Press Releases Are Good. Facts Are Better. YRC Soldiers On.

Implications

YRC Worldwide, the nation's largest trucking company by revenue, issued a press release saying it has reached a tentative agreement with the Teamsters union over more concessions made by its 55,000 rank-and-file Teamsters. Exact details are not known, and were not disclosed. They are likely to include an additional 5 percent wage cut in addition to the 10 percent wage giveback the union agreed to back in April.

Analysis

Fighting financial wars on several fronts, beleaguered U.S. trucking giant YRC Worldwide says it has reached a tentative agreement with the Teamsters union regarding more concessions by rank-and-file workers aimed at keeping the $7 billion LTL company afloat.

Exact details were not released. It is believed the Teamsters agreed to an additional 5 percent wage giveback to go along with the 10 percent cut agreed to in April. That earlier cut was estimated to save the company as much as $250 million annual. So an additional 5 percent shave might save the company $100 to $125 million.

"The press release says nothing new," wrote David G. Ross, a respected analyst who tracks YRC Worldwide for Stifel Nicolaus, Baltimore.

Ross has been on top of this company. He estimates that YRC National (the old Roadway and Yellow networks) has suffered year-over-year freight volume tonnage losses of up to 40 percent. Its regional carriers (the only Holland and New Penn companies) are off more than 20 percent. Full Story......

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......

Labor Pains Are Not Easily Shared

The Teamsters are not generally known for being easy to push around, so it is of some interest that the union's leaders have struck an agreement to allow the country's largest trucking company to cut the pay of its union members by 10 percent to help the firm survive the economic storm.

As you might expect, the deal does not come without a price: In return, union employees will get warrants that will allow them collectively to buy 15 percent of the stock of YRC Worldwide. The company has also assured the union that similar pay cuts will be given to nonunion employees, including top executives.

The hard-nosed calculation made by Teamster officials is that, with YRC's financial viability at stake, it is wiser and fairer to spread the pain among all active workers rather than force the company to lay off even more workers, or refuse to take a cut and possibly force the company into a bankruptcy reorganization in which workers and retirees would likely take even bigger hits. Full Story.....

FedEx Cuts Workers' Retirement Compensation While CEO Rakes in Multimillion-Dollar Pension

More Drastic Cuts in Workforce Compensation Fuels Drive for Teamster Representation

FedEx Corp. today announced drastic cuts in pay and deferred compensation for most of its U.S. workforce. Salaried U.S. FedEx employees will take permanent 5 percent to 10 percent base salary reductions while FedEx founder, Chief Executive and Chairman Fred Smith will take a permanent 20 percent reduction in base salary.

According to company statements, hourly employees will not see base wages impacted in this round of cost controls.

"The FedEx workers that have made this company a household name and deliver the profits will now shoulder more insecurity for their futures," said Teamster General President Jim Hoffa. "At the busiest time of their delivery season, the company is delivering nothing but coal for its workforce."

More dramatically for hourly employees, bonus compensation and the company's 401(k) matching contribution will cease for 2009. This unilateral decision to stop 401(k) matches closely follows the June 2008 capping of FedEx Express employees' defined benefit pension. In announcing the end of the defined benefit plan in 2007 FedEx said, "Planning and saving for retirement is a partnership between FedEx and its employees, and we are committed to helping our employees enjoy a financially sound future."

Apparently, that "partnership" is no longer part of the corporation's future.
Although garnering headlines for his salary adjustment, Smith meanwhile retains $26,411,752 accrued under the FedEx Retirement Parity Pension Plan and $1,164,464 under the Employees' Pension Plan. Additionally, Smith's $1.4 million salary only comprised 13 percent of the $10.9 million that he raked in for 2008. In fact, 55 percent of Smith's 2008 pay was in stock options not tied to any performance goals.

As of May 31, Smith also held currently exercisable, in-the-money options worth $24.9 million, based on yesterday's closing stock price. In the past two years alone, he's exercised options worth more than $60 million. FedEx has not clarified if the company's variable compensation changes will affect Smith's outstanding, exercisable options or if FedEx will suspend option grants for 2009.

"FedEx workers have seen their wages stagnate, their health care costs go up and their retirement benefits go down or go away entirely while FedEx has pocketed millions in profits in good times," said Teamsters Vice President At Large and Package Division Director Ken Hall. "Many FedEx workers already see Teamster representation as a way to secure their future and these drastic measures will convince more of the value of a Teamster contract."

The difference in pay and compensation between management and workers is one factor leading FedEx workers to seek Teamster representation. The broken "Purple Promises" on wages and retirement benefits were the subject of a public Blue Ribbon Commission hearing on Dec. 16, jointly sponsored by the Teamsters, the Los Angeles County Federation of Labor, and Clergy and Laity for Economic Justice/Los Angeles (CLUE LA).

Blue Ribbon Commission members U.S. Rep. Linda Sanchez, Los Angeles City Councilman Bill Rosendahl and United Methodist Church (Los Angeles) Bishop Mary Ann Swenson heard testimony from a number of FedEx workers on their deteriorating work conditions and struggles to hold onto the middle class life.

"I could afford to retire at age 62 under the defined benefit pension plan but with the stroke of a pen, and with little warning and no input or discussion from employees, FedEx changed our retirement plans," said Dan Forrand, a 15-year veteran aircraft maintenance technician from FedEx Express in Los Angeles.

Now, as the economy suffers and FedEx Express employees' retirement security is in greater jeopardy, FedEx has pulled a bait and switch more drastic than even Forrand knew on Tuesday.

Forrand's statement and other testimony and questions are archived online at www.fedxmx.com. Additional information is at www.FedExWatch.com.

Zollars: Labor Pact Levels Field

YRC Worldwide Chairman, President and CEO William D. Zollars said the money saved by the wage concessions sought from the Teamsters union will level the playing field between his company and its nonunion competition.

"This pretty much wipes out the difference between union and non-union in our industry, in terms of our cost-base," Zollars said in an interview this morning with CNBC.

YRC is seeking a 10 percent wage cut from its Yellow Transportation, Roadway, Holland and New Penn subsidiaries and a suspension of cost of living adjustments. In exchange, Teamsters employees would receive a 15 percent ownership stake through YRC stock. YRC estimates the cost savings from the modifications to the National Master Freight Agreement at $220 million to $250 million annually. A vote on ratification of the agreement by union members is scheduled for later this month.

Zollars said freight levels declined in "double digits" compared with a year ago.

"It's a pretty ugly situation out there. We're just putting ourselves in a position to be able to make it through no matter how bad it gets." (Click here for video)

Drivers consider wage cut to aid trucking company

About 80 members of Teamsters Local 397 will be among union members nationwide who will vote on a 10 percent wage reduction as part of economic relief plan for YRC Worldwide Inc., a trucking company.

Local 397 President Ronald Gibbs said union leadership is recommending approval of the plan because of the financial problems faced by YRC Worldwide during the current economic downtown.

The company has lost about 80 percent of its stock market value over the past year. As a result, banks have mandated virtually all of its assets be pledged to cover current debt. That means the company can't borrow more and could face a liquidity crisis in 2009, the union said.

About 40,000 Teamster members are employed at the affected YRC Worldwide units -- Yellow Transportation, Roadway, Holland and New Penn. About 80 truck drivers from Erie and Crawford counties are represented by Local 397.

If approved, the wage reductions will remain in effect until the current Teamsters contract expires in 2013.

In return for the wage concessions, Gibbs said Teamsters members will receive an equity stake in the company. Nonunion employees would receive the same or greater percent reduction in total compensation.

The estimated savings is $220 million to $250 million a year.

Ballots are now being mailed to union members and are to be counted on Dec. 30. The reductions are expected to go into effect Jan. 1.

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."