ABF, Teamsters agree to another 30-day contract extension after union leaders spurn offer

The Teamsters union and less-than-truckload (LTL) carrier ABF Freight System Inc. agreed late Friday to another 30-day extension of their current contract after management made an economic offer unlikely to go over well with the company's approximately 7,500 employees.

Under the proposal, made last week during talks in Dallas, ABF employees would take a 6.5-percent wage cut, accept reductions in pension contributions as well as caps on those contributions, and pay about $3,000 a year for family health coverage, according to reports from the Teamsters and from dissident group Teamsters for a Democratic Union (TDU). According to TDU, the wage cuts would reduce Teamster salaries, on average, by about $4,000 a year.

The latest extension, the second in as many months, runs until May 31. The contract originally expired March 31 but was extended until the end of April. There are several bargaining options available to both sides. First, the existing contract could be extended again for an agreed-upon time period. Another option would be for operations to continue without a contract. This is a dicey scenario for both sides, however. It's risky for management because the union could call a strike without notice. It's also risky for the union because it could be decertified by management and lose access to hard-won benefits from the previous contract. Finally, there could be a strike on June 1 if no agreement of any kind is reached.

In a statement issued Friday, the company said the terms of its proposal are designed to bring ABF's labor costs closer in line with the rest of the LTL industry. ABF has the highest labor costs in the LTL segment, a factor in the company's $230 million in cumulative losses since 2009.

"We have taken a balanced approach to the negotiations and have specifically avoided proposing the meat-axe wage and benefit cuts that our competitors have been forced to adopt," the company said in the statement. It added that even with the proposed cuts, ABF workers will remain the best compensated in the industry. ABF did not disclose specifics of its offer in the statement.

If comments from Teamster officials are any indication, it will be a long slog in resolving core wage and benefit issues.

"While we've made progress on major local and...work rule issues over the last few months, the company's new proposals this week are very disappointing and place our progress at risk," Gordon Sweeton, co-chairman of the Teamsters ABF National Negotiating Committee, said Friday. "We've put millions of dollars worth of operational relief on the table but that apparently is not enough."