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Home » YRC workers ratify five-year contract extension, buying labor peace through March 2019
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YRC workers ratify five-year contract extension, buying labor peace through March 2019

January 27, 2014
Mark B. Solomon
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Unionized workers at YRC Worldwide Inc. late last night voted to ratify a five-year extension to their collective bargaining agreement, keeping the less-than-truckload (LTL) carrier out of a possible date with bankruptcy court and preserving labor stability for most of the rest of the decade.

The contract extension, which runs until March 2019, was ratified by a vote of 12,267 to 6,314. The old pact expires in March 2015. YRC employs between 26,000 and 30,000 workers represented by the Teamsters Union.

In an interview this morning, YRC CEO James L. Welch said the company is "putting the pieces together" on financing plans to restructure its $1.14 billion in debt and to lower its onerous interest payments. YRC's lenders have conditioned any refinancing on ratification of a contract extension.

Welch did not elaborate on the specifics of the debt restructuring efforts because they have not been finalized. Company executives have said there is little money left over to reinvest in operations after its debt is serviced, wages and benefits are paid, and other fixed costs are met.

The ratification came less than three weeks after the rank and file rejected management's initial contract extension offer by a 5,000-vote margin. The defeat sent labor and management scrambling to prepare a revised proposal before a scheduled due date of Feb. 15 for a $69 million payment on the company's debt.

Both sides negotiated a revamped proposal within two weeks. The new deal made unionized nondriver members eligible for pay raises. It also softened some of the language relating to worker vacation time and purportedly added labor protections to provisions allowing Overland Park, Kan.-based YRC to subcontract up to 6 percent of driver work.

Unlike the first proposal, which was not negotiated by Teamster leadership and was instead mailed directly to members for their vote, the Teamster hierarchy negotiated and approved the revised offer before forwarding it to the rank and file. Welch said the Teamsters' involvement was the key difference between the decisive rejection of the first contract and the equally solid margin of ratification of the revised offer.

During the period between the two votes, YRC executives made it clear that ratification of the revised offer would be the only path forward for the company and its employees. Scott Ware, president of YRC's Holland regional unit, told employees in a letter Friday that management would have nothing more to offer them if they rejected the new proposal. Ware's letter also hinted at a bankruptcy filing should the proposal go down to defeat.

In a statement last night, Teamster General President James P. Hoffa said the union will "hold management's feet to the fire to make sure our members' jobs are protected."

The contract extension maintains language, negotiated in 2010, requiring workers to take a 15-percent wage cut. It also does not require the company to raise its pension contribution levels. Pension payment levels had been reduced by 75 percent several years ago as a cost-saving measure. In each of the first two years of the new contract, lump-sum payments will be made to workers in lieu of hourly wage increases. Wage increases will kick in during the third year and be in force for the remainder of the contract.

Transportation Trucking Less-than-Truckload
KEYWORDS YRC Worldwide
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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