ABF to deal direct with Teamsters on new contract

ABF Freight System has notified the Teamsters that it will not negotiate a new labor contract under a National Master Freight Agreement (NMFA) that has been the template for many unionized trucking sector employees since April 2008.

ABF, a subsidiary of Fort Smith-based Arkansas Best Corp., employs around 10,000, with roughly 7,600 of those falling under a collective bargaining unit represented by the International Brotherhood of Teamsters.

The labor contract between ABF and the union ends March 31, 2013, and the decision by ABF could add another element of tension to more than two years of conflict between ABF, the Teamsters and YRC — the largest competitor to ABF.

FREIGHT FIGHT
The NMFA, implemented April 1, 2008, was designed to cause equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters.

The NMFA is at the heart of a $750 million lawsuit ABF filed against the Teamsters and YRC in November 2010. That lawsuit was recently dismissed a second time by U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas).

The suit essentially claimed that YRC received three rounds of wage and benefit concessions from the Teamsters, with one concession including a $350 million wage and benefit reduction annually through 2013. ABF has been unable to receive similar concessions from the union. According to the NMFA, labor terms with all trucking companies under the agreement, which included YRC and ABF, are to be the same.

In April 2010, prior the legal action, ABF and the Teamsters hammered out a deal that included a similar 15% pay cut approved by Teamster drivers for YRC. But the contract amendment failed. 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.

DEAL DIRECT
On Aug. 13, Roy Slagle, president and CEO of ABF Freight System, sent a letter to Teamsters President James Hoffa and Gordon Sweeton, an assistant director with the Teamsters, saying that ABF was ready to deal direct with the Teamsters.

“We stand ready to meet and negotiate a new collective bargaining agreement (CBA) applicable only to ABF to replace the NMFA at its expiration,” Slagle noted in his letter. “ABF hereby requests that the IBT commence bargaining with ABF for the purpose of entering into a new CBA for ABF. ABF is prepared to commence negotiations at your earliest availability.”

David Humphrey, Arkansas Best vice president of investor relations and corporate communications, said bargaining for a new contract typically begins in the fall.

“We continue to internally prepare for the negotiation of ABF’s upcoming labor contract. As we have stated before, formal negotiations have not been scheduled. Historically they have begun in the Fall prior to the conclusion of the existing agreement,” Humphrey explained.

Attempts to contact Teamsters spokesman Galen Munroe were unsuccessful.

Arkansas Best has been under pressure to cut costs since declining national freight volumes began to hit the company’s ledger in late 2008.

For the first half of 2012, Arkansas Best has lost $6.321 million, an improvement over the $7.51 million loss during the same period of 2011. The company posted 2011 net income of $6.159 million, a huge swing from the $32.693 million loss during 2010. The 2011 financials marked the end of two consecutive years of income losses.

Shares of Arkansas Best (NASDAQ: ABFS) closed Wednesday at $10.31, down 8 cents. During the past 52 weeks, the share price has ranged from a $22.79 high to a $9.75 low.