New Penn Workers Approve Contract Concessions

Sept. 10, 2009
Transportation and logistics company YRC Worldwide dodged another bullet as its New Penn workers approved contract concessions on a second round of voting

Hold outs at New Penn, a regional less-than-truckload unit of YRC Worldwide (YRCW), reversed an earlier contract vote and have approved contract concessions that were accepted by 90% of YRCW union workers in August.

With the threat hanging over New Penn workers' heads that YRCW would sell the unit or merge it into the larger group, the Teamster workers voted 912 to 334 in favor of the concessions. The 73% positive vote eclipsed the earlier 58.5% positive company wide vote at YRCW.

In a company statement, Mike Smid, president of YRC Inc. and COO of YRC Worldwide, said "As employee owners and stakeholders, our union workforce has made difficult decisions and demonstrated their commitment to achieving long-term success for YRC Worldwide. Revisions to the contract enable the company to strengthen its financial position."

Tyson Johnson, director of the Teamsters National Freight Division, said, “The New Penn local union leaders did a great job explaining the negative consequences if this revote was not successful. The New Penn members realized that hundreds of jobs were at stake in this vote.”

Johnson noted the “Job Security Plan” provides YRCW with over $1.2 billion of cost savings over the remaining 43-month term of the agreement and greatly enhances YRCW’s financial position. While the wage reduction and pension terminations are effective immediately, they will not remain in effect unless: 1) YRCW and its bank group amend their loan agreements in order to provide the company with sufficient liquidity and flexibility to complete its restructuring and take advantage of the upturn in freight demand anticipated in 2010; and 2) affiliated Teamster Pension Funds approve the "deferral/termination" arrangement.

YRCW officials described the modified agreement, which includes a 5% incremental wage reduction and an 18-month cessation of union pension fund contributions, which will not require repayment. Related savings from the pension and wage reduction are approximately $45 million per month, and primarily began in August, said YRCW. Savings increase to an estimated $50 million per month in 2010.

The New Penn vote is reassuring for YRCW, but the issue is not completely settled. The company and the Teamsters are “addressing employee concerns in the remaining smaller bargaining units who have yet to ratify the contract changes.” This represents a small percentage of the company's unionized workforce, said YRCW. The company did not offer a number for how many workers or operations have not ratified the changes, but the earlier ratification vote announcement said 10% of the workforce was covered by separate “whitepaper agreements.” New Penn workers represent a substantial portion of that group.

The Teamsters said that in the revote, New Penn members—as well as members covered by all mechanics and office agreements—approved the plan 912-334. The 1,246 union workers who voted represent 83% of 1,500 eligible to vote.

Though the union contract issues and lender negotiations have dominated the headlines, YRCW has continued to make service announcements, including its recent enhancements to its Expedited Precision Services. According to YRCW, with the new enhancements, customers can now simply write "YRC Time-Critical Fastest Ground" or "YRC Time-Advantage Fastest Ground" on their standard bill of lading, check the appropriate box on a quote-free bill of lading sticker or select Fastest Ground on the Online Bill of Lading and their shipment automatically moves at the fastest in-network YRC transit speed.

This announcement follows an earlier expansion of delivery guarantees to all of YRC's transportation companies. Those flexible “guaranteed window” solutions are designed to help retail suppliers avoid costly charge-backs when precise delivery windows are not met, said YRC.

"As customers look for ways to reduce costs and meet the increasingly stringent demands of today's supply chains, we continue to simplify the purchasing process," said John Garcia, executive vice president and chief sales officer for YRC Worldwide.

Other Recent Stories on YRCW:

YRCW Announces New Credit Agreement

Teamster Negotiations Ongoing At YRCW and UPS

Ratification Vote Survives YRC Gaffs

Join the discussion: YRC's Future. . .your take?

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