YRC workers soundly reject contract extension, casting uncertainty over company's future

The workers of YRC Worldwide Inc. represented by the Teamsters union have soundly rejected the company's proposal to extend the current five-year collective bargaining agreement until 2019, according to a final tally disclosed this evening.

Of the roughly 19,600 members who cast ballots, 12,028 rejected the proposal, according to the Teamsters for a Democratic Union (TDU), a dissident group. The union represents about 26,000 workers. The current contract runs until March 2015.

The outlook for ratification appeared dim earlier in the day as many of the larger Teamster locals rejected the company's offer, TDU said. The Teamsters said this evening that the union had not been given the final tally and could not comment. A spokeswoman for Overland Park, Kan.-based YRC was unavailable to comment.

YRC had pinned much of its hopes on securing a contract extension from its workers. The company is saddled with $1.4 billion in debt, and it has said that its high borrowing costs make it impossible to reinvest in the business after the debt is serviced and other fixed costs are paid. The first principal payment of $69 million is due Feb. 15. YRC confirmed that it had lined up about $1.15 billion in loans to refinance its debt. However, its lenders have said they will not agree to refinance the debt without an extended labor contract in place.

YRC CEO James L. Welch has said the company would not file for bankruptcy protection if the extension wasn't ratified. The extension would have bought five years of labor peace and would have helped the struggling company cut about $100 million a year in costs. Welch expressed confidence in several interviews with DC Velocity that the rank and file would approve the extension.

Under the proposal, union workers would receive, in lieu of pay raises, $750 in annual bonuses over the first two years of the extended contract. The first bonus would be paid in early 2014 should employees ratify the contract extension and lenders agree to the debt restructuring. After the first two years, workers would receive net annual raises equal to 34 cents an hour. Vacation pay would be capped at 40 hours per week or 1/58 of annual earnings. Three-week paid vacations would only be available to workers with 11 years' seniority.

Pension contributions, which were suspended in mid-2009 and resumed in 2011 at one-fourth their prior amount, would be fixed at the current levels through the life of the extended compact.

Profit-sharing programs would kick in if YRC Freight, the company's struggling long-haul unit, achieves a 97-percent operating ratio per year starting in 2015. Workers would share in a larger percentage of profits should the unit's ratio decline further. For YRC's profitable regional units, profit sharing would begin at 94.1 percent. Operating ratio is the ratio of expenses to revenues and is a measure of a transport company's efficiency and profitability.

The contract would allow YRC to subcontract out up to 6 percent of its driver work, with protections for all currently employed drivers. Welch has said the practice would be implemented only in cities where YRC experiences a shortage of drivers.

Ken Paff, TDU's national organizer, said Teamster General President James P. Hoffa and others in the union's upper strata should immediately begin bargaining with YRC while at the same time working with lenders to hammer out financial agreements that preserve union jobs without completely gutting the contract. Given that the deadline for the first principal payment on YRC's debt is just five weeks away, "there is no time to lose," Paff said.

Paff said YRC Teamsters could accept a contract extension that includes language the rank and file won't like. He said, however, that the members "did not accept a complete giveaway," and he criticized the union for failing to bargain on the members' behalf. TDU is often at odds with mainstream Teamster leadership.