The president of YRC Worldwide Inc.'s Holland regional unit said today there is no backup plan to offer YRC employees if union workers fail to ratify a contract extension proposal that they will vote on this weekend.
In a letter to Holland employees obtained by DC Velocity, Scott Ware said the company has "no plans to put anything else in front of our employees" if this weekend's vote fails. Ware said that if members reject the offer and YRC files for bankruptcy protection, Holland would be taken down with it. Ware emphasized his point by typing the warning in capital letters.
Ware said that all of the YRC operating companies, which include Holland, have guaranteed the various outstanding loans on behalf of the holding company. If the holding company files for bankruptcy, then by law the operating units must be dragged down as well, he said.
Ware told his employees what they likely already know: Trucking firms that file for bankruptcy protection do not emerge from the process. Instead, they liquidate and cease operations.
Ware noted that YRC, which is saddled with $1.4 billion in debt, has a nearly $70 million principal payment on the debt due in less than a month. As has been reported, YRC's lenders will not agree to restructure the debt unless union employees ratify an extension to the current contract, which expires in March 2015. YRC has 26,000 unionized workers represented by the Teamsters Union.
"Customers are nervous, and the banks are knocking," Ware said.
Ware's letter underscores the gut-wrenching decision facing Holland's unionized workforce. But the impact is amplified by Holland's success in the face of the company's travails. Holland, along with New Penn and Reddaway, comprise YRC's profitable and highly regarded U.S. regional operations. Some at Holland resent being pulled down—and possibly put out of business—by the continuing fiasco at YRC's long-haul unit, YRC Freight, and the financial mismanagement of the past few years that put the company in such a deep debt hole.
Earlier this month, YRC's union workers resoundingly rejected management's offer to extend the current contract until 2019. The Overland Park, Kan.-based less-than-truckload (LTL) carrier made a revised offer last week. The new proposal maintains some language contained in the initial offer. For example, the current contract would be extended until 2019. Pension contributions would remain at about 75 percent below levels in place before 2010. Workers would receive lump-sum bonuses in lieu of hourly wage increases in the extended contract's first two years. Wage increases would take effect in the third year, though those increases would be offset somewhat by the impact of the wage cuts that have already been agreed to.
The changes in the modified agreement include wage increases for unionized workers who don't hold Commercial Drivers' Licenses; the initial proposal froze their wages for the duration of the contract. The company also agreed to withdraw language that would have granted workers three weeks of vacation only after 11 years of service. It also dropped a proposal to eliminate a third week of paid vacation to employees that already have three weeks of time off.
Under the revised offer, bonuses from a profit-sharing plan tied to the operating performances of YRC Freight and YRC Regional would not be subject to the 15-percent wage reduction. Language from the initial offer allowing the company to subcontract up to 6 percent of all roadwork would remain in effect. However, the new plan is believed to include additional work-rule protections for drivers.