The CEO of less-than-truckload (LTL) carrier YRC Worldwide Inc. expressed confidence today that its 26,000 unionized members would ratify a five-year extension to their existing labor agreement, saying that the company remains an attractive place for drivers and other unionized employees to work.
James L. Welch told DC Velocity that YRC's jobs "pay market competitive wages, provide way-above-market family health care benefits that our employees pay zero dollars for, and offer a pension contribution that is in most cases better than a 401(K) plan." Welch added that YRC jobs "are some of the very best in the industry."
YRC is burdened with a $1.4 billion debt load and faces a $69 million principal payment due in mid-February. It is also dealing with a consortium of lenders unwilling to renegotiate loan terms unless the company has a new labor contract in place. It has asked the Teamsters union, which represents about 26,000 of its workers, for an extension through 2019 of the current five-year agreement, which expires in March 2015.
The YRC contract proposal is not expected to call for wage cuts, according to a communiquÃ© issued by the dissident group Teamsters for a Democratic Union (TDU). The TDU document said there would be no wage increases in 2014, but that annual increases would resume in 2015.
The proposal calls for changes in work rules, including the outsourcing of some driver work, according to the TDU. It also seeks changes in overtime-pay criteria and would amend health and welfare language so that a partial week of work would not receive full health and welfare coverage, according to the TDU communiquÃ©.
Leaders of YRC's locals will meet Dec. 6 to review the company's proposal and determine whether to submit it to the rank and file for ratification. Welch declined to comment on the TDU communiquÃ©, saying any list of proposed demands being circulated is "unofficial and a rumor" at this point. Welch also declined to comment on the status of the debt-restructuring talks with its lenders.
In an Oct. 30 letter to employees, Welch said that servicing YRC's $1.4 billion debt load leaves the company with no money to reinvest in the business once wages, benefits, and regular operating expenses are paid. YRC's interest rate is believed to be between 11 and 12 percent. The company pays $150 million in annual interest, more than all its publicly traded rivals combined, it said. The interest burden is "strangling the company," YRC said in a handout distributed at a Nov. 5 meeting with the Teamsters.
YRC said in the Oct. 3 letter that because a refinancing typically takes 90 days to complete, it must begin the process by Nov. 15 if it is to meet the first principal payment, which is due Feb. 15. YRC also has a $326 million payment scheduled for September 2014 and another $678 million by March 2015.