Yellow Corp. pointed the finger at the International Brotherhood of Teamsters on Wednesday evening, saying the union is responsible for its “inability to make its monthly contribution to Central States Funds.”
The less-than-truckload carrier made a request to Central States in June to defer upcoming benefits payments as it attempts to come to terms with Teamsters on changes to operations and seek additional funding. However, Central States notified plan participants employed by Yellow companies YRC Freight and Holland on Monday that the carrier was delinquent and benefits would be suspended on Sunday without payment.
Yellow’s (NASDAQ: YELL) news release said the request to defer payment with interest was “not without precedent” and that it was “regrettably” refused an extension “despite the funds’ healthy reserves.”
“Even more regrettably, Teamsters General President Sean O’Brien has blamed Yellow for failing its workers, but it is the Teamsters’ leadership who has failed the 22,000 Teamsters employed by Yellow as well as the 8,000 non-union employees who may soon become the Teamsters’ collateral damage.”
The Teamsters issued a strike notice on Tuesday, saying a work stoppage could occur as soon as Monday if the payment isn’t made.
Yellow contends the “union’s breaches of the collective bargaining agreement” have resulted in the missed payment. It recently filed a $137 million lawsuit against the union alleging Teamsters leadership didn’t have the authority to reject the proposed change of operations and it didn’t schedule a required hearing on the matter.
“In short, Teamsters’ leadership’s obstruction of One Yellow directly caused Yellow’s liquidity crisis and Yellow’s need to implement cash-conservation measures, including its benefit funding deferral request,” Yellow said.
Yellow accuses Teamsters of “freezing the company’s business plan for nine months” as it has made attempts to negotiate its proposed changes, which would consolidate terminals, create additional utility positions to maximize labor efficiency and lower its cost structure to allow it to compete with other carriers.
“For many months, Teamsters’ leadership has steadfastly refused to negotiate the company’s long-planned and necessary modernization effort that would enable Yellow, a 100-year-old company, to streamline and strengthen its operations to compete against non-union carriers,” Yellow said.
Yellow also said that it offered the Teamsters “a significant wage increase that aligns with its union competitors” last week. No further details on the offer were provided by Yellow.
However, the Teamsters referred to the offer as “a back-door deal to rescue [CEO Darren Hawkins] humiliatingly mismanaged freight company,” in a statement Wednesday evening.
“From July 12-13, Hawkins made informal offers to the Teamsters begging the union to return to the bargaining table well before the expiration of the current contract, suggesting the beleaguered freight company could offer workers hourly increases of just over $2 in the first year of a hypothetical new contract,” the statement read. “Shockingly, the communications from Yellow were stipulated on the Teamsters agreeing to a new five-year contract as quickly as possible.”
Previously, Yellow offered to pull forward contractual wage increases and implement an additional pay hike to expedite a deal. However, it acknowledged the increases would have to be approved by lenders when it refinanced its $1.5 billion in debt at a later date.
“It is not left to rank-and-file Teamsters to drag Yellow’s sinking ship to shore,” O’Brien said. “We are not going to agree to informal offers for new wages in the hopes of getting a fair contract next year when YRC Freight and Holland can’t even figure out how to pay their bills right now.”
The union’s statement ended with a reminder of the March 31 expiration date for the collective bargaining agreement.
Yellow said the Teamsters claim it can call a strike due to the missed plan contribution payment due July 15, “would be anything but lawful, as it would violate the parties’ collective bargaining agreement.”
“Commencement of meaningful negotiations with the Teamsters would set the stage for Yellow to reengage in comprehensive refinancing efforts with its lenders while clearing a path to advance One Yellow,” the carrier’s news release said. “All stakeholders — lenders, shareholders, employees and customers — need to see progress.”
Time appears to be running out for Yellow. In addition to facing a potential labor strike the company has been temporarily removed from some third-party freight platforms and shippers have been diverting freight to other carriers.
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John Kopp
Yellow will never take responsibility. It’s always someone else’s fault.
STUART BRUINS
“Union barks back” seems a little derogatory. Do better.
Road Hazard
By combination of wage and pension concessions, a $700,000,000.00 government “gift” from the taxpayers of America, and BILLIONS and BILLIONS in lender debt (not to mention driving the stock value into oblivion), Yellow has received BILLIONS and BILLIONS and BILLIONS of dollars that its competitor LTL carriers have NOT received. It is obvious that the money has not been used to pay down debt by any measurable standard (Yellow is BILLIONS of dollars, in various forms, of debt), has not been used on wages (current Teamster employees are lowest paid in the LTL industry), has not been used to adequately maintain equipment and facilities. The company is selling terminals, leveraging everything possible and downsizing, as opposed to thriving and growing with the money. Where’s the money? According to Darren Hawkins, Yellow supposedly has a liquidity problem. (Duhhhh! Ya think?!?) Yellow by all comparisons operates the same basic equipment, pays the same tolls, operates on the same roads, pays the same fuel price, pays the same employees, has the same customers, same, same, same…… The competition is thriving, Yellow is dying! Where’s the money!?! If Yellow can’t manage to survive after receiving the BILLIONS and BILLIONS and BILLIONS of dollars that it HAS received, that its competitors have NOT received, then Darren Hawkins and the 11 (yes, ELEVEN) member board are either criminal, or the most incompetent management team on the face of the Earth, or both! The “management” (lack thereof) at Yellow has led the company into all but complete ruin, and the same management is still in position!?! Why??? The very people that have failed the customers, employees and shareholder by leading this company to the point it currently sits, are still leading the company, downward. Why??? Why is Darren Hawking still CEO of Yellow? If NOW is not the right time to replace him, when is??? He should have been replaced LONG before the company reached the current status of failure. The board of directors, the taxpayers of America and the YELL shareholders should perhaps take a look at the “leader” that has been in position during the complete collapse and consider a possible change. Perhaps, just perhaps, if Yellow had some new leadership, actual true leadership, the Teamsters Union may be willing to help facilitate a turnaround for Yellow, but, ask yourself why would anyone in their right mind work with an individual that has led the company into complete ruin. Yellow has acquired multiple INDUSTRY LEADING LTL carriers and ultimately destroyed each and every one of them. The (multiple) companies Yellow has acquired were DECADES LONG/CENTURY LONG leaders in the freight industry: Yellow acquired them and each and every one of them have subsequently failed under the management of Yellow. Each of those companies hauled LTL freight. Each of those companies hauled LTL freight providing different methods of service for the customer. Each provided “CUSTOMER SERVICE”. The customers had a choice. Darren Hawkins and Yellow have eliminated that CHOICE; Eliminated that CUSTOMER SERVICE. Darren Hawkins and his “ONE YELLOW” concept are failingly focusing on what’s best for Yellow, NOT what’s best for the customers. Darren Hawkins and his “ONE YELLOW” concept have taken the service out of Customer Service. The customers are taking the customer out of Customer Service. What is the thought process to purchase multiple different companies that were ALL decades long industry leaders and change the decades long operating model of those companies to reflect the decades long failing operating model of Yellow? McDonalds, Burger King and Wendy’s all are Superstars in the world of cheeseburgers. All serve cheeseburgers, they just all do it differently. Cheeseburger customers nationwide have a choice. Imagine if Rally’s acquired McDonalds, Burger King and Wendy’s and decided to no longer serve Big Macs, Whoppers and Doubles, and only offered the Rally Burger because that is what is most convenient for Rallys. After a while, I think they’d lose most of the customers that for decades LOVED Big Macs, Whoppers and Doubles. Perhaps not the greatest analogy, but the same concept! Yellow is apparently out of money and deep in debt. Their current problem is lack of money and extreme debt obligations that they can’t currently meet. Darren Hawkins solution? Refinance the debt and borrow more money in order to continue operating. Great idea! “Let’s see? We can’t continue to operate because we are out of money and we can’t pay our debt? Hmmmm. I know! Let’s try to borrow even more money; And, let’s blame the Teamsters if they refuse to go along with the insanity.” THINK ABOUT IT!
Kevin Nussbaum
Bye bye YRC. If this strike occurs it would be the final nail in the coffin. Go away, and let someone else start a new modernized LTL carrier. It can be done, and I don’t believe this mess can be repaired.
Freightman
YRC has been a price-driven LTL carrier for decades. In order to properly balance their debts, they could have simply raised rates to be in the competitive market for shipments. Instead, they run at absurdly low profit margins to negative profit margins on every shipment and expect their employees to accept lower than average pay. Not a good business model, and this looming shut-down is evidence.
Joel Fleury
What are you smoking????
The teamsters gave back Tim and time again and mismanagement screwed up time and time again.
Did you conveniently forget with the first bailout management gave themselves hefty bonuses??
Did you forget the MILLIONS in concessions the teamsters gave Yellow just to watch them destroy everything??
Dick Bischoff
Shippers large and small are diverting their business away from Yellow. Their revenue stream and cash flow is drying up. They are entering a death spiral from which they will never recover. Another legacy union carrier will join the boneyard. Just what the LTL freight market needs, but not so for the 30,000 folks losing their jobs.
Freight Zippy
If only it were 1955 the work rules at Yellow would be perfect.
Customers are walking away from this freak show of a carrier and learning that conducting business with union LTL carriers is not in the customers best interest.
Throughout all of the teamster press releases they never mention anything about customers??
Because they do not care about who pays their salaries…
It is time to end this sideshow…