A negotiated Teamsters union contract will be voted on by
ABF Freight’s 7,500 members throughout the month of June. Pending its approval,
union members will accept an automatic 7% decrease in wages but will be
recovered by the 5th year of the contract. Union officials also granted the company
flexibility to use non-union, outside carriers. According to ABF, this
concession was needed because new business opportunities have been lost to
non-union competitors.
A Teamster representative noted “Nobody ever wants to see a
pay cut but in light of the company’s struggles and our desire to see the
company survive, something needed to be done. It is in our best interests, as
well as ABF’s that this company is given a chance to climb out of this deep
recession so that our members’ futures are protected”.
Indeed it appears troubles at ABF resulted in a rebuffed buyout
opportunity from YRC in April while in the midst of contract negotiations with
the Teamsters. According to Mr. Welch,
CEO of YRC, “We saw this as an opportunity to improve the density at YRC
Freight. Our network has the capacity to handle more shipments. I think an
acquisition makes sense.” Welch also said the attempted acquisition speaks to
the financial strength of YRC. He said the company would have been able to
secure the financing if the two firms had pursued the deal. An interesting
statement from a company, that not too long ago, teetered on the brink of
financial disaster and has quite a bit of debt on its books. Not too surprising, the Teamsters Union which
has a financial stake in YRC including a seat on the company’s board of
directors, was none too pleased with a possible merger. Teamsters President,
James Hoffa said “Before YRC begins looking for acquisition targets they should
first restore our members’ wages and pension contributions. We have seen this
kind of arrogance from YRC before. We thought they had finally learned the
lessons of past management catastrophes. Unfortunately it appears they have
not.”
YRC, itself, just recently received approval from the
Teamsters to undergo its network optimization plan which calls for
consolidating 29 terminals into existing terminals and closing three
distribution centers, along with several other changes to YRC’s network.
Meanwhile, ABF’s lawsuit with YRC continues. Arkansas Best
alleges that wage deals between the Teamsters and YRC violated the National Master
Freight Agreement (NMFA). The NMFA, implemented in 2008, was designed to create
equal labor costs and other benefit payments among trucking companies with
drivers represented by the Teamsters.
The lawsuit, first filed in 2010, was dismissed a second time
by the U.S. District Court. In late 2012, Arkansas Best appealed the case again
to the United States Court of Appeals. The Circuit has once appealed in favor
of Arkansas Best.
So, as a lawsuit hangs over YRC and ABF as well as both work
towards profitability, non-union less-than-truckload (LTL) companies such as
Old Dominion are taking market share,
increasing tonnage and posting record financial results.
The trucking industry is adapting to the current environment
where flexibility is vital and as such unions find themselves having to adapt as
well. For how long unions will be receptive to this need remains to be seen but
in order for them to survive as well, flexibility is just as important.
