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Union OKs pay cuts, which will save company $240 million a year, other concessions
By Hugo Miller
Bloomberg News
Published on Saturday, Jan 10, 2009
YRC Worldwide Inc., the biggest U.S. trucking company with Roadway operations based in Akron, rose Friday for an eighth day in Nasdaq trading after Teamsters union members late Thursday approved concessions including a pay cut that will save the company $240 million a year.
The 10 percent wage reduction and other contract modifications were approved by 77 percent of those voting, the Teamsters said in a statement. The union represents about 40,000 YRC employees, including drivers and dockworkers.
Savings from the concessions and expense cuts including shrinking the nonunion payroll are ''more than enough to see us through the downturn,'' Bill Zollars, chief executive officer of Overland Park, Kansas-based YRC, said Thursday.
The vote boosts YRC's efforts to trim costs after just one profitable quarter since the final three months of 2007, as a deepening U.S. recession extended a freight slump. In December, YRC had to rearrange about $1.5 billion in assets to use as collateral after a credit downgrade and is seeking to pay down debt.
Standard & Poor's on Friday raised its long-term corporate credit rating on YRC by two grades to CCC, or eight levels below investment status. The union ratification ''could help YRC in its bank negotiations, which are the most important immediate challenge facing the company,'' S&P said in a statement.
Demand for freight shipments ''got a bit worse'' last month compared with November, Zollars said. ''We haven't seen anything to indicate the bottom yet.''
YRC shares gained 28 cents, or 6 percent, to $4.96 on Friday. The Teamsters vote results were announced Thursday after regular trading ended. Shares have fallen 65 percent in the past 12 months.
In exchange for the revisions of their five-year contract reached in February 2008, the union workers will receive a 15 percent stake in YRC, the company said in a statement. Compensation for nonunion employees will be reduced by at least as much as that of the Teamsters members, YRC said.
''We are facing the worst economy in our lifetime, so we needed to act now to protect our members and their families,'' Teamsters President Jim Hoffa said in the union's statement.
YRC Worldwide Inc., the biggest U.S. trucking company with Roadway operations based in Akron, rose Friday for an eighth day in Nasdaq trading after Teamsters union members late Thursday approved concessions including a pay cut that will save the company $240 million a year.
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