Arkansas Best, Teamsters Agree On Contract Talks

Arkansas Best Corp. and the International Brotherhood of Teamsters have agreed to begin negotiations toward a new labor contract for the about 7,800 unionized company employees.

The dealing is set to begin Dec. 18 on a contract that will expire March 31, according to a statement issued Wednesday (Oct. 10) by Fort Smith-based Arkansas Best. The largest subsidiary of Arkansas Best is ABF Freight System, one of the largest less-than-truckload carriers in the U.S.

Most of the 7,800 are drivers but the union membership also includes dockworkers, mechanics and office staff.

“We look forward to working together with TNFINC to create an agreement for our future that allows ABF to be more competitive,” Roy Slagle, ABF president and CEO said in the statement. “Our goal is to reach an agreement that enables us to better compete in a rapidly changing freight transportation market on behalf of our customers, our employees and our shareholders.”

Arkansas Best employs more than 10,000.

Teamster officials touted the quality of the union employees and said a contract should adequately value their work.

“Teamsters are the safest and most productive workers in the industry,” Tyson Johnson, International vice president and national freight director, said in a statement. “We look forward to negotiating a contract that will recognize their contributions.”

Gordon Sweeton, a Teamsters vice president, said the union members working for Arkansas Best “deserve a safe workplace, good wages, strong health care and a secure retirement.”

LEGAL FOES
That goal will require Arkansas Best officials to sit at the same table with a Teamsters organization they have twice attempted to sue as part of a $750 million lawsuit.

Arkansas Best has alleged that wage deals between the Teamsters and YRC, a competitor of ABF Freight, violated a National Master Freight Agreement (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.

That 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). Arkansas Best officials say they will again appeal the dismissal to the U.S. Eighth Circuit Court of Appeals (St. Louis).

Company and Teamster officials will also negotiate during what continues to be a flat – or worse for ABF – economic environment for the U.S. trucking industry.

ECONOMY CONCERNS
Bob Costello, chief economist for the American Trucking Associations’, said Tuesday that the trucking industry is “pretty mixed right now” in terms of freight volume. He said tank trucks and flatbed haulers are doing well, but the dry van sector — which includes companies like ABF and Van Buren-based USA Truck are “underperforming.”

“The biggest risk to trucking would be a backslide into recession either because of the collapse of the Euro, or more likely, uncertainty related to the ‘fiscal cliff’ at the end of the year,” Costello said. “It is very likely that Washington simply punts on resolving the issues surrounding the cliff into 2013, thus limiting GDP growth to less than 2% until late in the year.”

Costello also said the recent “sharp deceleration in manufacturing orders which will limit manufacturing output and thus put a damper on truck volumes in the coming months.”

‘OUTDATED COST STRUCTURE’
Arkansas Best officials have made no secret of requiring wage concessions in an effort to improve financials. Industry watchers have also made note of the company’s cost issues.

Jack Waldo, a transportation industry analyst with Little Rock-based Stephens Inc., has said Arkansas Best’s “traditional LTL business is still faced with an outdated cost structure that is materially more burdensome than that of its competition.”

That burden has been part of the drag on financial performance. 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.

Arkansas Best is scheduled to release third-quarter earnings on Oct. 30.

Company shares (NASDAQ: ABFS) were trading Wednesday morning off the $8.14 open. The shares closed Tuesday at $8.15. During the past 52 weeks, the share price has ranged from a $22.79 to a $7.32 low.