Friday, December 05, 2008

Arkansas Best Freight's biggest competitor on brink of bankruptcy

Arkansas Best Freight's biggest competitor is on the verge of collapse, but a deal with the Teamsters union could save 40 thousand jobs. ABF is based in Fort Smith. The Yellow Roadway Corporation is a freight company based in Overland Park, Kansas. facing economic hardship, the company has reached an agreement with union leaders for a 10 percent pay cut across the board. but that doesn't mean the employees won't benefit.

"Through this plan we have created a trust so the members get a 15 percent stake in the company," Teamsters spokesman Brett Caldwell told 5NEWS.

Union employees won't be the only ones tightening their belts. non-union employees will also be asked to make an equal sacrifice. There will be ten percent less in their paychecks. a spokesman for the international brotherhood of teamsters says a similar offer has not been extended to arkansas best freight at this time and the carrier doesn't seem to want one.

This statement was released Friday: "ABF has reviewed the details of the agreement between YRC Worldwide and the international brotherhood of teamsters. We do not believe that agreement is appropriate for our company. We are in the midst of evaluating its impact on our employees, our cost structure and our competitiveness."

Some have speculated that YRC will significantly undercut abf's rates to survive. but Tteamster spokesman Brett Caldwell says that's not the case.

"We want YRC jobs to be protected we want ABF jobs to be protected. In no way would we do this program in order to undercut another union employer."

Caldwell insists that YRC's survival is in Arkansas Best' interest.

"If yrc has problems the financial pressure is on ABF as a surviving company for those pension funds would be tremendous."

YRC worldwide teamsters will still have to vote on the contract changes which will likely be approved and take effect January first 2009.

ABF's statement went on to say that they will always act in the best interest of the company and work to ensure the preservation of employee jobs.

FedEx Agrees to Pay $26.8 Million to Settle Drivers Lawsuit

FedEx Corp. has agreed to pay $26.8 million to settle a California lawsuit over whether some drivers were independent contractors or employees.

The agreement, presented in a hearing Friday, requires court approval.

In 2007, the California Appeals Court affirmed a 2004 district court ruling that about 200 drivers who operated in the state six to 10 years ago were employees and therefore entitled to business-expense reimbursement.

Moody's cuts YRC Worldwide's debt rating

Plans by YRC Worldwide to offer to buy back all of its publicly traded debt for an average of less than 50 cents on the dollar prompted Moody's Investors Service on Friday to downgrade the trucking firm's debt ratings.

Moody's took YRC's corporate family rating to "Caa1" from "B1", and cut its probability of default rating to "Ca" from "B1".

The rating outlook is developing, Moody's said.

On Thursday YRC said it would tender to buy back up to $537 million in principal on senior notes issued by it and subsidiary YRC Regional Transportation.

Moody's said the offer amounts to an average of about $475 for every $1,000 in debt.

The ratings service said it "views the tender, which is being offered at a deep discount to par, as a distressed exchange."

If YRC is successful with the tender offer, Moddy's said it will have used nearly all of its bank credit facility, which it will then need to refinance in 2012.

YRC shares fell 13 cents, or 2.4 percent, to close at $5.24 on Friday.

YRC wants to stop supporting non-YRC union retirees

YRC Worldwide Inc., looking for ways to reduce costs, said Thursday that it will seek federal help to eliminate its obligation to non-YRC union retirees.
YRC has had some preliminary contact with officials from President-elect Barack Obama’s administration on the issue of multi-employer pension plans, said Bill Zollars, YRC’s chairman, president and chief executive. YRC would like to stop supporting retirees from companies no longer in business.

“It’s really the treatment for the orphans that we’re concerned about,” said Zollars, referring to retirees of trucking companies that have shut down. “We’d like to see the government take on some role in supporting them and leave us to fund our own retirees’ pensions.”

Zollars’ comments came a day after Teamsters leaders gave tentative approval to a 10 percent wage cut that could go into effect in January. About 40,000 YRC union workers are eligible to vote on the proposal — which essentially swaps pay cuts for a potential equity stake in the company — by the end of the month.

YRC also has agreed to cut the wages and benefits of all non-union employees as part of the deal with the Teamsters.

Zollars said the company has discussed the pension matter with the Teamsters. YRC is the biggest employer left contributing to the union’s Central States Pension Fund, a multi-employer plan, with about 30 percent of the liability. United Parcel Service Inc. paid $6 billion to leave the fund last year under a new contract.

“The Teamsters and the company are together on this issue,” Zollars said Thursday. “There’s a reasonable chance we can get something done on this with the new administration. We’d love to be able to get it done in the first year.”

A Teamsters spokesman, without specifically addressing YRC’s proposal, said the union supports pension reform.

“Our union believes that anyone that has earned their pension benefits through years of hard work should not suffer impairment of those benefits simply because the employer for which they once worked is now out of business,” said union spokesman Galen Munroe. “We also believe it’s long past time to address the need for serious pension reform to ensure that pension funds will continue to have the resources to fulfill the promises made to their participants and that all working men and women will have a secure retirement.”

Analysts have estimated YRC’s unfunded liability in the Central States fund to be in the range of $4 billion, but Zollars said Thursday that he has not been provided with an updated figure from the fund.

“I’m sure it’s gone up significantly in recent months given what’s happened to the economy,” he said.

Meanwhile, YRC continues to restructure in an attempt to get through the prolonged economic downturn. Zollars estimated the cost savings from the wage cut of the union drivers and dockworkers to be $220 million to $250 million in 2009. An additional $200 million in cost savings should come next year from the merger of YRC’s two biggest carriers, Yellow Transportation and Roadway.

The savings from the 10 percent cutback of wages and benefits of non-union employees will be significant, Zollars said. He added the company may provide a more specific figure later this month.

YRC continues to work on the sale of properties no longer needed due to the merger of Yellow-Roadway and the sale-leaseback of other facilities.

Thursday, December 04, 2008

Teamsters may take 10% pay cut

About 40,000 of YRC Worldwide Inc.’s drivers and dock workers will have their wages cut 10 percent under a tentative deal reached with the Teamsters union.

Local union leaders reviewed and approved the proposal at a meeting in Scottsdale, Ariz., Wednesday in an effort to boost YRC’s worsening financial condition.

The proposal will be mailed union members on Dec. 9 and ballots will be counted by Dec. 30, said Bret Caldwell, a Teamsters spokesman.

Caldwell said the proposal includes an “equal sacrifice” provision to slash the wages and benefits of YRC’s nonunion and management employees by 10 percent as well.

Caldwell said the union’s portion of the cutback would just be on wages and not affect benefits.

YRC has union workers at four subsidiaries covered by the agreement: Yellow Transportation, Roadway, USF Holland and New Penn. Several hundred YRC employees in the area work at terminals operated by Yellow, Roadway and Holland.

Wednesday, December 03, 2008

Private sector loses 250,000 jobs

The U.S. economy shed a quarter-million private-sector jobs in November, according to a payroll processor's report that was worse than economists expected.

Non-farm private employment fell by 250,000 jobs from the previous month on a seasonally adjusted basis, according to the ADP National Employment Report.

The report was expected to show a decline of 200,000 jobs in November, according to a consensus of economist projections compiled by

"It's impossible to find any ray of light here," said ADP spokesman Joel Prakken in a conference call with reporters. "All of the major industries that we record had declines in employment."

The goods-producing sector lost 158,000 jobs last month, its 24th consecutive month of decline, according to the report. This includes 118,000 positions in manufacturing and 44,000 construction jobs.

The service industry shed 92,000 jobs, its second month of losses since the ADP reports began tracking employment in 2002.

Medium-sized businesses, with between 50 and 499 workers, were the hardest-hit part of the economy, hemorrhaging 130,000 jobs last month. Large businesses, with at least 500 workers, lost 41,000 jobs. Small businesses, with less than 50 workers, lost 79,000 positions.

Prakken said he expected to see "a string of very weak employment reports" going forward. He added that "declines in employment between 300,000 and 500,000 in the coming months would not surprise me."

The ADP also revised its reading for October, to a loss of 179,000 jobs from the previously reported loss of 157,000.

Fuel prices fall but fuel surcharges remain

Flexible fees applied by shippers and airlines are less expensive—and less risky—than purchasing fuel hedges, and most companies have no plans to give them up.

Corporate managers hoping for some relief from fuel surcharges now that oil prices have collapsed can forget it.

The added fees have become standard operating procedure in a number of industries and are here to stay.

Indeed, Morningstar equity analyst Keith Schoonmaker said that the implementation of fuel surcharges, which allow corporations to pass energy costs on to customers, has worked well for airlines, trucking and distribution companies over the past three to four years.

Analysts say the surcharges played a vital role in keeping these businesses alive as oil prices soared to record levels this summer. In fact, Mr. Schoonmaker said in the case of the trucking industry, “It’s really the difference between the relative health of these firms and catastrophe.”

Take FedEx for example. Despite paying an average jet fuel price that was 77% higher than in the previous year, the company managed to post an 8% gain in revenue for its fiscal first quarter in 2009. That’s an 8% increase from last year. Net income, however, did drop to $384 million from $494 million.

By implementing an effective fuel surcharge program, FedEx was able to remain profitable. Fuel surcharges can help produce “a benefit once the fuel prices have leveled off or even decline,” Mr. Schoonmaker said, “so FedEx, UPS and DHL will all have a benefit during these days of declining fuel prices.”

Full Story...........

Tuesday, December 02, 2008

ABF Eyes Wage Cuts

ABF Freight Systems is warning its workers it may seek the same kind of concessions that competitor YRC Worldwide recently negotiated with its unionized employees.

In an internal memo to employees, ABF President and Chief Operating Officer Wesley B. Kemp said the company is already losing business to non-union carriers, and the YRC wage cuts add that much more pressure to compete in the LTL market.

"If we're going to do anything about this, now may be the best time to act, while we're financially healthy, rather than waiting until we face a crisis," Kemp said in the memo. "We'll be following the YRCW results closely in the coming days and will let you know what we feel is best for our company."

In confirming the memo, David Humphrey, ABF's director of investor relations, noted that ABF employees "do a great job" for the company. "Nevertheless, it is true that the total cost of our wages and fringe (benefits) are higher than many of our competitors. That makes it difficult for us to grow, especially in the current economy. We always welcome the opportunity to talk to the Teamsters about additional ways to improve our competitive position and to preserve Teamster jobs."

YRC Worldwide just keeps on truckin’ despite market’s rough day

Not all local stocks participated in Monday’s Wall Street carnage.

Shares of YRC Worldwide Inc. posted their sixth consecutive gain, rising 14 cents and closing at $4.12, a 3.5 percent gain.

Add that to the five previous trading days, and owners have reclaimed $2.56 a share.

The stock’s continued uptick followed news late Friday that the company and the Teamsters union had agreed tentatively on contract changes aimed at pulling the trucking company through its financial struggles.

YRC has seen the weakening economy cut into shipping demand.

Its credit rating has been slashed, forcing the Overland Park-based company to pledge its remaining unpledged assets as collateral under its credit agreement. The company also is trying to raise $150 million by selling and leasing back a group of its terminals.

Investors bet Monday that management and labor may know how to turn an 18-wheeler more quickly than expected.