Arkansas Best, Teamsters Ratify Collective Bargaining Agreement

Union members employed by ABF Freight System have approved a new five-year contract that will see a wage reduction for drivers through July 2014 and changes in work schedules.

Well, they sort of approved a new contract.

The Teamsters issued a statement late Thursday (June 27) saying the contract had been approved, but not all provisions of the contract met with approval.

“Some local/area supplemental agreements, however, were rejected and issues in those areas must be addressed before the national agreement can be implemented,” noted a statement from the Teamsters.

Teamsters Spokesman Galen Munroe declined to comment on the process or the percentage vote that approved the overall contract.

“We understand the sacrifices our ABF members are making,” Gordon Sweeton, co-chairman of the National ABF Negotiating Committee (TNFINC), said in a statement. “We will work on obtaining approval of those supplements that were not approved. … Once ratified, the national contract will protect our members’ health, welfare and pension benefits and will also give the company the ability to compete in a very tough trucking environment, which is good for ABF and the long-term job security of our members.”

If the supplemental provisions are approved, the new contract will replace a three-year contract that expired March 31. Both sides have agreed to extend the existing contract until a new contract is approved.

“We are very pleased that our Teamster employees have ratified the ABF NMFA, which is a critical step to putting ABF back on the path to profitability while still preserving the best-paying jobs and benefits in the industry,” said ABF Freight System President and Chief Executive Officer Roy Slagle. “We know this was a difficult decision for our union workforce, following many sacrifices made in recent years by our non-union employees, and we look forward to resolving the remaining supplements in the near term.”

Judy R. McReynolds, Arkansas Best President and Chief Executive Officer, added that the new contract at ABF, once concluded, is just one of many corporate initiatives underway.

“As we near the end of this contract negotiation process, we are looking forward not only to a more efficient, profitable ABF but also to continued strong contributions from our non-asset-based, emerging businesses,” McReynolds said. “With the addition of premium logistics provider Panther Expedited Services a year ago and continued investments in technology and people, our emerging businesses are all poised for additional revenue growth and greater cross-selling opportunities both within our existing ABF customer base and throughout the broader transportation marketplace.”

WHAT’S IN THE CONTRACT
Officials with ABF Freight, a subsidiary of Fort Smith-based Arkansas Best Corp., and the International Brotherhood of Teamsters announced May 3 the proposed contract for the about 7,500 drivers for the less-than-truckload carrier. The contract was unanimously endorsed on May 20 by about 160 Teamster local union reps.

The contract includes an immediate 7% wage reduction that is recovered by the fifth year of the contract.

The wage reduction, a key negotiation point pushed by ABF Freight officials, schedule provides for a 7% cut beginning in the pay period following contract ratification. But beginning July 1, 2014, wages are increased 2%. Wages again increase 2% on July 1, 2015, up 2% on July 1, 2016, and up 2.5% on July 1, 2017.

Arkansas Best officials have said that wage cuts were necessary for the company to return to profitability.

The company reported on April 30 a first quarter 2013 loss of $13.4 million. The loss of 52 cents per share was higher than the consensus analyst estimate of a loss of 41 cent per share. Revenue during the quarter was $520.7 million, well ahead of the $440.9 million during the same quarter in 2012.

The quarter followed a 2012 that saw the Fort Smith-based transportation holding company post a $7.7 million loss, a wide swing from the $6.159 million gain in 2011. Arkansas Best has been unable to post two consecutive years of income gains since 2008.

The company was also able to negotiate for flexibility in work schedules and work across job classifications. Union officials also granted the company flexibility to use non-union, outside carriers to move quickly to capture new business or to reduce the number of “empty miles.”

Existing contract terms were agreed to in 2008 as part of a National Master Freight Agreement (NMFA) with which Arkansas Best, YRC and other trucking companies participated.

Threatened with bankruptcy, YRC was able to obtain a 15% wage reduction from the Teamsters prior to 2010. The deal also saw YRC give equity and board seats to the Teamsters in return for the wage cuts.

Arkansas Best continues to pursue a $750 million lawsuit against the Teamsters and competitor YRCW. Arkansas Best alleges that wage deals between the Teamsters and YRC violated the NMFA. The NMFA, implemented April 1, 2008, was designed to create equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters.

The lawsuit, first filed in November 2010, was recently dismissed a second time by U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas). On Oct. 29, 2012, Arkansas Best appealed the case again to the United States Court of Appeals for the Eighth Circuit (St. Louis). The Circuit has once appealed in favor of Arkansas Best.

Stephens Inc. Analyst Brad Delco said May 6 that the new contract could boost Arkansas Best earnings by between $2 and $3 annual earnings per share.

Delco, along with research associate Ben Hearnsberger, said the ABF salaries, wages and benefit structure is 12%-15% higher than its non-union competitors and up to 15% higher than YRCW. The Teamsters were given equity in the company in return for lowering wages and benefits.

Company shares closed Thursday (June 27) at $19.99, up 66 cents. The shares are trading again near historic levels, and the trades have been pushing 52 week highs. During the past 52 weeks, the share price has ranged from a $20.37 high to a $6.43 low.