FEDEX FOLLOWS YRC TREND - WAGE CUTS

MILE MARKER #53

YRC was the first to announce company wide wage cuts to weather out the storm. "Uncertainty" is the storm's name, and is blasting through as we speak. It's hitting us sideways!

As unemployment rises and workers lose negotiating power, it's easier for companies to trim pay. I knew it was a matter of time before other companies followed YRC's foot steps, that cut a path through the rugged economy.

When YRC announced the cuts, companies like FedEx and Conway tried to use that towards their advantage. They jumped all over that. FedEx advertisements suddenly came out with YRC troubles mentioned in them, trying to get an edge in today's tough market. I don't agree with these practices. Furthermore, I would consider that illegal in my mind, but hey, who am I? This happens every time before a contract comes due also.

SCENARIO:

FEDEX says, " You better jump aboard right now, because if there is a strike, we won't be able to handle all the business."

Give me a break!

What ever it takes I guess. I find it comical.

Welcome to the real world. FedEx is cutting 36,000 salaried workers by 5 % starting January 1st. The cuts include Fred Smith, President/Chief Executive Officer. He is accepting a pay cut of 20%. The cuts include a suspension of merit raises and company contributions to 401K plans also. A 7.5%-10% for other senior FedEx executives too.

We are all in the same boat no matter who you work for. The boat is half full of water, let's all stick together and keep it from sinking. Keep paddling.

TRUCKLOAD AND LTL SURVIVAL TACTICS

MILE MARKER # 52

Survival mode is engaged for both less-than-a-truckload and truckload companies during this rough stretch. You will probably see a spike in consumer spending for the month of December, due to holiday responsibilities. People will spend what little extra cash they have to make Christmas happen, but probably will go into hibernation for the next three or four months of the new year.

Truckload carriers tend to weather the storm in a weak economy better than LTL carriers. The profit outlook is much more negative for LTL than truckload for the near term. Industrial freight is very weak at this time, and that's more of the core business for LTL. Truckload carriers haul more consumer goods and staples.

The economy continues to soften, and nobody is exactly certain where the bottom is. Companies continue scrambling to make necessary changes that coincide with the present economy. Conway is changing its network by trimming the roster of terminals and rescheduling their line haul shipments. YRC is doing what they are doing with the merger and Teamster relief. I've covered those processes in previous blogs. I found it interesting that ABF wants to get labor concessions similar to what YRC's companies are getting, but there is a catch. At the Union meeting, a couple of ABF representatives were present, but when they found out that YRC management was involved with the 10% giveback, they didn't want any part of it. They were like, "Management too?" They said, "No, we're good." It's funny how they changed their tune. They were all about screwing the driver though, they ran to the meeting. At least YRC cut the whole entire work force 10% to try and get through these hard times. We'll see what ABF eventually decides to do.

When the trucking industry starts to rebound, the surviving carriers will do well. The question is, "Who will survive?"

YRC, UNION REACH TENTATIVE DEAL FOR WAGE CUT

MILE MARKER #51

Teamsters leaders vote unanimously for union workers at trucking company YRC Worldwide to take an immediate 10% pay cut to hold up the company's dwindling finances.
Teamsters spokesman Bret Caldwell said Wednesday union leaders reviewed the deal and said they expect to send it out for a member vote on Dec. 9. Ballots are expected to be counted on Dec. 30.

The 40,000 union workers at YRC Worldwide Inc. are currently covered under a 5-year contract that began in March. Caldwell said the agreement is an amendment to help cope with current market conditions. The Overland Park, Kan.-based company has about 58,000 employees.

The cut will not include any changes in health care or other benefits.

TRUCKLOAD OF MORALE

MILE MARKER #50

Local truck driving jobs are becoming scarce, as companies down size to deal with the struggling economy. For the few of us that are still hanging on by an unraveled thread, we are seeing our hours decrease as the freight tonnage declines.

The endless thoughts fermenting in the back of our heads question our vulnerability to unemployment. How long before unemployment calls our number? Most of us already thought of a plan B to ready ourselves to keep our battered ship afloat.

In the last two blogs, I've kept you updated with the YRC (Yellow Roadway Corporation) merger. If that's not bad enough, YRC is pursuing relief from the Teamsters, and will likely get it. Unfortunately, I am involved in this unexpected debacle. I don't blame Yellow. I blame the horrific economy for forcing companies to make these necessary decisions, which result in many job losses - Union and Non-Union, drivers and office personnel. I believe with these companies obtaining concessions, they will lay the grounds for other trucking companies to follow suit. Furthermore, I'm afraid this is only the beginning of it.

When I look around and listen to drivers and their personal situations, their morale is depressing. It's like they are just going through the motions of work, waiting to walk the plank. They know bad news is coming, but when? For those that it already happened to, I've watched them clean their trucks out, and leave the parking lot like a car disappearing into the endless horizon. These are good hard working people. The truth of the matter is, I will never see these guys again. It is not a good feeling waiting to see if you are going to get laid off, let go, or wondering if you are going to make the list when Yellow and Roadway merge.

I never thought the trucking industry would crumble like this before I retired, but now I sit here wondering. My plan B includes a sleeper truck in the future if all fails, but I still have my fingers crossed. To be honest with you, over-the-road was never a bad fit for me, but I sure do have it made where I'm at now. My morale is still in a positive state, and I will remain optimistic until I am forced to take a different path.

Good luck to you all.

UPDATE: ECONOMIC RELIEF PLAN FOR TEAMSTERS

MILE MARKER # 49

On Wednesday, December 3, leaders of freight local unions from across the country overwhelmingly endorsed an economic relief plan for the YRC Worldwide Inc. (YRCW) companies that will protect tens of thousands of Teamster members’ jobs and their retirement security.

“Today’s overwhelming support clearly shows that local union leaders from every area of this country know how bad this recession is, and they are confident that this agreement will protect the livelihoods of our members and their families,” said Tyson Johnson, Director of the Teamsters National Freight Division. “No one wants to see wages get cut, but this agreement will help get the company through this deepening recession while protecting the jobs, health, welfare and pension benefits of our members.”

“We are facing the worst economy in decades, so we need to act now to protect our members and their families,” said Jim Hoffa, Teamsters General President. “We worked hard to draft a plan that holds the company accountable. The plan requires equal sacrifice among all YRCW employees, and we have the ability to obtain stock in the company, and to place restrictions on where the savings can be used, among other protections for our members. I am confident that when our members read the plan details, they will agree that this is a necessary step during these very, very difficult times.”

The plan calls for a reduction in gross wages and mileage rates of 10 percent effective the first payroll period after ratification through the term of the National Master Freight Agreement (NMFA)—March 31, 2013. The wage and mileage increases called for under the NMFA will also be reduced by 10 percent. The cost of living adjustment is also suspended for the life the Plan.
Plan Protects BenefitsThe economic relief provided in the plan was limited to the 10 percent wage reduction. There are no changes to any health, welfare and pension contributions. These plans are funded as provided for in the NMFA. (See further plan details later in this newsletter). In addition, a full copy of the plan will be mailed to members in the ballot packages.
Ballots are scheduled to be mailed out to members on or about December 9, and ballots are tentatively scheduled to be counted on December 30. About 40,000 Teamsters are actively employed at the affected YRCW companies—Yellow Transportation, Roadway, USF Holland and New Penn.

The economic relief plan comes as trucking companies continue to get battered by a worsening economy, especially YRCW. Most of the for-hire trucking companies are now entering the third year of a recessionary downturn. Operating results at YRCW were trending negative long before the mortgage banking and financial markets collapsed in 2008. As the largest trucking company in the country, YRCW has felt the general freight industry’s downturn most acutely, but lower volumes have been reported at virtually all national carriers for some time. Continued setbacks in the housing and automotive-related sectors coupled with collapsing consumer demand suggest it will be late 2009 if not before positive tonnage numbers return.

Information from Teamsters.org

YRC TEAMSTER RELIEF UPDATE

MILE MARKER #48

YRC Worldwide Seeks To Modify Teamsters Labor Contract

OVERLAND PARK, Kan., Nov. 28 /PRNewswire-FirstCall/ -- YRC Worldwide Inc. (Nasdaq: YRCW) announced today that its Yellow Transportation, Roadway, Holland and New Penn business units have reached a tentative agreement with the International Brotherhood of Teamsters to modify the current labor agreement for employees covered by the National Master Freight Agreement. Details surrounding the modification are expected to be available next week following further discussions with labor leadership and the affected employees.
Bill Zollars, Chairman, President and CEO of YRC Worldwide, commented, "We have already taken a number of steps to strengthen our financial position and improve both our profitability and our competitiveness, including the continued successful integration of Yellow Transportation and Roadway, the exchange of equity for notes through private transactions, modification of our non-union pension and retirement plans, sales of excess properties and, most recently, the commencement of a $100 million tender offer to purchase outstanding notes. While these efforts have been effective, the worsening macroeconomic crisis in America and the increasingly critical state of our industry mean that we must take additional measures."

Zollars continued, "The industry decline in volumes and pricing is continuing in the current quarter, affecting our profits and cash flow and our ability to pay down debt from operating funds. The modification to the agreement, which we expect to be ratified in December, will establish a more competitive cost structure allowing us to accelerate our market share recovery and capitalize on opportunities for future growth, while at the same time, defending the long-term prospects and job security of our employees."

"Extraordinary times call for extraordinary action," said Mike Smid, President and CEO of YRC North American Transportation. "In that regard, our employees should be proud of the professionalism and seriousness that the Teamsters took on all fronts in their approach in reaching this tentative agreement. We look forward to continuing to work with them to protect the future of our employees and our company. At the end of the day, we have the interests of our employees and our customers in common, and together we are working hard to make our business more competitive and improve our position going forward."