YRC Worldwide Inc.’s union members will weigh an extra 5 percent pay cut on top of losing their pension contributions for 18 months, the union said Tuesday.
Leaders of local units for the International Brotherhood of Teamsters overwhelmingly endorsed the tentative plan at a Tuesday meeting in Chicago, the union said.
If union-represented YRC workers vote for the plan, the union this year would have gained options for as much as 35 percent of outstanding shares in the Overland Park, Kan.-based trucking company. The current plan also would require all YRC employees to take similar cuts, gain the union a YRC board appointee and bring in a corporate turnaround expert.
YRC and the Teamsters have been negotiating since June 29 about concessions that would provide YRC with the cash necessary to survive the recession. They reached a tentative agreement July 9 but didn’t release details until Tuesday.
The 5 percent wage cut, which would be effective until the union labor agreement ends in 2013, would mean a 15 percent total cut in wages this year. Early this year, Teamsters members agreed to a 10 percent cut in exchange for a 15 percent stake in YRC. The cost-of-living adjustment also is suspended through the contract, according to a document distributed at the Chicago meeting.
YRC would end its participation in union pension plans from July 1 through Dec. 31, 2010, meaning members don’t accrue pension benefits during that time. The company would have to resume participation and payments on Jan. 1, 2011. The move reportedly would save $500 million.
According to the document, YRC agreed to Teamsters demands that included gaining an appointee to the board, bringing in a turnaround consultant, offering the opportunity to get YRC stock options for an additional 20 percent of outstanding shares, bringing back bargaining-unit work that had been transferred to other countries, limiting the expansion of YRC Logistics and transferring its work back to the bargaining unit, restricting how the savings can be used, and requiring wages to revert to full rates should YRC file for bankruptcy or be sold. Job protections were added as well.
In addition, the document said, non-union workers at YRC will take equal pay cuts and, during the 18 months when YRC doesn’t participate in pension plans, won’t receive retirement benefits or 401(k) contributions.
YRC’s banks also agreed to “provide a fair share of the economic relief,” the document said, and YRC must provide the union with enough financial information that it can ensure the company’s compliance with plan provisions.
“Unfortunately, the freight recession has worsened for all trucking companies as 2009 has progressed, but it’s been more aggravated at (YRC) companies than any other trucking group operating in North America,” the Teamsters said in a document.