Freight Leaders Overwhelmingly Endorse Economic Relief Plan

Package Will Protect Jobs, Benefits

On Monday, April 19, leaders of freight local unions from across the country overwhelmingly endorsed an economic relief plan for ABF Freight System, Inc. that will protect thousands of Teamster members’ jobs and their health, welfare and pension benefits.

“Local union leaders understand that we need to take a bold step to help ABF get through this terrible economy and that we must act now to prevent far worse problems down the road,” said Tyson Johnson, Director of the Teamsters National Freight Division. “No one wants to see wage cuts, but this agreement protects our ABF members’ jobs and their health, welfare and pension benefits.”

Johnson said the union responded to members’ concerns that it only move forward if it could independently verify the company’s financial situation.

“An independent financial advisor has verified that the company is losing money and has been exhausting its cash reserves,” Johnson said. “The message is that we must act now.”

"ABF has been bleeding and they cannot keep bleeding," said Teamsters General Secretary-Treasurer Tom Keegel. "We need to take steps now to protect our members' jobs and health, welfare and pension benefits before conditions worsen."

The Wage Reduction—Job Security Plan calls for a reduction in gross wages and mileage rates of 15 percent effective the first payroll period after ratification through the term of the National Master Freight Agreement (NMFA), which runs until March 31, 2013. Negotiated wage increases (less 15 percent) and cost of living adjustments, if any, will remain in effect for the life the plan.

The plan has safeguards for ABF Teamsters—it contains triggers to reduce the wage reduction in 2011-2012 or terminate the plan if certain benchmarks are reached indicating a financial turnaround for the company. The plan also calls for equal sacrifice among all union and non-union employees. During the past two-plus years, management has faced pay freezes and benefit cuts, and management will face more so that their sacrifice is equal to Teamster sacrifices. Under the plan, the union will have access to the company’s financial records and the right to have an annual audit done. This will help protect members’ interests. (see plan summary for specifics).

Plan Protects Benefits

The economic relief provided in the plan was limited to the 15 percent wage reduction. There are no changes to any health, welfare and pension contributions. These plans are funded as provided for in the NMFA. (See further plan details later in this newsletter). In addition, a full copy of the plan will be mailed to members in the ballot packages.

Ballots are scheduled to be mailed out to members on or about April 30, and ballots are tentatively scheduled to be counted on May 21. About 7,000 Teamsters are actively employed at ABF while another 1,200 are on recall.

The Teamsters National Freight Industry Negotiating Committee (TNFINC) and ABF management reached a tentative agreement on the plan April 16. Teamster leaders attending the April 19 meeting voiced strong support for the plan.

“People realize something needs to be done sooner rather than later so that our members’ jobs and their health, welfare and pension benefits remain protected,” said Tim Nichols, President of Local 878 in Little Rock, Arkansas, the fourth largest ABF local union. “If we fail to take action now, we face a situation later where we may be hanging curtains on a house that’s on fire, and nobody wants that. Local 878 has had a longstanding relationship with Tyson Johnson, and we fully support his leadership.”

“We’ve got to do something before ABF gets on life support and a foot in the grave,” said Doug Davis, Secretary-Treasurer of Local 957 in Dayton, Ohio, the second largest ABF local. “If we wait, it might be more painful and we might have to give more to help save the company. By acting now, we protect our members’ jobs and health, welfare and pension benefits.”

“It’s good that our members have the opportunity now to stop the bleeding at ABF to avoid the kind of problems that occurred by waiting longer at YRC, where our members had to sacrifice a great deal more,” said Randy Cammack, Secretary-Treasurer of Local 63 in Covina, California.

“We have to do something—it’s our job now to do something to help our members,” said Mike Simeone, Secretary-Treasurer of Local 17 in Denver. “No one likes to see concessions, but we were elected to lead.”

“We need to act quickly to avoid things getting worse,” said Ernie Soehl, President of Local 701 in North Brunswick, New Jersey. Local 701 represents fewer than 20 workers, which makes it a typical size ABF local. “It’s vital that we protect our members’ benefits and retirement security.”

ABF lost $99.9 million in 2009 after a $49 million profit in 2008—almost a $150 million negative swing. Revenue was down 21 percent from 2008 to 2009. 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. The union estimates the company continues to lose more than $10 million per month in 2010 and liquidity continues to worsen. Once it becomes effective, the company-wide wage concessions will not pull ABF completely out of the woods based on the union’s projections, but it will provide immediate assistance and steer the turnaround.