New Penn Teamsters Accept Pay Cut, Pension Givebacks at YRC in 2nd Vote
This story appears in the Sept. 14 print edition of Transport Topics.
Teamsters at YRC Worldwide Inc.’s New Penn regional trucking subsidiary approved a 5% wage cut and pension givebacks in a second vote on those concessions to help the parent company cope with mounting losses and dwindling freight volumes.
In an earlier vote, the New Penn Teamsters had rejected the deal.
In a Sept. 9 statement, the Teamsters union said the employees approved the wage cut and pension deferral for 18 months by a 912-334 vote.
In August, about 60% of the 1,200 union voters at New Penn turned down the contract modifications, prompting union leaders to tell the workers that YRC intended to merge New Penn into the parent company if the changes were rejected again.
The cuts already are in place at other units of YRC that employ 90% of the Teamsters working for the company.
YRC estimated the new round of concessions would save $45 million a month for the rest of this year. The savings over 43 months until the National Master Freight Agreement expires could be as much as $1.2 billion.
“The New Penn local union leaders did a great job explaining the negative consequences if this revote was not successful,” Tyson Johnson, director of the Teamsters National Freight Division, said in a Sept. 9 statement. “The New Penn members realized that hundreds of jobs were at stake in this vote.”
The vote by New Penn workers means that nearly all YRC Teamsters members now have agreed to the latest round of cost cuts in an effort to boost the struggling company’s finances.
YRC said “a small percentage” of its workers haven’t yet ratified the contract changes, without giving any details or responding to requests about the status of three bargaining units in Chicago that rejected the second round of contract changes in July.
Losses at YRC have topped $1 billion in the past four quarters, as the recession reduced its freight tonnage more than 30%. First-half 2009 losses, including one-time costs for integrating its national network, were $582 million.
The company accelerated integration of its national less-than-truckload operation, sold assets and cut pay of nonunion workers by an equivalent amount to counter the drop in freight and pressure on pricing.
YRC and the union agreed to a 10% wage cut that took effect in January. In exchange, workers received the option to buy stock that would enable them to hold up to 15% of YRC stock. In the second agreement, the union won the right to take an additional 20% stake.
“As employee owners and stakeholders, our union workforce has made difficult decisions and demonstrated their commitment to achieving long-term success for YRC Worldwide,” Mike Smid, president of YRC Inc., said in a statement. “Revisions to the contract enable the company to strengthen its financial position.”
The union leadership and the company agreed to the second round of cuts in July, shortly before YRC reported a $257.4 million loss. Nearly 60% of those voting agreed to the cuts that shaved about $1.10 an hour from wages that had been cut by $2.20 an hour during the first round of reductions.
The union noted in its statement that wage and pension cuts that are effective immediately would not remain in effect unless lenders give the company “more flexibility to complete its restructuring.”
So far this year, lenders have relaxed terms of the credit agreement five times to give YRC more breathing room to meet its financing obligations.
