NATIONAL MOTOR FREIGHT
transportationreport
into a
ditch?
YRC’s troubles are taking employees,
the Teamsters’ freight division, and
the multi-employer pension system
for a wild ride.
THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS (IBT) HAS SEEN A LOT
in its 107 years of existence. But in its near two-year effort to rescue troubled trucker YRC
Worldwide Inc., it’s a safe bet the venerable union went where it has never gone before.
During 2009, as YRC’s financial situation grew more precarious, its 35,000 Teamster
employees agreed to two wage reductions and an extraordinary 18-month freeze on
YRC’s pension contributions.
Throughout the year, the union’s leadership actively participated in YRC’s financial
restructuring, acting in an advisory role that was considered well outside the union’s
traditional box.
Then, as YRC faced a New Year’s Eve deadline to execute a swap of $530 million in
debt for 1 billion shares of new equity or else confront bankruptcy and a possible shutdown, Teamster General President James P. Hoffa put very public pressure on several
financial institutions, notably the colossus Goldman Sachs & Co., to stop buying arcane
derivatives called “credit default swaps” that were essentially bets that YRC would
default on its obligations and file for bankruptcy protection.
Hoffa pulled out all the political stops, shrewdly framing the debate as a choice
between preserving thousands of middle-class jobs and letting greedy financial firms
scavenge for a few extra dollars in profits. Facing a potent backlash from lawmakers and
regulators already angered over the industry’s role in causing the financial meltdown,
the firms caved. Not only did they stop buying the derivatives, but they bought up
enough YRC notes to enable the debt-for-equity exchange to succeed.
To be sure, YRC’s burden had already been eased by the remarkable forbearance of
its banks, which threw the company numerous financial lifelines. But the flexibility of
YRC’s lenders would have meant little, experts said, if not for the concessions of its
rank and file, and the efforts of Hoffa and other union leaders to adopt a collegial attitude toward YRC instead of a confrontational one.
“If it wasn’t for the IBT, YRC would not be here,” says Michael H. Belzer, associate
economics professor at Michigan’s Wayne State University and one of the nation’s lead-
