The International Brotherhood of Teamsters has voted to modify its current labor agreement with YRC Worldwide, accepting a 10% reduction in gross wages and mileage rates and a suspension of a cost-of-living adjustment through March 31, 2013 in exchange for a 15% ownership stake in the company.
The modifications passed by a vote of 77% to 23%, with more than 75% of Teamsters members casting ballots. YRC—which consists of the Yellow Transportation, Roadway, Holland and New Penn freight companies—said that non-union employees will receive the same or greater reduction in total compensation, but have the option to purchase up to a 7% ownership stake in the company. Senior executives will also reduce total compensation, YRC added.
"This agreement is another critical step in our wide-ranging plan to strengthen our balance sheet, while enhancing service for our customers through our national integration of Yellow and Roadway," said Bill Zollars, chairman, president & CEO of YRC Worldwide. "With this wage reduction and our other planned cost savings, we are confident that we can sustain our liquidity position and meet our debt obligations, despite the economic downturn, upon completion of negotiations on an amendment to our credit facilities."
“We are facing the worst economy in our lifetime, so we needed to act now to protect our members and their families,” said Jim Hoffa, Teamsters general president. “We worked hard to draft a plan that holds the company accountable, requires equal sacrifice among all YRCW employees, gave us the ability to obtain stock in the company, and placed restrictions on where the savings can be used, among other protections for our members.”
According to the Teamsters, the plan has a provision that allows its members to recover lost wages if the company’s stock price increases in the future, as well as protections such as language on monitoring and enforcement rights.
YRC said that it expects to save $220 to $250 million annually from the move, in addition to the $75 to $85 million in savings in 2009 from non-union compensation reductions that went into effect on January 1st.