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December 24, 2007 7:45 AM, EST

YRC Gains Labor Flexibility

ABF Seeks $825 Million Buyout
By Jonathan S. Reiskin, Associate News Editor
This story appears in the Dec. 24-31 print edition of Transport Topics.
Editor's Note: Because of the holidays, the Dec. 24 and Dec. 31 issues of TT are combined. The next issue will be published Jan. 7.
On the heels of YRC Worldwide’s settlement with the Teamsters union on a new five-year labor contract with in-creased work-rule flexibility, ABF Freight System said it will offer an ambitious proposal to spend about $825 million to “withdraw from all of the 27 multi-employer pension plans to which we contribute.”
YRC — the nation’s largest less-than-truckload carrier — an-nounced the agreement Dec. 13, more than three months ahead of the March 31 expiration of the current National Master Freight Agreement (12-17, p. 4). Union leadership said it would start briefing membership Jan. 8. The lead negotiator for YRC said he thinks final ratification could come by early February.
While negotiators for both YRC and the Teamsters described their dealings as being more cooperative than confrontational, the second act of the LTL talks could offer more fireworks, as ABF follows a trail blazed earlier this year by UPS Inc.
“The multi-employer pension plans are an expensive and unreliable method of delivering retirement benefits,” said David Humphrey, director of investor relations for Arkansas Best Corp., ABF’s parent.
“As the [Teamsters] noted in response to the withdrawal of UPS from Central States, our employees deserve secure retirement benefits, and a single employer plan is the only way to safeguard the retirement security of our employees,” Humphrey said after consultation with other ABF executives. On Dec. 19, he provided written responses to questions posed by Transport Topics.
As part of its contract settlement with the Teamsters this fall, UPS said it will spend $6.1 billion to withdraw from the Central States plan, the largest of the multi-employer Teamster plans (10-8, p. 1). UPS is setting up its own plan to cover retirement obligations.
Humphrey’s letter said ABF, Fort Smith, Ark., anticipates having to spend between $800 million and $850 million on all 27 plans, with about 80% of that going to Central States.
ABF’s position stands in contrast to YRC’s. After UPS announced its plans, YRC Chairman and CEO William Zollars said the UPS contribution would substantially shore up the financial strength of Central States, making it desirable for his Overland Park, Kan., corporation to stay in the plan.
YRC owns Roadway Express, USF Holland and Yellow Transportation, all members of Trucking Management Inc., which conducted negotiations with the Teamsters on the new National Master Freight Agreement. New Penn Motor Express, also a YRC company, is not part of TMI but uses Teamsters labor under the terms of a “me too” contract.
“The early outcome of these negotiations is positive for our employees and positive for our customers,” said Mike Smid, YRC’s president of North American transportation.
TMI President Jim Roberts said the negotiation he completed covers about 45,000 YRC workers. Roberts said he could not comment in detail on the proposal until after the Teamsters have briefed their members but characterized the talks by saying:
“There was a realization from the union of the need to enter these negotiations quickly and conclude them as soon as possible, to quiet the concerns of shippers. . . . While the collective bargaining process is always adversarial, in this case, the union thought of us to an extent as more partners than adversaries.”
In February 2003, Roberts concluded talks on the current National Master Freight Agreement not quite two months before the former deal was to expire.
Shippers are welcoming the proposal, said Wayne Johnson, logistics director for American Gypsum Co. and chairman of the Highway Transportation Committee of the National Industrial Transportation League.
“This is a great relief for a lot of LTL shippers. Some had drawn up alternate plans to switch their freight to nonunion carriers.
“FedEx Freight had been beating the bushes for business. Con-way Freight could have taken over a lot of that business, too, and there were other carriers ready to pounce,” Johnson said.
Teamsters attorney James McCall, who was part of the union negotiating team, said, “This contract will provide for very good wage and benefit increases and job security. It will also make [the YRC] carriers competitive with the ever-growing nonunion carriers.
“The reality is that the nonunion sector tries to market off these negotiating deadlines and engages in scare tactics. To pre-empt that we’ve opted to go after early negotiations,” McCall said, adding that the Teamsters must still complete talks, not just with ABF but also with parcel carrier DHL Express and more than 50 smaller LTLs that use the TMI contract as a model.