YRC's Holland regional unit posts weak operating performance in 2014

For years, the regional less-than-truckload (LTL) operations of YRC Worldwide Inc. has been a steady and solid performer, and, by many estimates, its Holland regional unit has been the best of the three companies that comprise YRC's regional business.

But there may be some tarnish forming on the Holland crown.

The Holland, Mich.-based company, which serves the U.S. Midwest, Southeast, and Ontario, Canada, posted surprisingly weak operating metrics for 2014, according to an internal newsletter published at the end of November. Workers compensation costs rose 21 percent year-over-year. Bodily injury and property damage costs increased by 52 percent. Cargo claims rose 42 percent. Bodily injury and property damage claims due to vehicle collisions rose 273 percent.

The higher number of workmen's compensation claims forced Holland to set aside $51 million in reserves last year, a 65-percent increase from 2013 levels, according to the newsletter. Holland's 2014 accident rate based on injuries sustained was roughly twice the industry average, according to the newsletter.

Holland President Scott Ware wrote that the data shows the company's workers are "taking far more risk and not assessing the right outcome when it comes to working safely" when compared to peers at other trucking firms. In a reflection of that, most Holland workers who get injured are hurt more than once, Ware said.

In a broad-based effort to reverse the trend, Holland has launched a mentoring program for new hires, increased the level of training for management and support staff, and upgraded its regularly scheduled maintenance programs, Ware said. He did not divulge details in the letter. A YRC spokeswoman did not reply to a request for comment.

Stephen Walski, who has been a Holland driver for nearly 20 years, said the 2014 data is the worst he's seen since he joined the company. The situation has not improved in the six weeks since the newsletter was published, Walski said in an e-mail a few days ago, with weather-related issues adding to the problems that already existed.

Walski was one of the few rank-and-file workers that spoke out publicly against a five-year contract extension agreed to last January by YRC workers. He pinned the subpar Holland numbers on poor employee morale that resulted from the outcome of a protracted battle that nearly put the company in bankruptcy protection. Walski said that, in the wake of the contract battle, worker sentiment at Holland has soured to the point that "employees don't go above and beyond anymore." He added that the number of inexperienced new hires contributed to the subpar performance during 2014.

The January extension kept in place a 15-percent wage cut that unionized workers agreed to in 2010. It also does not require the company to raise its pension contribution levels, which 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 take effect during the third year and be in force for the remainder of the contract.

YRC management said a contract extension was a requirement for lenders to agree to a restructuring of $1.14 billion in debt and a reduction in the company's onerous interest rates.

The other two YRC regional units are New Penn, which serves the Northeast, Quebec, and Puerto Rico, and Reddaway, which serves mountain states, the West Coast, and British Columbia.