Transportation News

Teamsters Overwhelmingly Reject YRC Contract Extension

Teamsters employees at trucking giant YRC Worldwide Inc. on Thursday overwhelmingly rejected extending a concessions-laden contract that the company said it badly needed.

Before the vote, YRC executives had said rejection would put the Overland Park-based company in jeopardy.

They said lenders demanded the contract extension before they would refinance more than $1 billion in debts the company can’t repay.

YRC executives were scheduled to meet Friday with lenders in New York. A company statement said YRC officials were “in contact with Teamster leaders to explore options.”

Official results of a monthlong mail-in vote tabulated on Wednesday and Thursday showed that 61 percent rejected the pact’s extension for five years and 39 percent approved it, according to the International Brotherhood of Teamsters.

Ballots had been cast by 19,651 of the roughly 26,000 Teamsters who work for YRC, according to Bloomberg News.

“The Teamsters Union believes in democracy, and we’ve let the democratic process take its course,” said Tyson Johnson, director of the Teamsters national freight division. “Our members have made huge sacrifices to keep this company alive and a majority made the decision not to sacrifice anymore.”

YRC said it would operate normally despite the vote’s outcome.

“It is business as usual as we have approximately 15,000 trucks on the road today serving 250,000 customers. We will keep our customers, employees and stakeholders advised of our efforts,” chief executive James Welch said in a statement.

“While we are disappointed in the outcome of the vote, we believe that timing of events related to our refinancing did not work in our favor. Many employees had already returned their ballots prior to Dec. 23, the date the company announced it had a refinancing agreement in place. We believe that was information employees needed to make a fully informed decision.”

YRC said in December it had worked out a $300 million deal with lenders and investors, but its completion depended on the union’s approval of the contract extension.

Previously, Welch had said in a DVD mailed to Teamsters’ homes that the vote and corporate refinancing were needed to “save all our jobs and our company.”

Totals from the Teamsters union showed that Local 41 in Kansas City rejected the contract extension overwhelmingly. Its members voted 71.4 percent against the extension. In a 2010 vote, 76.4 percent had approved the existing contract.

Teamsters reject proposal

The contract extension’s failure spread across the company’s national footprint. The Teamsters’ report showed defeat at larger union locals in Milwaukee; Cincinnati and Akron, Ohio; Louisville, Ky.; Atlanta; Chicago; Charlotte, N.C.; Portland, Ore.; Detroit and many others.

A few larger locals had approved, including those in Toledo, Ohio; Union, N.J.; Hempstead, N.Y.; and Salt Lake City, the results showed.

Despite the company’s warnings, several Teamsters members had openly rejected the contract extension during the month-long mail-in period for the vote. Some posted photos of themselves on Facebook with “no” marked on their ballots before mailing them in.

Approval would have meant the 15 percent pay cut the Teamsters have worked under since 2009 would continue into 2019, as would pension and other benefits reductions they had approved in three earlier votes.

It also would have made other changes to work rules, vacation benefits and other matters that management said would make the company flexible enough to compete with its mostly non-union rivals.

The Teamsters’ current contract runs through March 2015.

“Our members have sacrificed billions of dollars in wages and pension benefits over the past five years, and yet the company has been unable to recover from the disastrous policies of the previous management,” Jim Hoffa, the Teamsters’ general president, said in the union’s announcement.

Welch, a former longtime employee, returned to the company as chief executive in July 2011.

Much of the company’s debt piled up previously through acquisitions of other large trucking companies. It has been unable to repay the debt as business deteriorated during the long recession and failed to recover substantially.

YRC’s shares fell $2.99, or 16 percent, to $15.67 Thursday amid early indications that the contract would not be approved.

Among those was an online post Thursday morning from the Teamsters for a Democratic Union, an independent group unconnected to the International Brotherhood of Teamsters.

It said the group’s observers at the ballot counting had indicated that stacks of “no” ballots seemed larger than “yes” ballot stacks. The post suggested that the contract would fail.

Welch, having emphasized the importance of extending the contract, declined in December to talk about what plans the company had in the event of a failure.

“I wouldn’t want to speculate anything along those lines because we want to get through this ratification first. That’s our most important thing on our radar,” Welch had said.

Source: The Kansas City Star

Related: Teamsters nix YRC wage-cut scheme, freight diversion to rival carriers a worry

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