Teamsters union leaders on Friday announced a tentative contract agreement with Overland Park-based YRC Worldwide Inc. that the struggling company called the “best — and only remaining — path forward.”
“We worked hard to find alternatives to save this company and to protect the jobs of our members at YRC,” Teamsters general president Jim Hoffa said in the statement.
The new proposal will be presented Tuesday to leaders of the many Teamsters locals that represent YRC’s 26,000 union employees throughout the country. That group will decide whether to present the proposal to a member vote.
YRC had said it needed its first proposed deal to convince lenders to refinance more than $1 billion in debts YRC can’t repay. Chief executive James Welch had emphasized that all employees jobs, not just those of the Teamsters members, were riding on the vote and refinancing.
“The outcome of this week’s discussions is critical to the future of the company,” Welch said in a statement issued Friday after the Teamsters announcement. “The (contract) extension is something our employees can have confidence is the best — and only remaining — path forward.”
YRC’s statement, released after the financial markets closed, said the revised proposal addresses concerns that union leaders and members had about the original offer. The Teamsters said 61 percent of the nearly 20,000 ballots cast had rejected the first pact.
Under that plan, pay raises scheduled for this year and next would have been replaced with one-time bonuses of roughly equal size. The swap, however, would have meant that employees would have collected the amount only once rather than every year as with a raise.
Other proposed changes reduced vacation pay, froze the pay of some employees but not others, created a lower pay scale for employees newly hired for some jobs, and instituted penalties company-wide for repeated absenteeism.
YRC’s original proposal also would have extended the current labor contract into 2019, continuing a 15 percent pay cut in place since 2009 and pension cutbacks as well. The current contract runs through the end of March 2015.
The company, which operates YRC Freight and is one of the nation’s largest trucking firms, said the new proposal would extend its labor agreement through March 2019, but offered no other details about its terms.
YRC’s statement also pointed out that the revised proposal came about through negotiations with the Teamsters union. YRC’s first offer had not.
The Teamsters’ statement said the tentative proposal, if approved by a member vote, would give YRC a way to substantially reduce its debt. It also called on lenders to help out.
“We recognize that YRC will have to go back to the financial market to obtain financing,” Teamsters freight division director Tyson Johnson said in the statement. “But the market needs to understand that YRC’s front line workers are the lifeblood of the company and, while willing to play a role, will not shoulder the entire burden.”
YRC’s debt load mounted after a series of acquisitions several years ago, and it forced the company to make sharp cuts during the recession to stay in business.
In late December, the company announced it had an agreement with lenders and investors that would have reduced its debts by $300 million. The deal, however, was dependent on the first contract proposal passing. YRC did not say Friday whether that agreement would still be available if the new offer passes.
YRC has a debt payment of $69.4 million due Feb. 15.
The company’s stock gained 35 cents, or about 2 percent, and closed Friday at $15.82 before the report of the agreement. Shares rose 21 percent Thursday on news the two sides were meeting.