December 9, 2013

Struggling YRC Worldwide lobbies Teamsters union to alter, extend contract

Overland Park-based YRC Worldwide on Monday sent field leaders and vice presidents to company work sites to campaign for extending the giant trucking company’s contract with the Teamsters union into 2019. Their message is that the proposed changes to the contract would save jobs without cutting health benefits and without further reducing paychecks or pension contributions.
The push is on to convince 26,000 Teamsters to accept a decade of cut wages and reduced benefits from YRC Worldwide Inc.

, the struggling trucking giant based in Overland Park.

Unionized drivers, mechanics, dockworkers, clerks, janitors, porters and maintenance workers already have lived with pay cuts since 2009.

Now, they are asked to extend that pact into 2019, plus accept some changes aimed at saving the company an additional $100 million a year. Some estimates put the savings so far in the neighborhood of $3 billion.

It is an election campaign in which the Fortune 500 company, one of only three in the Kansas City area, seeks union votes for the five-year deal that management considers a must-have.

Ballots will be mailed this week and members of the

Teamsters union

have until Jan. 8 to vote.

More than 4,000 Teamsters listened Sunday to a companywide conference call that included time for questions, James Welch, YRC’s chief executive, said Monday. There also were some town-hall style meetings Sunday.

“We’ve got a detailed schedule over the next two weeks hitting as many employees as we can,” Welch said. “We’re trying to be transparent and involve as many employees as we can. And so far so good.”

YRC says it needs the deal to convince lenders to refinance $1.4 billion in debts that the company can’t pay. Most of the debts financed poorly managed mergers that, along with the Great Recession, damaged YRC’s ability to make money.

Welch, who became chief executive in mid-2011, kicked off the campaign for union approval as one last step in the company’s long recovery. He has said the company’s future and all of YRC’s 32,000 jobs are at risk, not just the Teamsters’ work.

“This agreement and our contemplated financings will be the final hurdle we need to clear to have a strong, stable business,” Welch said in a company announcement Monday.

It may be a tough sell to voters who already have had five years of pay cuts.

“When are we going to stop giving?” asked a Dallas-area Teamster who asked not to be identified for fear of possible reprisals. “It’s time to draw a line in the sand.”

Randy Zolner, a Teamster who works in the Chicago area, said he would vote for the extension though it’s not a good deal.

“I’m 56. I don’t want to go look (for a job) again,” Zolner said.

YRC Worldwide’s campaign to win union votes for a contract extension sent field leaders and vice presidents to company work sites Monday.

Their message is that the eight-page proposal revealed over the weekend would save jobs without cutting health benefits and without reducing paychecks or pension contributions any further.

It would, however, cut vacation pay and benefits, freeze wages for some employees, introduce lower pay scales for some new hires and change work rules the company said would give it flexibility to compete.

In return, the company offers a profit sharing plan that could make its first payment in 2016, if the company starts to operate far more efficiently.

Union leaders made no recommendation on how members should vote. Citing the sacrifices so far and the dire fate YRC offers as the alternative, the union said members “should have the right to decide their own destiny.”

Wall Street embraced the proposal as YRC shares jumped $1.55, or 18.3 percent, to close Monday at $10.

“We don‘t expect Teamster members to vote against a new labor deal to force a YRC Worldwide bankruptcy or liquidation,” analyst Scott Group

wrote Monday in a note to clients of Wolfe Research


He said the Jan. 8 voting deadline leaves the company little time to modify its proposal and seek a second vote. YRC’s first big debt payment is due Feb. 15.

Payday blues

Ask a Teamster how much he already is giving back to the company, and he will look no further than a weekly paycheck for the answer.

Every Teamster pay stub tallies the dollar value of Teamsters’ individual pay and benefits concessions. The weekly total exceeds the amount taken out for federal withholding. Over the course of a year, it’s thousands of dollars.

“It gets a little frustrating, seeing it week after week after week,” said a Kansas City-area employee who moves trailers around terminal yards.

“It’s depressing,” said another Teamster, who asked not to be named for fear of losing his job. “That’s money for my daughter. It’s money for vacations. It’s money for food. It’s money for entertainment.”

Labor historian

Nelson Lichtenstein

said showing the amount on each check puts psychological pressure on workers. It also serves a purpose for the union, ensuring that workers know what they’re being asked to do for the next five years.

“Every paycheck, you see what you’ve lost,” Lichtenstein said.

The pay cuts, agreed to in two previous contract deals, total 15 percent. The Teamsters’ current agreement includes annual pay raises, but these also fall under the 15 percent cut when applied on payday.

The deal

YRC’s new offer eliminates the 40-cents-an-hour raises set for next year and 2015. Instead, workers would get $750 each when the deal is completed and again in early 2015.

The amount of money is amounts to a wash now, but it means workers won’t collect that forfeited pay increase in future years.

YRC’s proposal preserves pay raises currently set beyond 2015 for drivers with a commercial driver’s license. But it freezes pay for others: dock workers without that license, clerks, janitors, porters and maintenance workers. New hires for those jobs would come in at lower pay.

Welch said the freeze recognizes that these jobs don’t pay the same as nonunion drivers. He repeatedly has told Teamsters that their jobs pay competitive wages and carry better health care benefits than nonunion jobs in the industry.

YRC also is asking for rules changes that management has said would give it the flexibility to compete against the nonunion freight companies battling for shippers’ business.

Specifically, YRC would have more leeway to hire other trucking firms to haul freight when YRC itself doesn’t have a regular driver available and when it doesn’t have enough business in an area to serve shippers efficiently.

It also wants to set up “utility” employee pools, for example reassigning a qualified dock driver to fill in on a delivery haul when needed.

“We’re constantly looking for drivers in Chicago,” Welch said Monday.

Other changes carry specific dollar values to the company. Expanding the absentee policy used in its Western region over the entire company could cut down on the $40 million YRC say its loses to absenteeism each year.

YRC says it would save $1.5 million if employees accept the deal that requires them to receive their pay through direct deposit.

A key feature of the plan is that these changes would begin immediately. The promised carrot, a profit-sharing plan, would wait until 2016.

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