About 160 Teamster local union reps on Monday (May 20) unanimously endorsed a tentative labor contract between the union and ABF Freight System that includes an immediate 7% wage reduction that is recovered by the fifth year of the contract.
Monday’s action paves the way for a vote among the estimated 7,500 union workers employed by Fort Smith-based ABF. ABF Freight is one of the nation’s largest less-than-truckload carriers and is the largest subsidiary of Fort Smith-based Arkansas Best Corp.
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.
“Nobody ever wants to see a pay cut, but in light of the company’s struggles and our desire to see the company survive, something needed to be done. It is in our best interests, as well as ABF’s, that this company be given a chance to climb out of this deep recession so that our members’ futures are protected.” Gordon Sweeton, co-chairman of the National ABF Negotiating Committee for the Teamsters National Freight Industry Negotiating Committee (TNFINC), said in a Teamsters statement.
The Teamsters urged qualified union members to approve the proposed contract.
“Your Teamsters National ABF Negotiating Committee has worked very hard in 2013 to beat back the employer’s attempt to essentially throw out the existing contract in its entirety. The committee believes this agreement represents the best opportunity to maintain Teamster standards and employment in the freight industry.”
Ballots will be mailed June 3, and must be returned by June 27.
WAGE CUT NECESSITY
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 proposed deal also includes a reduction in vacation days for time that accrues after April 1, 2013. The deal also includes bonus pay for union employees of the ABF operating ratio – a key metric used in the trucking industry – of below 96 for any full year. An operating ratio of 96 indicates that the company generated $1 in revenue for every 96 cents in expenses.
WORK, CARRIER FLEXIBILITY
The company was also able to negotiate for flexibility in work schedules and work across job classifications.
A union report on the agreement noted: “While much of the debate was over road dispatch procedures and job bidding, the company also wanted to merge various job classification responsibilities so that drivers could be forced to work the dock and road drivers could be asked to make city runs or hostle equipment at the end of their workday if so directed. While the union rejected the broadest of these demands, we did accept a few proposals that affect yard opera- tions including that there would be no ‘forklift driver only’ bids under the new agreement and that bid hostlers could be required to move (in seniority order) during their shift to where work is most needed in the yard.”
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.”
“ABF also demonstrated in negotiations that certain new business opportunities with key shippers have been lost to non-union competitors over the past five years because ABF could not respond to customer demands and re-position sufficient numbers of drivers and equipment quickly enough to adequately service such events as a new product launch,” explained the union report.
However, the non-union carrier provision also includes “strong road driver protections” that essentially prevent layoffs of union drivers employed prior to a certain date, according to the Teamsters document.
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.