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Kent State blown out in second half, loses to Temple 47-13
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Will Health Care Reform Pass?
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Silverdome Potentially SOLD!
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Colloquium at University of Akron
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Nintendo's Mario endures even as games come and go
Deal for all workers, executives will aid ailing Roadway parent company. Teamsters to vote on proposal
By Samantha Bomkamp
Associated Press
Published on Thursday, Dec 04, 2008
NEW YORK: Teamsters leaders voted unanimously Wednesday for union workers at trucking company YRC Worldwide Inc. to take an immediate 10 percent pay cut to hold up the company's dwindling finances.
At a meeting with YRC Worldwide Inc. and about 300 representatives of the International Brotherhood of Teamsters in Phoenix Tuesday, union leaders reviewed the deal and said they expect to send it out for a member vote on Dec. 9. Ballots are expected to be counted on Dec. 30, Teamsters spokesman Bret Caldwell said.
The 40,000 union workers employed by YRC are currently covered under a five-year contract that began in March. The agreement is an amendment to help cope with current market conditions, Caldwell said. The Overland Park, Kan.-based company has a total of about 58,000 employees and is the parent company of Roadway operations in Akron.
The cut will not include any changes in health care or other benefits, he said.
The amendment calls for ''equal sacrifice,'' Caldwell said, which means that all nonunion workers and executives on all rungs of the corporate ladder will take a similar cut in compensation. The spokesman noted that the nonunion cut might affect health coverage, and include provisions such as higher insurance co-payments.
''Every employee at YRC will help pay for this recovery,'' he said.
Bonuses eliminated
The provision also cuts out executive bonuses, Caldwell said.
''[Management] cannot earn any money on the backs of our members taking a cut,'' he said.
A trust has also been formed as part of the deal, which will provide workers warrants to buy stock when the company begins
to turn around, Caldwell explained. Union workers will be offered warrants equal to about 15 percent of the company's outstanding stock, or about 10 million shares, through the trust. The trust can sell the stock after January of 2010, Caldwell said.
The deal also includes a ''snapback'' provision that will kill the agreement if the company files for bankruptcy or there is ''a material change in ownership.''
Requests for comment from YRC Worldwide's top executive, President and Chief Executive Bill Zollars, and a company spokeswoman, were not immediately returned.
In a statement last week, Zollars said that a deal ''will establish a more competitive cost structure allowing us to accelerate our market share recovery and capitalize on opportunities for future growth, while at the same time, defending the long-term prospects and job security of our employees.''
Some changes made
The company has already made changes to shore up its finances and pay down debt as its liquidity has come into question. It has swapped stock for notes, modified its nonunion pension and retirement plans, made plans to sell real estate, and started a $100 million tender offer to buy back outstanding notes. It has also announced plans to cut as much as 15 to 20 percent of its union work force as it merges its Yellow and Roadway unit operations.
Pact might reduce debt
In a recent note to clients, Stephens analyst Thom Albrecht said he had ''issues'' with the company's request for employees to take a pay cut, despite the pact's potential to reduce the company's overall debt and to boost its stock price.
YRC has already called for job cuts and is implementing ''significant changes to operations,'' including operating fewer terminals and adding new major freight routes, he noted, and ''to place a third burden/request upon the Teamsters is not inconsequential,'' Albrecht wrote.
Albrecht said that at least four less-than-truckload (LTL) carriers have rolled back wages in the past 20 years, but none of the efforts were able to save the companies from eventual bankruptcy. However, the analyst noted that YRC is much larger than any of those companies, and job options for truckers currently are much more bleak.
But risks remain, Albrecht said, such as the perception of the move by YRC's customers or ''worker unrest.'' The analyst said he believes YRC's primary competitor, Arkansas Best Corp., ''will push for a similar rollback,'' but with no debt and ample cash, ''its hardship case is not very convincing.''
Shares of YRC rose 51 cents, or 11.8 percent, to close Wednesday at $4.84. The stock has plunged from 52-week high of $22.52, falling as low as $1.20 in recent weeks.
NEW YORK: Teamsters leaders voted unanimously Wednesday for union workers at trucking company YRC Worldwide Inc. to take an immediate 10 percent pay cut to hold up the company's dwindling finances.
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