Con-way Inc. announces expense reduction initiatives

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Con-way Inc. on Monday, March 9, announced a series of proactive measures being taken to enhance the company’s position in the challenging operating environment. Douglas W. Stotlar, president and chief executive officer of the San Mateo, Calif.-based company, said the less-than-truckload market remains hampered by soft demand as well as excess capacity, which year-to-date through February caused tonnage at Con-way Freight to decline about 12.5 percent year-over-year.

“These actions are designed to ensure we continue to maintain the strongest financial foundation possible during these unprecedented economic times,” Stotlar said. “With these market conditions, which we don’t expect to change in the near term, there is too much capacity chasing too little freight, so we have to manage accordingly. We’re taking prudent steps to control expense, protect our market share and conserve capital.”

Con-way said the cost-reduction actions, which are projected to save between $100 million to $130 million in 2009, include:

  • Suspension of certain 401(k) contributions, including the company match;
  • Reduction of 10 percent in the salaries of Stotlar and certain other members of the senior leadership team;
  • Base wage and salary reductions of 5 percent for all other executives and employees at Con-way Freight and Con-way Inc., including administrative services and trailer-manufacturing entities;
  • A change in vacation/paid-time-off policies (PTO) at Con-way Freight and Menlo Worldwide with respect to when PTO hours are earned and recorded as expense;
  • A change in Con-way’s primary defined-benefit pension plan, which eliminates a provision for retirement benefit increases based on future increases in employee compensation rates; and
  • A reduction of 10 percent in the annual retainer paid to nonemployee members of Con-way’s board of directors.
  • Con-way said implementation of the cost-saving measures will be completed early in the second quarter and are in addition to expense reduction actions the company took in the fourth quarter of 2008; those actions included work force reductions of 2,500 positions, suspension of merit-based pay increases, reduction in capital expenditures and other spending cuts. Stotlar said that once the economy begins to recover and business returns to more normalized levels, the company will revisit its actions.