Stabilizing YRCW (the full text can be viewed here)
The International Union has retained a corporate turnaround expert who explained to local officials meeting last week that these provisions will likely stabilize YRC and allow it to return to profitability.
The agreement is conditioned on YRCW converting a significant amount of its debt to equity: that is, banks would accept YRCW stock in exchange for reducing the company’s debt, by December 31, 2010. And the company will be required to find new financing by March 31, 2011.
Summary of Terms
- The agreement with YRCW companies would be extended two years, to March 31, 2015.
- The present pension withdrawal would continue until June 1, 2011. Then YRCW would make a contribution of 25% of the contract rate in effect on July 1, 2009, which is far below the present rate. (The rate was about $7 at that time, so 25% would be a rate of about $1.75 per hour.)
The new concessions would include:
- Road drivers drop and hook at end-of-line terminals, even when yard crews are on duty.
- A new classification of 4-hour cartage part-timers would be created, up to 10% of the seniority list with a minimum of two.
- Teamsters with four or more weeks vacation give up one week per year.
- Coffee breaks cut from 15 to 10 minutes, in states where legal.
- Road casuals allowed everywhere, including the Central Region.
- Lunch breaks 30 or 60 minutes, at the company’s discretion on a daily basis.
- Sunday through Saturday flex work week, in all areas.
- And some other work rule changes affecting certain locals.
The 15% wage concession would continue for 4.5 years, with annual increases of 40c-45c-40c-40c, minus the 15%. Health and welfare continue as at present, with annual increases of 35c to keep it funded.
Ballots out October 7
Ballots are slated to go out on October 7 to all working and laid off YRCW Teamsters. New Penn Teamsters will be counted separately. The ballots will be counted on October 28 or 29. Independent member observers will be allowed, per a previous lawsuit by Teamsters for a Democratic Union members.
Members to decide
We urge all members to learn the facts, talk with your fellow Teamsters, and give us your feedback and ideas. And cast a vote.
Posted on Tue, Oct. 05, 2010
Union workers must OK concessions for YRC Worldwide to survive, executive says
By RANDOLPH HEASTER
The Kansas City Star
A top YRC Worldwide Inc. executive said the additional concessions sought this month from its union workers would be necessary to continue operating.In a letter to YRC’s Teamsters employees, Mike Smid said a rejection of the tentative agreement reached between company and union leadership could lead to the Overland Park-based trucking giant’s shutdown.Smid is YRC Worldwide’s chief operating officer and president of YRC Inc., the company’s U.S. carrier. He is among the senior executives under YRC chairman and CEO Bill Zollars, who said he would retire from the company soon.
Ballots will be mailed this week to more than 25,000 YRC drivers and dock workers who are being asked to extend concessions that they have accepted since January 2009. Those cuts have included a 15 percent wage cut as well as YRC’s suspension of monthly payments into Teamsters pension plans since July 2009.
The YRC work force is being asked to extend its national contract to March 2015. It now is set to expire in March 2013. The new agreement calls for the wage cut to remain in effect. However, workers would receive hourly raises of 40 or 45 cents an hour beginning each April from 2011 to 2014.
The new agreement also would allow YRC to continue suspending monthly payments into union pension plans until June. The current concessionary pact has the company’s payment suspension ending in January.
Under the latest proposal, YRC would resume monthly pension contributions at 25 percent of what the company paid previously. That reduced amount could range from $6 million to $10 million.
In his letter, Smid said that adopting the agreement would attract new investors who would work to convert more debt to equity, a condition required by the Teamsters.
Friday, September 17, 2010
YRC again takes uncertain financial road
Kansas City Business Journal - by David Twiddy Staff Writer
Media
It’s another fall of uncertainty for YRC Worldwide Inc. as the less-than-truckload carrier again seeks to answer key financial questions before the end of the year.
Like last year’s debt-for-equity swap, the issue involves hundreds of millions of dollars, and failure could endanger the company’s ability to survive. An added wrinkle this time is that the solution also could be conditioned on the fate of the company’s top leader.
Overland Park-based YRC is negotiating with the International Brotherhood of Teamsters to possibly extend a waiver on the cash-strapped company’s obligation to pay into an employee pension fund, a lapse that union members approved in the summer of 2009 to help the company avoid a bankruptcy filing.
Those $30 million monthly payments are set to resume in January, as are more than $300 million in diverted payments, which YRC officials have said the company will have a hard time covering.
YRC agrees to pay $10M to settle racial harassment investigation
Kansas City Business Journal
YRC Worldwide Inc. has agreed to pay $10 million to settle a federal investigation into alleged racial harassment against black employees at Chicago-area terminals.The U.S. Equal Employment Opportunity Commission on Wednesday announced a federal magistrate judge had given preliminary approval of the five-year consent decree against Roadway Express and YRC Inc. Yellow Transportation merged with Roadway in 2008 to form YRC.
The EEOC had alleged in its lawsuit that black employees at the company’s terminals in Chicago Heights and Elk Grove Village, Ill., regularly were subjected to racist graffiti, cartoons and comments, as well as hangman’s nooses left around the facility. The agency also said it planned to show in court that the company discplined black employees more often and more harshly than white employees and tended to give them harder, more time-consuming tasks. While black employees complained about the treatment for years, the EEOC claimed, Roadway and YRC did nothing to change the behavior.
A spokeswoman for the Overland Park-based company (Nasdaq: YRCW) declined to comment on the decree
Teamsters Seek Major Restructuring at YRC
The Teamsters union is telling workers at YRC Worldwide that it will only support concessions sought by the financially troubled trucking company if they come with a “comprehensive restructuring” of the business.
The union told members in a letter Friday that YRC, the country’s largest less-than-truckload operator, recently asked for a new round of cost savings in the company’s ongoing “struggle to stabilize its business.”
Tyson Johnson, chairman of the Teamsters National Freight Industry Negotiating Committee, said the union leadership group is negotiating a “sustainable YRC solution” to submit for ratification by drivers.
Any concessions would follow givebacks the unionized drivers agreed to over the past year as they took wage cuts of up to 15 percent and a suspension of pension contributions, including $155 million in deferred payments and $300 million in permanent savings, to help YRC stave off bankruptcy protection.
Tyson said in his letter to rank-and-file members that the negotiation group is “only willing to submit those cost savings for ratification if certain specific conditions are met that help protect your interests, and if the effort supports a comprehensive restructuring that will give the company the best opportunity to not only survive, but thrive, over the long term.
“Our goal is to help facilitate that restructuring and protect as many Teamster jobs as possible,” he wrote.
YRC has scaled back its operations sharply as the company has lost market share and tried to cope with enormous debt.
The company has made some progress, reporting a $48.3 million operating profit in the second quarter and showing a net loss of $9.5 million that was a strong improvement over last year’s $309 million net loss. But YRC still had nearly $1 billion in long-term debt on its balance sheet on June 30.
Wednesday, September 15, 2010
YRC agrees to pay $10M to settle racial harassment investigation
Kansas City Business Journal
YRC Worldwide Inc. has agreed to pay $10 million to settle a federal investigation into alleged racial harassment against black employees at Chicago-area terminals.
The U.S. Equal Employment Opportunity Commission on Wednesday announced a federal magistrate judge had given preliminary approval of the five-year consent decree against Roadway Express and YRC Inc. Yellow Transportation merged with Roadway in 2008 to form YRC.
The EEOC had alleged in its lawsuit that black employees at the company’s terminals in Chicago Heights and Elk Grove Village, Ill., regularly were subjected to racist graffiti, cartoons and comments, as well as hangman’s nooses left around the facility. The agency also said it planned to show in court that the company discplined black employees more often and more harshly than white employees and tended to give them harder, more time-consuming tasks. While black employees complained about the treatment for years, the EEOC claimed, Roadway and YRC did nothing to change the behavior.
A spokeswoman for the Overland Park-based company (Nasdaq: YRCW) declined to comment on the decree.
Report: YRC’s Teamsters may trade more concessions for removal of CEO Zollars
Kansas City Business Journal - by David Twiddy Staff Writer
The International Brotherhood of Teamsters may seek the removal of YRC Worldwide Inc. CEO Bill Zollars in return for asking its members to continue waiving the company’s pension obligations.
In a blog posting Friday, Teamsters for a Democratic Union, a dissident organization of union members, said the Teamsters plan to ask members next month to approve $350 million in new annual concessions. In return, the Overland Park-based trucking company (Nasdaq: YRCW) would have to agree not to renew Zollars’ employment contract and to pursue more equity deals with its bankers to help reduce its debt. The report was based on anonymous sources within the Teamsters.
The concessions, virtually equal to the $350 million in pension obligations YRC now is avoiding based on prior concessions, would run through March 2015, two years beyond the expiration date of the current National Master Freight Agreement that governs the Teamsters members.
Teamsters spokesman Galen Monroe said he was looking into the TDU’s claims. YRC spokeswoman Tracy Memoli said the company declined to comment.
Workers represented by the Teamsters last year agreed in two separate votes to 15 percent wage cuts and to waive YRC’s required contributions to a multi-employer pension plan for 18 months, part of a package of concessions designed to help the struggling company avoid bankruptcy.
The wage cuts expire with the NMFA in 2013, and the pension waiver ends in January. Although YRC has seen an uptick in revenue from recovering freight levels, company officials have warned that YRC isn’t in a position to renew those pension payments, which CFO Sheila Taylor this summer estimated would cost “north of $300 million.”
The company has formed two committees with the Teamsters to negotiate possibly extending the waiver and other things the union could do to help YRC’s profitability. Union members would have to approve any new concessions, meaning that any negotiated deal would have to be reached long enough before the end of the year to give members a chance to vote — and prevent an exodus of customers worried about YRC’s viability.
YRC also is pursuing federal legislation that would reduce its obligations to the multi-employer pension fund, which also pays the benefits for former employees of companies that have gone out of business.
Zollars’ employment contract is due to expire Dec. 31, though it provides for automatic one-year extensions if neither Zollars nor the company provides a termination notice. According to his contract, if Zollars were terminated without cause, he would be eligible for $7.4 million in severance and other benefits.
Tuesday, November 24, 2009, 8:47am CST | Modified: Tuesday, November 24, 2009, 9:32am
YRC Worldwide sells piece of logistics unit for $34M
Kansas City Business Journal - by Suzanna Stagemeyer Staff Writer
YRC Worldwide Inc. has sold part of its logistics unit for $34 million, which will help pay down YRC’s credit line.
The Overland Park-based trucking giant (Nasdaq: YRCW) said in a Tuesday release that it had sold YRC Logistics’ dedicated contract carriage business, including customer contracts and the trucks and trailers associated with it, to Dallas-based Greatwide Logistics Services LLC. The deal affects about 600 employees, nearly all of whom Greatwide expects to absorb, CEO Raymond Greer said in an e-mail. The deal closed on Monday.
Greatwide said in a late Monday release that the YRC business would immediately be integrated under the Greatwide brand. Contracts include customers in the grocery, steel and auto industries in 29 operating locations nationwide. They span the Midwest, South and West Coast, Greer said.
YRC said sale proceeds would be put toward its revolving credit line and applied to its new revolver reserve.
“This sale is a strategic move toward a more asset-light business model and aligns resources at YRC Logistics to focus on our core offerings, including transportation, distribution and global services,” YRC Logistics President John Carr said in the release. He added that affected clients had been supportive.
The sale aligns with YRC’s turnaround plan by setting up the unit for future success, the release said. Debt-laden YRC has been making dramatic efforts to avoid bankruptcy amid a lengthy freight recession, taking measures that include reworking agreements with its union, pension funds and lenders; selling assets; and laying off thousands.
On Oct. 30, YRC reported a 45 percent plunge in third-quarter revenue, but less of a loss — $158.7 million — compared with the same period last year.
In a Tuesday note, Longbow Research analyst Lee Klaskow dubbed the deal as YRC finding “more coins under the couch.” Greatwide, which has about $1.2 billion in revenue and is held by private equity, will get an estimated 400 tractors and 800 trailers that YRC Logistics’ dedicated business used to support five main customers, he said. Klaskow estimated that the acquired business has annual revenue of about $65 million to $75 million, constituting about 15 percent of the YRC unit’s revenue and 1 percent of YRC’s total revenue.
The main reasons for the sale probably were getting cash and improving the balance sheet, Klaskow said.
Greatwide calls itself the second-largest dedicated contract carrier provider in the nation and also offers transportation management, freight brokerage and warehousing services.
“This acquisition allows us to expand our capabilities to include flatbed dedicated service and apply our transportation management services expertise to new industrial shippers,” Greer said in the release.
YRC ranks No. 2 on the Kansas City Business Journal’s list of area public companies.
sstagemeyer@bizjournals.com | 816-777-2203
