YRC Worldwide Inc. on Tuesday, July 14, announced significant progress on its previously announced comprehensive plan to realize efficiencies from the YRC integration, restore financial strength and position its operating companies for future success. The company’s progress report includes updates on two key areas of its plan:
“This is another step in our ongoing strategic plan to restore the financial strength of our company,” says Bill Zollars, chairman, president and chief executive officer of YRC Worldwide, based in Overland Park, Kan. “Modifications to the labor agreement will help us reduce our cost structure, preserve operating capital and increase our competitiveness.” In addition, YRC Worldwide is continuing discussions to address the structural inequities of multiemployer pension plans to determine a long-term solution. “We continue to have ongoing, productive dialogues with all our stakeholders, including the bondholders and pension funds,” Zollars says.
The company says the modifications would create an approximate $45 million-per-month savings, which begins immediately upon ratification, and grows to an approximate $50 million-per-month savings in 2010; in exchange, the Teamsters employees would receive options for 20 percent of the outstanding shares of YRC Worldwide stock, pending shareholder approval, which would allow them to further share in future company performance through stock price appreciation. YRC Worldwide says it also will appoint an additional member to its board of directors who is mutually agreed upon by the company and the negotiating committee.
“In the midst of the worst economic recession in our lifetime, our union negotiators have crafted an agreement with YRCW that requires shared sacrifice while preserving good jobs and benefits for 35,000 YRCW workers and their families and tens of thousands of Teamster retirees,” says James Hoffa, Teamsters general president.
The new modifications are on top of the previous modified contract announced Jan. 8 in which the Teamsters accepted a 10 percent wage reduction and suspension of cost-of-living adjustments for the remaining life of the contract, and in exchange received a 15 percent ownership stake in the company.
Last year, nonunion employees of YRC Worldwide began contributing to cost structure reductions at the same or a greater percentage of their total compensation as union employees; this includes modifications to the nonunion pension, retirement and other benefit programs in addition to salary and wage reductions. “During this severe economic recession, I am gratified by the continued partnership, professionalism and commitment of our union and nonunion employees to make personal sacrifices to achieve long-term success for our company and our customers,” Zollars says.