“Frustrating” contract negotiations between Fort Smith-based Arkansas Best Corp. and the International Brotherhood of Teamsters have again been extended, with May 31 the new deadline.
The Teamsters issued a statement on April 19 suggesting that new proposals from Arkansas Best have put the negotiations “at risk.”
The existing labor contract between ABF and the International Brotherhood of Teamsters expired March 31 for the about 7,500 Arkansas Best employees represented by the Teamsters.
The largest subsidiary of Fort Smith-based Arkansas Best is ABF Freight System, one of the largest less-than-truckload carriers in the U.S. Most of the 7,500 are drivers but the union membership also includes dockworkers, mechanics and office staff. Arkansas Best employs more than 10,000.
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.
Negotiations got off to a rocky start in December when company and Teamster officials issued less-than-kind statements about each other’s negotiating positions.
However, statements issued in late March said a 30-day extension had been set, with both sides indicating that progress had been made.
The April 19 statement from the Teamsters indicated that new proposals from Arkansas Best included:
• A 6.5% wage reduction;
• The elimination of coverage for employees working fewer than 130 hours in a month;
• Employee co-pays including a $240 per month employee contribution for family coverage;
• Significant increases in out-of-pocket employee costs; and,
• Overall reduced benefits.
“While we’ve made progress on major local and over-the-road work rule issues over the last few months, the company’s new proposals this week are very disappointing and place our progress at risk,” Gordon Sweeton, Teamsters ABF National Negotiating Committee Co-Chairman, said in the statement. “We’ve put millions of dollars worth of opera- tional relief on the table but that apparently is not enough.”
Teamsters National Freight Division Director Tyson Johnson said the company’s proposals were “certainly frustrating.”
“Perhaps most disturbing is the company’s meat axe approach to benefits. It certainly raises a question about how the company values its employees,” Johnson said in the Teamsters statement.
ARKANSAS BEST STATEMENT
Following is the April 22 statement from Arkansas Best about the contract extension. (Arkansas Best has a policy of not commenting on the negotiations beyond the statements released.)
“Following Friday’s announcement of another 30-day contract extension to allow for continuing contract discussions, misperceptions about our pension proposals have been circulating and must be corrected.
“Our goal is to stay in every pension fund and ensure ABF’s long-term viability in order to continue contributing to the funds. We pay money into 25 different multiemployer pension funds. Nearly two-thirds of our Teamster employees are enrolled in plans that are currently in the “critical” or “endangered” zone. Withdrawal from the pension plans would expose ABF to potentially significant withdrawal liability, which would be counterproductive to our efforts to better align our costs with our competitors.
“The terms of our initial proposal include pension payments that we believe are sufficient to allow the continued participation of our employees in each of the current 25 pension plans, including the Western Conference pension plan. It is not our intention, nor do we envision any scenario that would result in our withdrawal from any fund in which we are currently participating.
“As we have said throughout the course of the negotiations, here are our goals:
1. To maintain the best-paying jobs in the freight industry.
2. To stay in our current pension funds.
3. To ensure our employees have great benefits.
4. To adapt to the changing needs of our customers, who ultimately decide the fate of our jobs and company.
5. To put ABF on a path of profitability to secure jobs and retirements, now and in the future.”
TROUBLED FINANCIAL HISTORY
Arkansas Best posted a $7.7 million loss in 2012, a swing of almost $14 million when compared to the $6.159 million net income in 2011.
Heading into the fourth quarter, the company was ahead of 2011 when comparing income and revenue. But a $2.4 million charge to adjust for workers’ compensation expenses and estimated lost revenue of $2 million to $2.5 million from Hurricane Sandy resulted in a fourth quarter loss of $7.9 million. The per share loss of 31 cents was well off the consensus of analyst’s estimate of a 4 cent per share loss.
For the full year, total revenue was $2.065 billion, ahead of the $1.907 billion during 2011. Fourth quarter revenue was $537.042 million, up 16.3% compared to the 2011 quarter.
Company officials were hoping to string together two consecutive years of positive income. Net income for 2011 reached $6.159 million, a huge swing from the $32.693 million loss during 2010. The company posted a net income loss of $127.522 million loss in 2009, with $64 million representing an accounting charge. The company posted net income of $29.168 million in 2008.
The company’s reserves – cash and short-term investments – as of Dec. 31 remain strong at $119.756 million, but are down from $175.255 million at the same time in 2011. Arkansas Best used $80 million in cash in the deal to acquire Seville, Ohio-based Panther Expedited Services. The deal closed June 15.
An interesting factor of the negotiation is that Arkansas Best is also pursuing 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.
Arkansas Best is set to release first quarter 2013 earnings on April 30.