Teamsters Considering Reopening Labor Deal With YRC to Help Carrier Conserve Cash

This story appears in the June 15 print edition of Transport Topics.

The Teamsters union, which already has agreed to pay cuts for workers it represents at YRC Worldwide Inc., said it is considering whether to reopen its labor contract to help the less-than-truckload carrier conserve cash.

“It is imperative that YRCW weathers this recession,” said Tyson Johnson, director of the Teamsters Freight Division.

A union committee “will also determine whether adjustments are necessary to further our central goal of protecting the jobs and benefits of our members at YRCW and all members covered” by the National Master Freight Agreement, he said.

YRC and the union for the past two months have been discussing the company’s proposal to stop making pension contributions of between $34 million and $45 million a month and instead use real estate collateral, possibly until the end of the year. The union didn’t say when it would make a decision.

Asked for comment on the union’s move, YRC said in a statement that it “was the Teamsters’ decision and action to form a subcommittee to review the pension issues. We are pleased with the

professionalism and ongoing support of our Teamster employees, our pension funds and our banking group, to advance the company’s strategic plan to manage through this economic recession.”

As the second quarter began, YRC’s cash balance had dipped to $249 million that wasn’t subject to creditor restrictions — $76 million less than on Jan. 1. To counter the cash drain linked to losses over the past five quarters, the carrier has secured a 10% wage cut from the union, lowered nonunion workers’ pay, unloaded excess facilities and integrated its national trucking service.

YRC and Arkansas Best Corp.’s ABF Freight System signed the NMFA with the union two years ago. It included a total wage increase of $2.20 an hour and $5 more per hour in employer contributions to health, welfare and pension plans, both spread over five years.

The agreement calls for $1 per hour increases in pension contributions on Aug. 1 of 2009, 2010, 2011 and 2012 in addition to an increase that took effect on that date last year.

Arkansas Best Corp. spokesman Danny Loe said “while we are not familiar with the specific discussions that YRCW is currently having with the IBT on this issue, ABF would expect to be a part of that process if the NMFA was reopened.”

Separately, the Western Conference of Teamsters Pension Trust on June 4 voted to terminate pension fund agreements with YRC and its subsidiaries. However, the fund also said it would give pension credits to workers for March, April and May, even though the company made no pension payments for those months.

“Our hope is that the parties will be able to reach agreement on the outstanding issues so that YRC can again participate,” said the memo from Chuck Mack, chairman of the Western Conference of Teamsters Pension Trust.

Late in May, the New England pension fund said it would “continue all steps necessary to enforce the payment of these overdue contributions.” The May 29 memo to participants said YRC would be terminated from that fund if contributions weren’t made within 30 days.

Under federal law, termination of YRC from a pension plan could move the company closer to a potential multi-employer pension obligation. The termination has to occur before a pension fund can present a demand for payment. An actual demand for payment, if it occurs, could trigger obligations that have accumulated on surviving companies such as YRC. No fund is known to have made such a demand.

Under the law, YRC and Arkansas Best have to pay for pensions for workers at failed LTL competitors as well as for their own employees.

YRC has estimated its liability at $4 billion or more, while Arkansas Best’s is at least $800 million.

The NMFA contract negotiating committee, also headed by Johnson, will review the committee report and decide whether to ask union members to approve any changes it recommends. Rank-and-file approval is required, as it was for the wage reduction approved earlier this year, which members backed by a 3-1 margin.