Ratification Vote Survives YRC Gaffs

Despite some last-minute gaffs on the part of YRC Worldwide (YRCW), Teamsters voted to ratify the latest modifications to their contract with the financially troubled carrier group.

As members of the International Brotherhood of Teamsters pondered their ballots deciding whether or not to support changes in their contract with YRC Worldwide, Bill Zollars, chairman, president and CEO, was quoted saying non-union employees would likely not be asked to take any further cuts. This angered union officials and led to an apology by Zollars which stated that the company remained committed to the principle of “equal sacrifice.” He reiterated that the financial books of the YRCW companies would be available to the IBT to verify that non-union employees “have provided equal sacrifice.”

The ballot, which asked union members to agree to a wage reduction for the full term of the National Master Freight Agreement (through March 2013), drew 64% of members to cast ballots. The volume of the response actually led the IBT to postpone announcing the result as ballots were tallied. The result was a 58.5% to 41.5% affirmative vote. The 15% wage cut (incorporating the 10% reduction approved earlier in the year) and other concessions will provide YRCW with over $1.2 billion in cost savings over the term of the contract.

The wage reductions and termination of pension contributions were scheduled to take effect immediately, but they would not remain in effect unless YRCW and its bank group amend loan agreements to provide YRCW with sufficient liquidity and flexibility to complete its restructuring, the union pointed out. Also, other affiliated Teamster Pension Funds must approve the deferral/termination agreement, the union added.

Included in the agreement is a stock option that could give Teamster members an additional 20% of the company's outstanding stock over and above the 15% that was negotiated at the end of 2008. In its announcement of the ratification vote, YRCW said, "With the support of our employee-owners and other stakeholders, we continue making progress with our comprehensive recovery plan—realizing efficiencies from the YRC integration, restoring financial strength and positioning YRC Worldwide for future success." Bill Zollars said, "The contract changes enable us to reduce our cost structure, preserve capital and be more competitive in the marketplace."

There were some bumps in the road to this agreement. In addition to the comment that implied non-union workers would not be asked to take further cuts, Zollars had issued an apology to the union for information posted to the company's Web site indicating YRCW would pass cost savings from the economic relief provided by Teamster employees on to its customers. “The intent of the cost savings is to provide the companies with sufficient operating cash to survive the worst economic recession in recent history,” said Zollars' statement.

With those clarifications in place, Zollars was not finished. He also had to apologize and retract an announcement that YRCW would work with Specialized Transportation Inc. (STI) to provide residential delivery services. STI is not part of the “bargaining unit” and, as such, the agreement was a violation of Article 32 of the National Master Freight Agreement or terms of the Memorandum of Understanding with the IBT. Zollars acknowledged that the work must be offered to the bargaining unit.

"Our union employees approached this situation in a very professional manner," said Mike Smid, president of YRC Inc. and COO of YRC Worldwide. "This vote sends a clear message to our customers and our competitors. We are moving forward together, and we're moving forward with confidence, delivering uninterrupted and unparalleled service in our superior networks."

A small group of IBT members (10% of members voting) did not ratify the agreement. They are subject to a “handful of separate white paper agreements,” said the IBT. “As with past contract ratification rejections, those issues will be dealt with on a local-by-local basis,” said the IBT.

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