Teamsters at YRC Worldwide Inc. rejected a contract extension that the company said was crucial to refinancing its debt and ensuring long-term stability.
The union announced the results of the vote late Jan. 9. A total of 26,000 union members at the less-than-truckload carrier were eligible to vote on changes that would extend their contract into 2019 from the scheduled March 2015 expiration. The vote was about 61% against the plan that was put to a rank-and-file vote last month.
Union approval of the memorandum of understanding to extend the contract was required for the company to finalize a $300 million debt refinancing plan. The debt plan was announced last month with the goal of lowering interest costs.
“The Teamsters Union believes in democracy, and we’ve let the democratic process take its course,” said Tyson Johnson, director of the Teamsters National Freight Division “Our members have made huge sacrifices to keep this company alive, and a majority made the decision not to sacrifice anymore.”
“While we are disappointed in the outcome of the vote, we believe that timing of events related to our refinancing did not work in our favor. Many employees had already returned their ballots prior to December 23, the date the company announced it had a refinancing agreement in place. We believe that was information employees needed to make a fully informed decision,” YRC CEO James Welch, said in a statement.
“Despite the vote results, it is business as usual as we have approximately 15,000 trucks on the road today serving 250,000 customers. We will keep our customers, employees and stakeholders advised of our efforts,” said Welch.
In earlier statements, YRC said the debt deal announced Dec. 23 was “a momentous step” and warned that a vote against the plan would “unfortunately mean some very difficult decisions for the company and its employees.”
Interest on the carrier’s debt was $124.2 million over the first nine months, swallowing up profit before interest and taxes of $30 million over the same period.
Based in Overland Park, Kan., YRC ranks No. 5 on Transport Topics Top 100 listing of the largest for-hire carriers in the United States and Canada.