Teamsters reject ABF wage adjustment contract

More than 3,700 of the roughly 7,000 union employees of ABF Freight System rejected a wage-adjustment deal negotiated by the company and Teamsters leaders.

It is unclear what the setback will mean for a trucking company that has struggled to survive during a national freight recession that began in late 2006.

The International Brotherhood of Teamsters reported in late April that it and Fort Smith-based Arkansas Best Corp. reached a tentative agreement on 15% pay cuts through 2013 for the roughly 7,000 drivers affiliated with the less-than-truckload carrier.

The tentative deal between the union and ABF required company management and nonunion employees to take an equal amount of pay cuts. Nine separate nonunion wage and benefit cuts, already implemented since Jan. 1, 2008, were considered in determining if any further management and nonunion employee cuts are required.

Teamsters officials reported that Arkansas Best is losing about $10 million a month in 2010 and needed the pay cuts to keep from burning through its cash reserves.

“ABF has been exhausting its cash reserves at an unsustainable rate and cannot face losses of this magnitude for much longer, especially in a tight credit market where alternative financing has largely dried up,” according to a Teamsters statement prior to the vote.

The deal struck with Teamsters leaders did not sway union members. According to a Teamsters statement, ballots were sent April 30 to about 7,000 active employees and about 1,000 drivers with recall rights. The final count was 3,764 votes against and 2,936 votes for the new contract, representing about 80% of the total members.

“We took a proactive approach to help ABF get through the worst economic recession since the Great Depression, but our members have rejected the plan,” Tyson Johnson, director of the Teamsters National Freight Division, noted in a statement. “The union will regroup to determine if there are other means to protect jobs and benefits. Our first priority continues to be the members’ best interests.”

Arkansas Best officials said they were disappointed the Teamsters rejected a wage plan similar to that accepted for other union-affiliated trucking compaines.

"The current economic decline has been unprecedented in its depth and duration. Our company, including our nonunion employees, has made significant financial sacrifices during this period. It is unfortunate that our union employees have chosen not to participate in better aligning ABF’s cost structure with those of its LTL competitors," Judy McReynolds, Arkansas Best president and CEO, said in a statement. "Going forward, we will evaluate our various options in dealing with our cost structure and the other issues we face during this challenging freight environment."

Arkansas Best, the parent company of ABF, reported April 23 that it lost $21.4 million in the first quarter of 2010. The first quarter hit for Arkansas Best amounted to a loss of 85 cents per share, worse than analysts estimates of a 63-cent per share loss. Arkansas Best posted quarterly revenue of $359.88 million, 5.9% higher than the first quarter of 2009.

Arkansas Best, which employs about 9,500 nationwide, posted a 2009 net income loss of $127.52 million, compared to a $29.168 million gain in 2008. However, the 2009 income loss includes a non-cash accounting charge of $64 million for the impairment of goodwill. Total revenue in 2009 was $1.472 billion, a 19.6% dip from 2008 revenue of $1.833 billion.