Teamsters employed at ABF Freight System rejected the company's proposed changes to the labor contract, which involved a 15 percent pay cut, while protecting pension, health care and welfare benefits.
With the Teamters' rejection of the LTL carrier's financial relief plan, ABF may now be in a tough spot, analysts say.
With the Teamters' rejection of the LTL carrier's financial relief plan, ABF may now be in a tough spot, analysts say.


In April, local Teamsters Unions from across the country endorsed the financial relief plan of the less-than-truckload carrier.

"The current economic decline has been unprecedented in its depth and duration," said Judy R. McReynolds, Arkansas Best president and CEO. "Our company, including our nonunion employees, has made significant financial sacrifices during this period. It is unfortunate that our union employees have chosen not to participate in better aligning ABF's cost structure with those of its LTL competitors. Going forward, we will evaluate our various options in dealing with our cost structure and the other issues we face during this challenging freight environment."

Mail ballots were sent out April 30 to about 7,000 active employees and about 1,000 workers with recall rights. With a final count of 3,764 to 2,936, the workers voted no on the plan with about 80 percent of the members affected participating in the vote.

"We took a proactive approach to help ABF get through the worst economic recession since the Great Depression, but our members have rejected the plan," said Tyson Johnson, director of the Teamsters National Freight Division. "The union will regroup to determine if there are other means to protect jobs and benefits. Our first priority continues to be the members' best interests."

According to a letter sent to clients, analyst group Stifel Nicolaus provided several reasons why the employees voted this way. Some workers may feel the company did not do enough to cut costs before asking employees to take a pay cut, while others may be concerned that lower wages will lead to more aggressive pricing to gain more volume. Another reason employees might have rejected the plan is because they believe they didn't get enough input in the process. Meanwhile, others may be looking at ABF's $138 million balance sheet and believe the company should exhaust those funds before turning to wage cuts.

"We believe the company will reconvene with Teamsters leadership to try and work out some other wage reduction proposal; however, it is unclear to us what concessions, if any, would be agreeable to the members," said Stifel Nicolaus.

The analysts believe the carrier is now in a tough spot.

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