YRC, Teamsters Reach Tentative Deal on Additional Cost Cuts
YRC Worldwide and the Teamsters union have reached a tentative agreement that would reduce wages another 5% and set other cuts that would save the company about $870 million, while giving the union an option for more company stock.
The plan would suspend pension payments for 18 months and reduce health and welfare contribution increases scheduled for Aug. 1, while giving the Teamsters an option for another 20% stake in the company.
Coupled with stopping pension payments from July 1, 2009, through Dec. 31, 2010, YRC estimated its savings that would be nearly four times larger than the first round of wage cuts.
YRC also agreed to give the union a board seat in addition to the option to buy another 20% of its shares on top of the 15% granted in the first round of pay cuts. The Teamsters also won concessions to limit transfers of work to non-union subsidiaries.
Less-than-truckload carrier YRC, seeking to cut losses that reached $257 million in the first quarter, won the 5% wage cut, on top of a 10% reduction earlier this year.
The two sides released statements late Tuesday following a meeting in Chicago, where union leaders overwhelmingly endorsed the package. The agreement is subject to ratification by union members.
There are approximately 35,000 active Teamsters at YRC, and another 10,000 who are not working but eligible to vote on the deal. The union said it planned to mail out ballots to union members as early as Friday, with a vote count tentatively scheduled for Aug. 6.
“This is another step in our ongoing strategic plan to restore the financial strength of our company,” said Bill Zollars, YRC’s chairman and chief executive officer.
“Modifications to the labor agreement will help us reduce our cost structure, preserve operating capital and increase our competitiveness,” he said in a statement.
YRC, ranked No. 4 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers, estimated monthly savings at $45 million in the second half of 2009 and $50 million next year.
By Transport Topics
Senior Staff Reporter Rip Watson contributed to this story.
