Friday, January 09, 2009

If YRC Worldwide Fails, You Can't Blame the Teamsters.

Analysis of: Teamsters Freight Members Ratify YRCW Job Security Plan

Implications: By a 77-to-23 percent margin, Teamsters rank and file at the YRC Worldwide member companies have approved a 10 percent wage giveback that is expected to save the company between $220 million and $250 million annually. It actually will save the company more than that going forward because it also suspends all cost-of-living raises-- which were supposed to be around 3.5 percent annually--through the end of the contract in 2013. Pension contributions are unchanged, which is of prime importance to the Teamsters.

Analysis: Well, YRC Worldwide's 55,000 or so Teamsters have certainly done their part to help save the venerable 83-year-old trucking concern, the nation's largest.

Now, it's management's turn.

Labor and management leaders have both strong-armed this wage concession through to the point where it passed by a 77-23 percent margin with an impressive 75 percent of affected Teamsters voting. That's a huge number, considering only about 33 percent of eligible Teamsters actually vote in union presidential elections.

Teamsters union President Jim Hoffa called it a desperation move. "We are facing the worst economy in our lifetime," Hoffa said.

Not to be outdone, YRC Worldwide CEO Bill Zollars says in his press release: "During a time of economic hardship, we are proud of the understanding and support of our employees. The amended contract will provide our company with significant annual cost reductions that will also have long-term benefits as the economy recovers."

Full Story......

Union representing trucking company workers to get stock ownership, workers to see pay cuts

Workers at one of Inland Southern California's busiest trucking operations overwhelmingly accepted a deal that cuts their pay but gives their union an ownership stake in the company.

About 1,800 Teamsters from Rialto-based Local 63 are among about 44,000 nationally who voted to amend their contract with YRC Worldwide Inc., the parent company of Yellow Transportation, Roadway Express, Holland and other trucking operations. The vote reduces their pay by 10 percent, the union and company said in statements Thursday.

In exchange, the Teamsters will receive a 15 percent stake in publicly traded YRCW. The company will also suspend cost-of-living raises for the life of the contract, which expires in 2013.

Teamsters nationally accepted the deal by a margin of about 4-to-1, and the vote carried by more than an 8-to-1 margin in Inland Southern California, said Bob Paffenroth, freight coordinator for Local 63.

Accepting a pay cut means that Teamsters should be protected from layoffs, Paffenroth said.

"It's a fairly good deal because of the stock, and because of the current economy," Paffenroth said. "No one can foresee how the economy is going to go. This gives us job protection."

According to a company statement, nonunion employees will also see pay cuts of at least 10 percent, and they received benefit reductions last year. Nonunion workers were offered options to purchase up to 7 percent of YRCW's stock.

Bill Zollars, the company's president and chief executive officer, praised the employees for their support. In November, Overland Park, Kan.-based YRCW said its fourth-quarter tonnage would be off about 11 percent.

"The amended contract will provide our company with significant annual cost reductions that will also have long-term benefits as the economy recovers," Zollars said in a statement.

The Teamsters' stock grants will be placed in trust, but eventually the workers who have to live with the pay cuts will own shares, Paffenroth said. YRCW's stock closed at $4.68 a share on the Nasdaq stock exchange Thursday, up 18 cents, but the company had traded at $20 as recently as August.

"If we could get it back to the $25 range we'd be talking about a lot of money," Paffenroth said. "That would essentially offset the pay cuts."

Thursday, January 08, 2009

Will YRC Make It? Here's One Vote That Says "Yes."

Implications: The Teamsters' concession to give back 10 percent of its wages, and freeze all wages through 2013, is all but official. It is expected to save the $9 billion trucking concern at least $220 million a year. While LTL competitors are eager to paint YRC as a dying company, YRC may have more staying power than many expect.

Analysis: It's the oldest trick in journalism. Find a company in financial difficulty, call a competing company, offer to go off the record with an executive, and write the financial obituary of the company in question.

This story by respected transportation journalist Mark Solomon in DC Velocity falls into that trap. It's hardly Solomon's fault. YRC Worldwide has been a punching bag for so long that everyone wants to be credited with the knockout punch.

This report quotes an unnamed executive of a competing company saying there is a "75 percent chance" that YRC won't survive.

Hey, rival trucking executive, I've got an offer for you. If YRC is still operating two years from now, would you care to go on the record and identify yourself?

Trouble is, as Mark Twain would say, reports of YRC Worldwide's demise may be greatly exaggerated. Full Story......

Labor Calls for Unity After Years of Division

The presidents of 12 of the nation’s largest labor unions called Wednesday for reuniting the American labor movement, which split apart three and a half years ago when seven unions left the A.F.L.-C.I.O. and formed a rival federation.

The union presidents issued their joint call after the transition team for President-elect Barack Obama signaled that it would prefer dealing with a united movement, rather than a fractured one that often had two competing voices.

David E. Bonior, a member of Mr. Obama’s economic transition team who withdrew from consideration as labor secretary, helped arrange and oversee a meeting of the union presidents on Wednesday in Washington.

The leaders are hoping, by April 15, to approve a plan to reunify, one union official said. But some officials said they might fail to reach agreement.

Mr. Bonior, a former House majority whip, said he would organize meetings with labor leaders over the next few weeks in the hope of hammering out details about what form a reunified labor federation would take.

The 12 union presidents issued a statement, saying: “The goal of the meeting is to create a unified labor movement that can speak and act nationally on the critical issues facing working Americans. While we represent the largest labor unions, we recognize that unity requires broad participation.” Full Story.........

Wednesday, January 07, 2009

Standard & Poor’s upgrades rating on YRC Worldwide

Standard & Poor’s changed the implications of its CreditWatch review of YRC Worldwide Inc. on Wednesday to “developing” from “negative” after YRC’s sudden stop of a debt tender offer and negotiations with its bank group.

S&P also put its “CCC+” issue-level ratings on Yellow Corp.’s and Yellow Freight System Inc.’s industrial development bonds on CreditWatch with developing implications “given the uncertainty of the eventual corporate credit rating,” the ratings agency said in a release.

S&P had lowered its ratings on Overland Park-based YRC (Nasdaq: YRCW) on Dec. 4 and put them on CreditWatch with negative implications after the company announced a “distressed tender offer,” the release said.

On Dec. 24 , YRC stopped its offer to buy back $150 million in senior debt that was contingent on union workers ratifying a wage reduction.

“We will meet with management to discuss YRC’s liquidity position, capital structure and operating prospects to resolve the CreditWatch,” S&P credit analyst Anita Ogbara said in the release. “We could take interim rating actions as more information becomes available, in advance of a resolution of the CreditWatch review.”

About 40,000 YRC employees who are members of the International Brotherhood of Teamsters had until Tuesday to vote on contract changes that include a 10 percent cut in wages in exchange for a 15 percent stake in the company.

A YRC spokeswoman said Wednesday that the company expects to have results of the vote sometime Thursday.

In addition to its efforts to rework its labor agreement, YRC said in September that it was speeding up the integration of its Yellow Transportation and Roadway subsidiaries. The company’s consolidation has yielded layoffs or notifications with state agencies of potential layoffs in various cities.

The YRC spokeswoman said Wednesday that the consolidation will reduce the number of facilities from 600 to about 450 by year’s end but that customers whose access was restricted to Yellow Transportation or Roadway will have access to all the consolidated facilities. The consolidation also will add about 21,000 additional direct service points, she said, meaning that number of additional routes will start at one point and go straight to the destination, without intermediate stops, improving transportation time and efficiency.


Ballots for the YRCW contract modifications were still being sorted as of noon today, and no ballots have been counted so far.

It is estimated that over 30,000 of the 40,000+ ballots were returned. Sorting began Tuesday, January 6. Results are expected tomorrow, Thursday, January 8.

Teamsters working at YRC Worldwide's four trucking units were voting on wage concessions IBT leaders had negotiated with YRC management—an agreement that called for a one-time 10-percent wage cut and elimination of cost-of-living increases over the next four years.

Arkansas Firms Send Four Truckers To National Competition

Truckers from several Arkansas companies are headed to Arlington, Va., for a national competition to be held Jan. 11-13.

The drivers are among 36 finalists vying to become captains of the American Trucking Associations' America's Road Team.

The drivers are:

• Danny Fuller of Jonesboro, Con-way Freight.

• Paul Gattin of Benton, ABF Freight System of Fort Smith.

• Gary Leu of Shelbina, Mo., Bentonville-based Wal-Mart Stores Inc. transportation division.

• Ben Saiz of Estancia, N.M., ABF Freight System.

A panel of trucking industry officials and trucking news media will judge the 36 contestants on knowledge of the trucking industry, dedication to safety, ability to communicate trucking's messages and overall safe driving records.

The three-day competition will result in new America's Road Team Captains, who serve two-year terms addressing trucking safety and professionalism issues with legislators, news media, civic organizations and the general public, according to a news release.

"America's Road Team represents the best of the best," said Bill Graves, American Trucking Associations' president and chief executive officer. "The 36 professional drivers selected as finalists all have impressive driving records, share a passion for safety and are engaged in their communities."

Drivers nominated to compete must be employed as either a company driver for an ATA member motor carrier or as an owner-operator leased to an ATA member; have an excellent safety record; and communicate his or her commitment to safety, courtesy and professionalism.

Arkansas is home to several trucking companies, including J.B. Hunt Transport Services Inc. in Lowell and PAM Transportation Services Inc. in Tontitown. Wal-Mart and Springdale-based Tyson Foods Inc. also operate trucking fleets.

State trucking industry workers earn an average annual salary of $29,561 and trucking generates more than $2.5 billion annually in payroll, according to a fact sheet from the Arkansas Trucking Association.

Trucks carry 87 percent of manufactured freight into and out of the state. Each day, trucks bring 303,692 tons of freight into the state and take 338,060 tons out, the state association said.

Tuesday, January 06, 2009

Trucking keeps on churning

Carriers exit market, which could lead to capacity crunch when economy starts rolling again

At the start of 2008, trucking executives looked forward to an end to the economic downturn by the second quarter. But the elusive recovery proved harder to catch than a Class 8 tractor with no brakes on a downhill grade.

Truckers could only watch as it moved farther toward the horizon, finally disappearing as it zipped past the banking crisis in the third quarter.

As the trucking industry rolls into 2009, it’s clear that there will be much less freight hauled by far fewer trucks as trucking companies and shippers strive to survive the fourth year of a “freight” recession that now grips the entire economy.

As was the case with 2007, 2008 began with trucking companies banking on rates bottoming out as shippers planned to lock in low prices after several years of occupying the short end of the negotiating table.

But aside from a brief volume boost around midyear — propped up in part by fuel surcharge revenue — 2008 turned out to be one of the worst years to be a carrier. More than 3,000 trucking companies went out of business in 2008. They included major names such as Jevic Transportation, which sent a shock wave through the LTL market when it suddenly shut its doors in May. But the majority of the carriers that folded were small companies and owner-operators that couldn’t absorb rapidly increasing fuel prices. Full Story........

YRC Worldwide jumps as analyst upgrades stock

Shares of YRC Worldwide Inc. surged Tuesday after a Wachovia Capital Markets analyst upgraded the stock, saying the nation's largest publicly traded trucker may not be in as much immediate financial trouble as some believe.

Analyst Justin B. Yagerman lifted the stock to "Market Perform" from "Underperform," noting that some investors' pessimism seems "overblown." Yagerman expects a proposed 10 percent union wage cut to be approved this week. Ballots were collected this morning, but International Brotherhood of the Teamsters spokesman Bret Caldwell said he expects them to be counted and validated Wednesday.

Yagerman also noted that the company is working to amend its credit agreement with lenders.

These factors combined lessen the immediate risk the company would file for bankruptcy or take other drastic financial measures to preserve cash, he said.

But the analyst warned that he still does not recommend investors buy shares of the trucking company. He suggests that pessimism surrounding the stock will lessen, though, once the wage reduction is approved. Yagerman noted that Teamsters workers will most likely concede to the wage reduction because of bankruptcies at other trucking companies and few opportunities elsewhere in freight transportation because of the weak economy.

In afternoon trading, shares of YRC rose 96 cents, or 26 percent, to $4.68. The stock has traded as low as $1.20 and as high as $22.52 in the past year

Wachovia Upgrades YRC Worldwide to Market Perform

Recent pessimism seems overblown, but we aren't constructive.

Wachovia analyst says, "We are upgrading shares of YRCW to Market Perform, from Underperform, as we no longer see the risk-reward equation on the short as compelling at current depressed levels.

We currently expect the International Brotherhood of Teamsters rank and file to ratify the wage reduction amendment this week. The ballots are to be collected at 10AM this morning for the official vote.

Moreover, management expects to amend its credit agreement with its lenders. Accordingly, we see limited downside risk assuming these potentially positive events come to fruition, materially reducing uncertainty about YRCW's near-term liquidity."

YRC Worldwide Inc. is a holding company that through wholly owned operating subsidiaries offers its customers a range of transportation services.

Monday, January 05, 2009

Con-way, Teamsters fund settle withdrawal liability

Con-way Inc. and the $26.8 billon Teamsters Central States, Southeast and Southwest Areas Pension Fund settled a dispute over an alleged $662 million in withdrawal liability from Consolidated Freightways Corp., a Con-way subsidiary spun off to stockholders in 1996, according to an SEC filing Dec. 31 by the San Mateo, Calif.-based company.

In the settlement, Con-way agreed to pay $8 million to the pension fund and assign any future proceeds from the Consolidated Freightways bankruptcy. In 2002, Consolidated Freightways filed for Chapter 11 bankruptcy protection, and Con-way filed claims totaling $35.8 million, said Gary Frantz, Con-way director of communications.

Con-way has received $5 million so far from its claims, which the company will retain, Mr. Frantz said. He couldn’t estimate the amount Central States could eventually receive. The proceeds Con-way received amounted to 14 cents for each dollar of claims paid, according to the SEC filing.

Under the settlement, Con-way agreed to drop its federal lawsuit against Rosemont, Ill-based Central States and its arbitration demand that rejected the withdrawal liability the multiemployer fund assessed against Con-way as a result of the bankruptcy filing.

“The settlement agreement does not constitute an admission of liability by Con-way,” Mr. Frantz said.

Mark F. Angerame, Central States CFO, couldn’t be reached for comment.

Con-way has a non-union work force and has no employees in the Central States fund, Mr. Frantz said.