The largest independent less-than-truckload company in the U.S. is asking for a bailout of another kind – one from the Teamsters.
YRC Worldwide Inc. called on the Teamsters to renegotiate a 9-month-old labor contract after the mega-carrier was downgraded by Standard & Poor’s Ratings Services on Nov. 19. That drop in three grades by S&P caused the company’s stock to plummet.
The downgrade and declining stock value forced the trucking company to put up $1.5 billion in assets as collateral on loans.
On Monday, YRC announced it would start a buyback of notes to reduce its debt and coming up with the cash it needed for that was dependent on a “giveback” of union wages and benefits. YRC approached the Teamsters and asked to open talks on renegotiating the existing contract.
The Teamsters agreed on Monday, Nov. 24, to open negotiations with YRC officials. The labor contract with the Teamsters involves approximately 40,000 employees.
During the course of the negotiations, the Teamsters have posted updates acknowledging YRC’s tough financial position.
In an update on the negotiations issued by the Teamsters Tuesday, Nov. 25, the Teamsters’ “experts” have determined it is questionable whether YRC can generate enough cash to survive a prolonged downturn.
“The union believes it has only one opportunity in 2008 to help this company recover its financial footing and position in the trucking industry and has pledged its best efforts to understand the needs of the union’s second-largest employer,” the Nov. 25 update states.
The update leaves little doubt that the main objective of the Teamsters is preserving its members’ jobs – which hints that the union may very well agree to a contract renegotiation.
“We understand the challenges the company is facing, and we are discussing those challenges,” said Tyson Johnson, the Teamsters’ National Freight Division director. “We are making it clear to the (YRC) companies that protecting our members’ jobs and benefits is paramount. We will do whatever it takes to make sure our members’ interests are protected in this process.”
Industry insiders are not expecting a decision on the renegotiation before next week.
– By Jami Jones, senior editor