and ABF Teamsters shifts to the upcoming national negotiations. The new website, NoFreightConcessions.org, has more information on that matter.

ABF said it may consider an appeal to the federal court of appeals, which earlier directed the district court to re-hear the issue. The suit was filed in November 2010, alleging that the International Union violated the terms of the National Master Freight Agreement by giving YRCW concessions, but not ABF.

In other news, ABF reported a second quarter net profit of $12 million.

Click here to visit www.NoFreightConcessions.org

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Trucking giant YRC Worldwide reported an operating profit of $15.5 million in the second quarter while cutting its net loss 47 percent to $22.6 million.

The $15.5 million gain is the $4.9 billion less-than-truckload operator’s first operating profit attributable to freight operations since the third quarter of 2008.

“We are producing results slightly ahead of our forecast, despite the recently softening economy,” James Welch, YRC Worldwide CEO, said in a statement Friday.

“Our focused approach to pricing discipline, customer mix management and cost initiatives has driven year-over-year improvement in our business,” he said.

YRC’s regional carrier group, which includes Holland, New Penn Motor Express and Reddaway, increased its operating profit by 55.7 percent to $22.9 million.

The regional carrier group increased revenue 7 percent year-over-year to $429.8 million as tonnage rose 4.4 percent and shipments, 2.5 percent.

“Holland, New Penn and Reddaway are increasing market share and leveraging their operational improvements to enhance profitability,” Welch said.

At long-haul LTL carrier YRC Freight, tonnage and shipments dropped 3.3 percent and 2.1 percent from a year ago. The carrier had a $5.1 million operating loss.

YRC Freight completed a network reorganization in the second quarter designed to speed freight to receivers with less handling and reduce transit times.

YRC Worldwide ended the quarter with $248.7 million in liquidity, the company’s best second-quarter liquidity level since 2008, CFO Jamie Pierson said.

The holding company reduced its “cash burn” from operating activities by $44.7 million year-over-year, despite higher interest and pension expenses, he said.

August 2, 2012: ABF's lawsuit against the Teamsters Union and YRCW, demanding concessions similar to what the IBT granted to YRCW companies, was dismissed yesterday by Federal District Judge Susan Webber Wright.

Now the focus for the future of the National Master Freight Agreement (NMFA) and ABF Teamsters shifts to the upcoming national negotiations. The new website www.NoFreightConcessions.org has more information on that matter.

ABF said it may consider an appeal to the federal court of appeals, which earlier directed the district court to re-hear the issue. The suit was filed in November 2010, alleging that the International union violated the terms of the NMFA by giving YRCW concessions, but not ABF.

Labor attorneys consulted by Teamsters for a Democratic Union (TDU) stated at that time that the case had little merit, and was likely filed more to influence Teamster members and International officials.

In other news, ABF reported a second quarter net profit of $12 million.  Read more about that report here. 

A news report on the dismissal of the lawsuit is available here. 

The latest truck driver hours of service rule is not only arbitrary and capricious, but unwarranted, the American Trucking Associations said in a court filing.

The trucking group filed its first shot in a court battle over the federal rule, which governs how many hours a driver can work each day and week.

The latest version of the rule, published Dec. 27, would keep some drivers off-duty longer between work weeks, cutting into the time they can drive and their earnings.

The ATA is suing the Federal Motor Carrier Safety Administration in the U.S. Court of Appeals for the District of Columbia Circuit, hoping to overturn the HOS rule.

In its appeal, the association and several allied trucking and shipping groups take aim at key provisions of the rule that are scheduled to take effect in July 2013.

Most prominent are revisions the FMCSA made in its final rule to the so-called 34-hour restart provision, which allows drivers to restart their weekly on-duty cycle.

The final rule requires truckers to spend two 1 a.m. to 5 a.m. periods off-duty before starting a new work week. That could lengthen the time drivers must wait before restarting their weekly clocks.

The ATA and its allies also attacked a new requirement that requires drivers to take a 30-minute off-duty break after working seven consecutive hours.

As it has done since the FMCSA proposed the changes, the ATA criticized the agency’s analysis of the final rule’s net benefits, calling it “a sham.”

“The agency’s cost-benefit analysis is driven by irrational assumptions and unjustifiable decisions made to inflate the (rule’s) total benefits,” the ATA said.

In particular, the association challenged the claim that 13 percent of truck crashes are caused by fatigue and the arguments the agency used to support a relationship between work, sleep and crash risk.

July 23, 2012: The Freight Division of the International Union has issued an 18-page memo settling a number of grievances filed by YRCW Teamsters and local unions, and giving guidance on future grievances.

A copy is available here, so that Teamsters working at YRC, Holland, and New Penn can better enforce the contract.

The memorandum comes 21 months after the deal was made. The memo reports that YRC and the International union reached a final resolution last week. Many of the decisions were made much earlier, in 2012 or 2011.

Some grievances are upheld, some denied, and some clarifications made.

In some cases the company is directed to respect past practice, but with no monetary penalties for a pattern of violations (respecting seniority with respect to local cartage work assignments and overtime, breaks for 4-hour employees, foreign road drivers being required to break units and dock trailers, etc). In the case of past practice violations of vacation pay calculation in the Central Supplement and others, back pay was awarded where timely grievances were filed by individuals or locals.

The Equal Employment Opportunity Commission, Yellow Transportation Inc., and YRC Inc. have settled for $11 million an EEOC suit alleging that the trucking companies permitted the racial harassment of black employees at a now-closed Chicago Ridge, Ill., facility, EEOC announced June 29 (EEOC v. Yellow Transp. Inc., N.D. Ill., No. 09 CV 7693, preliminary approval granted6/28/12).

Magistrate Judge Susan E. Cox of the U.S. District Court for the Northern District of Illinois June 28 granted preliminary approval of a proposed consent decree that would settle EEOC's suit under Title VII of the 1964 Civil Rights Act. The court must grant final approval following a fairness hearing before the decree takes effect.

The proposed consent decree would settle both EEOC's suit and a private suit filed in 2008 by 14 black employees under the Civil Rights Act of 1866 (42 U.S.C. § 1981), which were consolidated for purposes of settlement.

Second Large Settlement With YRC

EEOC claimed that black employees at the Chicago Ridge facility, which closed in 2009, were subjected to multiple incidents of hangman's nooses and racist graffiti, comments, and cartoons. EEOC claimed that Yellow and YRC also subjected black employees to harsher discipline and closer scrutiny than their white counterparts and gave black employees more difficult and time-consuming work assignments. Although numerous black employees complained about these conditions, Yellow and YRC failed to act to correct the problems, EEOC alleged.

Yellow Freight operated the Chicago Ridge facility until its merger with Roadway Express, when the two companies combined to form YRC Inc. in October 2008, EEOC noted.

In 2010, EEOC and YRC had settled for $10 million a separate Title VII suit involving alleged racial harassment at two other company facilities in Chicago Heights and Elk Grove Village, Ill., which are still open (178 DLR A-13, 9/10/10).

“The company now has had to pay $21 million to resolve egregious racial harassment and discrimination at two of its facilities,” said John Hendrickson, EEOC regional attorney in Chicago. “Employers should not believe that because they are in an industry—like trucking—known for rough working conditions, they can ignore discrimination when it arises. A noose is not an acceptable symbol there or anywhere else—that's the law.”

A group of 14 black employees at YRC initially sued under Section 1981 in 2008 before EEOC filed its race discrimination suit the following year. In October 2006, 15 current and former black employees, including the 14 who had sued earlier, intervened as plaintiffs in EEOC's suit.

Yellow Freight and YRC Inc. admit none of EEOC's allegations by entering into the settlement, the decree provides.

Company Disputed EEOC's Claims

In a June 29 statement, YRC Freight in Overland Park, Kan., said it “vigorously disputed” EEOC's allegations but “amicably settled” the suits in order to avoid further legal fees and costs.

“We take any claim of harassment or discrimination very seriously,” said Kelly Walls, senior vice president of human resources for YRC Freight. “There may be isolated instances of improper conduct in any workplace, but the allegations in these cases did not reflect the real working environment at Chicago Ridge.”

The company said it had evidence “refuting the most scandalous allegations,” that the original lawsuit was filed by a small group of former employees, and that “many former employees declined to join” EEOC's subsequent lawsuit.

The company makes clear through its “Respect in the Workplace policy,” its training, and its internal communications that “respect for fellow employees is a fundamental component of being a part of the YRC Freight team,” Walls said in the statement.

YRC Freight, which has about 21,000 employees at nearly 280 U.S. locations, “actively recruits minorities, women, and veterans” for management, dock professional, and driver jobs, the company said.

Terms of Proposed Decree

The proposed decree will benefit as many as 324 African American employees who worked at Chicago Ridge as loading dock workers, hostlers, janitors, clericals, and supervisors from 2004 until the facility closed in September 2009, EEOC said.

Many black employees who formerly worked at Chicago Ridge currently work at YRC's Chicago Heights facility, where they are shielded from race discrimination or harassment under the terms of EEOC's 2010 consent decree with YRC covering that facility, EEOC said.

The proposed decree settles both the EEOC suit and the private plaintiffs' Section 1981 suit, which the district court in May 2011 certified as a class action. No member of the Section 1981 class opted out of the certified class, which covers current or former YRC employees who worked at the Chicago Ridge facility at any time between October 2004 and September 2009, according to the decree.

Class members covered by the decree will have an opportunity to object to its terms at a court fairness hearing, but will get no second chance to opt out of the Section 1981 certified class, the proposed decree provides.

Class counsel for the Section 1981 plaintiffs will receive $1.1 million representing attorneys' fees and costs, the proposed decree provides.

John C. Hendrickson, Gregory Gochanour, Richard J. Mrizek, and Ethan Cohen of EEOC in Chicago represented EEOC. Randall D. Schmidt of the University of Chicago Law School, Carol Coplan Babbitt in Chicago, and Catherine A. Caporusso in Chicago represented the private plaintiffs. Kevin W. Shaughnessy and Tracey L. Ellerson of Baker & Hostetler in Orlando, Fla., represented YRC Inc.