Hoffa speaks out on YRC
Teamsters General President James P. Hoffa discusses the role his union played in keeping YRC Worldwide afloat—and why he thinks trucking labor still has a future.
The International Brotherhood of Teamsters (IBT) played a huge and, some say, unprecedented role in the rescue of troubled trucker YRC Worldwide Inc. In these excerpts from a March 2010 interview with Senior Editor Mark B. Solomon, Teamsters General President James P. Hoffa discussed YRC and the future of trucking labor.
Q: Did you think that you or the Teamsters would ever play such a huge role in the rescue of a unionized carrier like YRC, or be so involved in its future success or failure?
A: It is not one of those things you plan for or hope that you have to deal with, but by virtue of the size of the company and the number of employees that we represent, it is possible to imagine that we would need to play a role.
Q: The rescue of YRC and the preservation of IBT jobs has come at a price: two rounds of wage concessions, 18 months of forgone pension contributions, and ownership in a reconstituted YRC that some analysts believe has no value. Do you feel that the IBT gave up too much, or do you feel that you had no choice?
A: We had unprecedented access to information and formulated our own independent opinion about what was needed and what we thought our membership would ratify. It is the responsibility of the union leadership to put options in front of our members that we thought gave the company the best chance of survival. We feel we did the best we could, given the circumstances of balancing need, preserving jobs, and maintaining decent wages and health benefits. It is easy to second-guess, but I don't think you can put a price tag on the livelihoods of 30,000 families.
Q: Do you believe YRC will have the available cash needed to resume its pension payments in January 2011? The obligation has been estimated at about $500 million.
A: Our goal was to bridge the recession. The company has taken a lot of steps to reduce costs and is operating as lean as it can. If the economy improves, they are in a good position to take advantage of an upswing in freight. We can't control how long the recession will last but firmly believe that the only option was to provide the company time to weather the storm.
Q: What percentage of the new YRC will be owned by the Teamsters, and does the union have board seats?
A: Our members received options to purchase stock in both our [agreements]. The first one provided 15 percent of outstanding shares [as of February 2009] and the second one 20 percent of outstanding shares [as of March 2010]. Both option plans were designed to provide monetary value to our members to help offset the wage concessions. Any potential value is all predicated on the stock price appreciating. Cumulatively the number of options granted does not add up to 35 percent because of dilution issues [issuance of new stock] surrounding the debt-for-equity exchange—the calculations get a bit complicated.
We have the right to appoint a person to the board of directors. We are in the process of interviewing candidates and hope to have the decision made in the coming weeks.
Q: Do you see your stewardship in the YRC crisis being a referendum of your leadership in the next election?
A: No. It is our job to provide leadership and put those options in front of our members. That is what we did in this case and what we do on a daily basis.
Q: Looking back, if you could have done anything different in the YRC situation, what would that have been?
A: Pushed to get the financial restructuring done sooner. It's been more than a year that analysts and shippers have had concerns about YRC, and the longer that the restructuring process took, the more shippers were hesitant to ship with YRC and the more difficult the process became. The financial restructuring piece is now complete, costs have been reduced, banks have provided needed liquidity, and $500 million of debt has been taken off the books. But the noise created from going through each step and knowing there were additional steps had a negative impact on shipper mentality, so getting all those pieces done in a shorter time would be something to shoot for.
Q: The Teamsters' freight division has been decimated by bankruptcies, business closures, and consolidation. Realistically, do you expect any growth in the division's rolls?
A: Yes. Trucking deregulation changed the rules of the game and has decimated the industry. Organizing in the last 20 years has become extremely difficult, and that is why we are fighting for labor-law reform and support the Employee Free Choice Act. One example highlights this: Overnite (Transportation Co.). In the late 1990s, Teamster locals organized many Overnite terminals. Overnite employees voted to join the Teamsters union. But the company fought those organizing campaigns and stalled in bargaining a contract to a point where we were forced to strike. The law failed these workers. Contrast that with today; the former Overnite workers are now all Teamsters. We were able to work out a fair process with UPS Freight where workers could choose to form a union. [Editor's note: The Overnite name was changed to UPS Freight after UPS bought Overnite in 2005.] Contract negotiations went smoothly, and they now have the benefits of a union contract. The Teamsters Union added 12,000 freight members in 2009.
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