Thanks to a floundering economy, the trucking industry has been hemorrhaging workers, and YRC Worldwide has had a terrible year. Labor contract negotiations were painful throughout the summer, and YRC received generous concessions from its employees at New Penn just to stay afloat. The result was lost jobs and an uncertain future for the trucking giant. From Logistics Management:
A Reuters report cited sources within YRCW as saying the job reductions were substantial and being made across many departments. […] This original agreement went through in early August—and approved by Teamsters at YRCW—is comprised of a 5 percent incremental cut and an 18 month freeze on union pension fund contributions. YRCW officials said these measures are expected to save the company roughly $45 million per month through the rest of 2009 and increase to roughly $50 million per month in 2010. […]
“YRCW is looking at all avenues to keep the company alive,” said Satish Jindel, president of Pittsburgh-based SJ Consulting, in a recent interview. “It does not mean YRCW is going to be shutting down tomorrow, but it does not mean they are out of the woods and on a path to recovery. This gives them a few more days and weeks of extra life and how they perform in that time will determine whether things continue or come to an end.”
The pension fund freeze that YRC negotiated this summer feeds into the much larger disaster-waiting-to-happen. YRC Worldwide is part of an aggregate pension fund with Teamster’s Central State Pension Fund that is billions of dollars in the hole. Some time soon, those retirees will coming calling, only to find that there is no money in the funds. If YRC goes under, they default on what some estimate to be a $4 billion obligation.
Read more in Reuters.