Teamster Freight Members at New Penn Approve Job Security Plan

Drivers, Dockworkers Ratify Plan Aimed at Preserving Their Jobs, Benefits

Teamster members at New Penn have overwhelmingly approved a Job Security Plan that provides economic relief to its parent company, YRC Worldwide, Inc., as it tries to recover from a recession that is pummeling the freight business.

In the revote, New Penn members--as well as members covered by all mechanics and office agreements--approved the plan 912-334. In the first vote, New Penn members rejected the plan while a majority of other YRCW employees ratified the plan. About 1,500 New Penn workers were eligible to vote.

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

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.

The plan calls for a reduction in gross wages of 15 percent from the full
National Master Freight Agreement rates. This includes the 10 percent wage
reduction previously ratified by the membership in January 2009.

Additionally, the plan will allow the company to terminate pension fund contributions effective from July 1, 2009 through December 31, 2010, but employees will not lose accrued benefits or credits previously earned during this period.

YRC gets little interest in sale of New Penn

YRC Worldwide Inc. has been exploring sales of subsidiaries that include New Penn Motor Express Inc. but has received little interest, its union said.

That leaves New Penn union workers with little choice if they want to keep the subsidiary operating past September, the International Brotherhood of Teamsters members said in a letter to New Penn members. Falling trucking valuations and the potential of having to cover unpaid pension payments have kept most potential buyers away, the union said in the letter, dated Aug. 18.

The union sent a second set of ballots to New Penn Teamsters on Aug. 19. The group was among a minority that last month voted down concessions to Overland Park-based YRC (Nasdaq: YRCW), and the union has said YRC is looking into merging regional carrier New Penn into its national unit, which could eliminate hundreds of jobs. That prompted the revote, due Sept. 9.

“Unfortunately, we have been formally notified by YRCW’s vice president of labor relations, and have also accumulated evidence from the field, that YRCW is prepared to shut down New Penn entirely and rebrand all remaining equipment and terminals as YRC exclusively going forward,” the letter said. “As difficult and distasteful as a revote is to conduct, it is our firm belief that New Penn Motor Express will not exist as a motor carrier past September if the (concessions are) rejected again.”

New Penn workers have railed against an extra 5 percent pay cut and giving up 18 months of pension payments, in part because their unit has been profitable for years. But they’re lumped in with a group of regional carriers — including Holland and Reddaway — whose revenues through June have dropped 33 percent from the same period last year and which posted an operating loss of more than $120 million in the first half of 2009, the union said.

New Penn represents about 4 percent of all employees and revenue for YRC, so it doesn’t add enough profitability to prompt YRC to exempt its workers from the companywide cuts, the union said.

If YRC were to file for bankruptcy or change hands, the concessions would end.

The trucking company has been deferring and eliminating pension payments, laying off thousands of workers, selling property, renegotiating lender agreements, integrating subsidiaries, seeking union concessions and taking various other steps so that it can keep enough cash to continue operating.

YRC carrier votes again after rejecting concessions

About 1,500 drivers and dockworkers at New Penn, a YRC Worldwide Inc. regional carrier, rejected the concessions accepted by most YRC Teamsters members earlier this month.

A revote began last week. This time, declining to accept the revised contract that reduces wages 5 percent more could cost many New Penn employees their jobs, the union said.

New Penn is a regional less-than-truckload company that operates mainly in the Northeast. Its employees are covered by a contract separate from the national agreement most freight industry Teamsters work under. YRC’s biggest units, YRC Inc. and USF Holland, approved the cuts to the national contract, including allowing YRC to suspend monthly pension fund payments until January 2011.

In a letter to New Penn union workers last week, Teamsters national freight director Tyson Johnson said YRC requested an emergency meeting with the union’s national bargaining team after the vote count.

“During the Aug. 11 meeting, the company indicated that it plans to call for a change of operations in the near future to merge New Penn into YRCW,” Johnson said. “Because the merger could cost hundreds of Teamsters jobs, the majority of New Penn local unions have also requested a revote by New Penn members.”

Essentially, industry observers said New Penn would be closed if it were to merge with YRC’s other carriers, a prospect that most likely will change the vote’s outcome this time.

Members of three Teamsters locals in the Chicago area, also under their own contracts with YRC, also rejected the concessionary proposal. They most likely will also hold revotes facing the same prospect of job losses.

YRC said bargaining units representing less than 10 percent of the company’s union employees have not yet ratified the contract revisions.

“The company and the Teamsters are addressing employee concerns for these smaller bargaining units to reconsider the modifications,” YRC said. “The company has not filed any change of operations affecting the network status of New Penn.”

The mailed ballots for the New Penn revote are expected to be counted on Sept. 9.

NEW PENN FREIGHT MEMBERS TO REVOTE JOB SECURITY PLAN

Teamsters say YRC Worldwide may close regional carrier unless workers approve wage, benefit cuts

Less-than-truckload carrier New Penn Motor Express may be merged into long-haul operator YRC unless union employees reverse course and accept wage and benefit cuts they rejected earlier this month, the Teamsters union said.

YRC Worldwide plans to merge New Penn into YRC unless the “job security plan” approved by YRC and Holland Teamsters is adopted at New Penn, Teamster executive Tyson Johnson said in an Aug. 17 letter to New Penn Teamsters.

Teamsters at New Penn will have the opportunity to vote again on the Job Security Plan, and ballots will be mailed on or about Wednesday, August 19, 2009 and will be due back September 9, 2009.

YRC Worldwide, which sought the labor concessions as part of a larger effort to restructure its operations and debt-ridden finances, did not respond immediately to calls for comment.

Teamsters at long-haul LTL carrier YRC and regional carrier Holland approved wage and benefits cuts Aug. 7 by a 58.5 percent margin.

Teamsters at regional carrier New Penn, however, who belong to a different bargaining unit, rejected the proposal.

At an Aug. 11 emergency meeting with the union's negotiating group, "the company indicated that it plans to call for a change of operations in the near future to merge New Penn into YRCW," Johnson wrote in the letter.

"Because the merger could cost hundreds of Teamster jobs, the majority of New Penn local unions have also requested a revote by New Penn members," wrote Johnson, who is co-chairman of the Teamsters National Freight Industry Negotiating Committee.

New Penn, which became part of what is now YRC when Yellow Corp. acquired Roadway in 2003, has long been considered the best of YRC's regional subsidiaries. It employs more than 2,000 workers and has 24 terminals, primarily in the Northeast.

New Penn Introduces New Guaranteed Levels of Precision

YRC Worldwide Inc. announced today that New Penn, one of its regional operating companies, will introduce a new and improved suite of guaranteed service offerings featuring superior reliability and value. All guaranteed service shipments are backed by the New Penn no-hassle guarantee to be complete and on-time or the invoice will automatically be reduced to zero dollars with no need for the customer to file a claim.

One of the primary enhancements is a new guaranteed by 9 a.m. service that provides customers with a level of morning precision that is typically found only with air freight or dedicated delivery carriers.

The other key enhancement is a new day-definite service offering that is guaranteed to deliver by 3:30 p.m., rather than end of day like most competitive offerings. By offering earlier guaranteed delivery times, customers are able to get goods into production or for sale to clients the same day the shipment arrives rather than traditional guaranteed delivery by 5 p.m. in which shipments often cannot be incorporated into the supply chain until the following day.

With the enhancements, the New Penn Guaranteed Precision suite of award-winning service offerings now includes:

Guaranteed Delivery By 9 a.m.
Guaranteed Delivery By Noon
Guaranteed Delivery By 3:30 p.m. (Day-Definite)
Guaranteed Delivery Within a Single-Hour Window
Guaranteed Delivery Within a Multi-Hour Window

"We are constantly reviewing our services in order to provide highly customizable solutions that meet the demands of our customers and their tightened supply chains," said Steve Gast, president of New Penn. "We have aligned the needs of our customers with the highly reliable capabilities of the New Penn network to provide our customers with an expanded set of guaranteed service options - all backed with the no-hassle, New Penn delivery assurance guarantee."

Pact shields union jobs, reduces costs

New Penn Motor Express’ parent company has reached a tentative deal with the Teamsters that will reduce the firm’s expenses and protect union jobs.

YRC Worldwide Inc. and the International Brotherhood of Teamsters agreed to modify terms of their current labor agreement, according to statements from the company and union issued yesterday.

YRC’s stock price, which opened the day at a 52-week low, shot up on the news and closed at $1.49, an increase of $0.60, or 67 percent. The stock has traded between $0.89 and $22.52 during the past year.

Details of the agreement are expected to be released next week after further discussions with the union, news releases from YRC and the IBT said. The modified contract will be voted on by YRC employees who are represented by the Teamsters.

New Penn, a trucking firm based in South Lebanon Township, employs more than 2,000 people and operates a fleet of more than 750 tractors and 1,700 trailers.

YRC Worldwide, with headquarters in Overland Park, Kan., and 49,000 employees, is the holding company for a group of brands, including New Penn, Holland, YRC and YRC Logistics.

The Teamsters say the deal calls for “equal sacrifice” from workers and the company, according to The Associated Press. In earlier negotiations, the Teamsters expressed concern with issues they felt would affect them and not YRC. One of those issues was that YRC was asking to stop its pension contributions for 14months, which would save $500 million, but the workers would not have received anything in return.

“This is a tough situation for the company and our members,” Teamsters Freight Division Director Tyson Johnson said in a statement. “We are confident this tentative agreement balances the need to provide job security while maintaining good quality jobs.”

“We appreciate the ongoing willingness of the Teamsters leadership to work with the company to identify ways to improve the financial position of YRC Worldwide during this severe economic recession,” YRC President and Chief Operations Officer Mike Smid said in a release. “Our employees are the most dedicated and professional in the industry, and their continued loyalty to serving our customers remains unrivaled.”

In January, the 35,000 union members agreed to a 10 percent pay cut in exchange for a 15 percent stake in the company.

YRC has sold a number of its properties, including its corporate headquarters, to preserve liquidity and has made deals with creditors to stay within terms of its debt obligations.

2 New Penn drivers earn right to compete at National Truck Driving Championships

Two New Penn drivers won their classes at the Pennsylvania state truck driving championships over the weekend to earn the right to compete at the National Truck Driving Championships (NTDC).

Will Chrvala, of Reading, Pa., won the 4-axle class and received an award for having the highest score on the written test. Chrvala previously competed at the NTDC in 1992, 1993, 1995, 1997, 1998, 2001, 2002, 2004, 2005 and 2007.

From Camp Hill, Pa., Richard Walton placed first in the twin trailers class.
YRC drivers won the Pennsylvania team trophy, having two second- and one third-place finishes.

These YRC Worldwide drivers will represent their states and YRC at the 2009 National Truck Driving Championships from Aug. 17–22 in Pittsburgh.

Trucking firm’s parent in trouble

New Penn Motor Express’ parent company is in dire financial straits, leaving the future of the South Lebanon Township trucking firm in doubt.
Late last week, Kansas-based YRC Worldwide Inc. said it will ask for $1 billion in federal bailout funds.

Two analysts don’t believe the nation’s largest publicly traded trucking company can survive.

“We have a difficult time seeing how the math works here to restore the company to profitability,” David Ross and John Larkin wrote in a Stifel Nicolaus research report. “It has already had its employees take a 10 percent wage cut. Plus, we do not see industry volumes rebounding this year and industry pricing remains very competitive.”

Ross told The Associated Press on Friday that the chance YRC will get bailout money is “very slim.”

“TARP (Troubled Asset Relief Program) was made for financial institutions, not to bail out a trucking company,” Ross told AP. “If YRC (received a bailout) that would just open up the floodgates for other struggling companies to ask for money, too.”

New Penn employs more than 2,000 people and operates a fleet of more than 750 tractors and 1,700 trailers. It is “widely regarded as one of the most efficiently operated carriers in the industry,” according to a YRC statement issued Tuesday in response to questions from the Lebanon Daily News.

New Penn has a network of 23 service centers in the northeastern

U.S., Quebec and Puerto Rico.
YRC had $8.9 billion in revenue in 2008. It employs about 49,000 people. Included among its operating companies are Yellow Transportation and Roadway Express, which are being integrated, New Penn Motor Express, USF Reddaway, USF Holland, USF Glen Moore and YRC Logistics.

On May 11, YRC reported a $257 million quarterly loss, compared to a loss of $46 million in the first quarter of 2008. YRC booked $164 million in charges for the quarter related to integrating its Yellow and Roadway divisions and laid off more than 3,000 workers.

On Friday, YRC announced it had reached an agreement with its banking group that will enable it to stay within the terms of its debt.

While the amendment with its lenders will help, the company is still staring at about $2 billion in pension obligations from a multi-employer plan, the Wall Street Journal reported. Bill Zollars, chief executive officer for YRC, said those obligations are unfair because YRC must pay for employees who never worked for the company.

Ross disagreed that seeking TARP money to solve the pension problem “is the way to go about it.”

Another analyst, Jon Langenfeld of Robert W. Baird & Co., wrote in a research note that the TARP fund application could backfire.

“Despite the fact that the union pension is not relevant to YRC’s near-term viability, shippers have already misinterpreted this move as an act of desperation, which could make share recovery more challenging,” wrote Langenfeld, who kept a “neutral” rating on the YRC stock.

YRC’s survival is dependent on “how much rope the banks want to give (YRC),” Ross told AP.

Stifel Nicolaus is maintaining a “hold” rating on YRC stock, with a “strong negative bias.”

In a recent note to clients, Ross said YRC continues to lose business to competitors and that YRC’s volumes in April were down 35 to 40 percent compared with a a year earlier.

YRC’s stock price has been hammered, closing at $3.18 on Tuesday. In mid-July, the stock price stood at $22.52.

On Friday, Zollars said that “volumes that were temporarily diverted have begun to return,” but added, “it has not been at the level and speed that we initially expected.”

YRC’s statement issued Tuesday said the firm is “making significant progress in strengthening our competitive and financial position. With our unrivaled networks, we are well-positioned to continue providing service that is simply reliable. On the financial side of our business, we are confident that we are taking the right steps by actively managing cash flow and engaging in constructive discussions with our lenders so that (we) can continue to meet our obligations and serve our customers. The most recent example is our bank amendment announced on Friday.”

YRC Worldwide is in talks to put up real estate as collateral in place of pension contributions

YRC Worldwide Inc. is negotiating with the Teamsters union and its lending group about putting up real estate as collateral in place of monthly pension contributions.

In a regulatory filing, YRC said it makes $34 million to $45 million in monthly pension payments depending on employment levels at three trucking subsidiaries, YRC Inc., USF Holland Inc. and New Penn Motor Express Inc.

The company said any agreement would not affect the current or future benefits of those participating in the pension plans.

YRC Worldwide said it has asked it lending group to release some of the $1.5 billion in assets put up as collateral last fall following a credit-rating downgrade. The company said further details will be released once an agreement is reached.

The Overland Park-based trucking company has thousands of current workers and retirees who belong to the Central States Pension Fund, run by the Teamsters. YRC Worldwide is the biggest contributor to the multi-employer plan.

Teamsters officials declined to comment on YRC’s disclosure.

However, an internal Teamsters memo to locals nationwide said YRC was seeking payment deferrals to pension funds for several months, according to a report on the Journal of Commerce’s Web site.

In its annual report, the Central States fund reported $17.3 billion in pension assets at the end of 2008, down from $26.8 billion a year earlier. Much of that loss was blamed on the stock-market collapse last year.

The report of YRC Worldwide’s talks with the union comes a week after Bill Zollars, YRC’s chairman and chief executive, told analysts that freight demand remained very weak.

YRC Seeks Millions in Pension Payment Deferrals

Carrier offers real estate as collateral in lieu of contributions

YRC Worldwide is looking to defer millions of dollars worth of payments into Teamster union pension funds to help prop up the company’s cash reserves as it struggles to improve its finances in the ailing economy.

In an April 13 filing with the Securities and Exchange Commission, YRC, along with USF Holland and New Penn Motor Express, said they are seeking an agreement with the Teamsters and YRC’s banks to use real estate as collateral to the multi-employer pension funds in lieu of making contributions.

“Depending on employment levels (which, in turn, are driven by freight levels and seasonal changes in those levels), the company makes multi-employer pension contributions of $34 million to $45 million per month,” according to the SEC filing.

An internal Teamster memo from Teamster Chairman James P. Hoffa to local unions participating in the National Master Freight Agreement said YRC management was seeking “several months” worth of payment deferrals from the pension funds.

YRC’s latest move to stay afloat in the brutal freight environment comes a week after management told Wall Street analysts that tonnage at its national and regional less-than-truckload operations declined 29 percent and 27 percent respectively, year-over-year in the first quarter.

“It’s certainly not a positive sign,” said David G. Ross of Stifel Nicolaus. “The only reason they would have to do this is that they don’t have the cash, and that means things aren’t good. They said they’re not buying any new equipment, they’ve cut wages 10 percent – anything they can get out of paying, they’re doing. They wouldn’t be thinking about deferring pensions if things were improving.”