National less-than-truckload carrier YRC Worldwide Inc. finds itself in a bit of a jam right now, as the Teamsters employed by the company have rejected a contract extension that would have allowed YRC to reduce its debt load by $300 million while extending the current contract out to 2019. Although YRC announced last month that it had reached a refinancing agreement with some of its lenders and investors, that deal was contingent on the Teamsters agreeing to the contract extension.
As CEO James Welch noted in December 2013, failure to pass the contract extension with its drivers would lead to “some very difficult decisions for the company and its employees.” Expressing his disappointment that the extension was rejected, Welch emphasizing that “it is business as usual today 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.”
The vote wasn’t even close, as 61% of the approximately 26,000 Teamsters employed by YRC voted to reject the extension. One of the sticking points is that employees agreed to a 15% wage reduction back in 2009 during another financial crisis at YRC, and the contract extension would’ve kept that reduction in place through 2019, along with a 75% reduction in pension contributions.
“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,” says Jim Hoffa, general president of the International Brotherhood of Teamsters.