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Latest News - November 2011

November 17, 2011
YRC Worldwide will close 40 terminals because of low freight volume
Source: Kansas City Business Journal
By: David Twiddy

YRC Worldwide Inc. plans to close about 40 terminals across the country as it continues shrinking its operations to handle a smaller amount of customer freight.

Sheila Taylor, CFO of the Overland Park-based company (Nasdaq: YRCW), told analysts during an analyst conference on Wednesday that the company has submitted a “change of operations” with the International Brotherhood of Teamsters union about the closures.

“We’re taking steps to ‘right size’ the business,” Taylor said, adding that the closures affect about 12 percent of the company’s 334 facilities.

Chairman and CEO Bill Zollars said that most of the terminals set to close are smaller facilities and that there should be no more closings for a while.

“We’re in pretty good balance now between volume and capacity,” Zollars said. “I wouldn’t look for significant changes in capacity going forward.”

In an e-mail, the company said that it planned to consolidate facilities between mid-December and mid-January and that employees at those facilities would be given the chance to relocate.

“This is not a work-reduction effort but an effort to create greater density moving to and from our delivery terminals,” the statement said. “We will still cover all current service areas direct through fewer local facilities.”

YRC came close to filing for bankruptcy last year as the recession cut the amount of freight being shipped and competitors slashed their rates in hopes of driving the company out of busines

It survived through a combination of wage and benefit concessions from its union-represented workers, as well as agreements with lenders to swap debt for equity in the company.

YRC is in the middle of its latest restructuring plan. The Teamsters last month approved a third round of concessions, and Zollars and Taylor said they are in early negotiations with lenders about a new round of capital financing and restructuring of its debt.

The agreement with the Teamsters requires that the financial restructuring be agreed to by the end of the year.

However, rival trucking company ABF Freight System Inc. has filed a federal lawsuit in Arkansas seeking to overturn the three rounds of concessions between the Teamsters and YRC, claiming they violate a nationwide labor agreement for truckers and dockworkers.

On Tuesday, YRC and its subsidiaries asked that the suit be dismissed, saying that ABF was not a party to the concessions and so lacks standing to challenge the concessions in court. The company’s filing notes that ABF sought similar concessions from the Teamsters this spring — which union members ultimately denied — and YRC wasn’t a party to those negotiations.

“We think the fact pattern is fairly straightforward. ... As they aren’t part of the bargaining unit, they don’t have any right to try and get the same kind of result we got from our negotiations with the Teamsters,” Zollars said at the Wednesday conference. “We would expect that we’d get a favorable result there in a fairly short period of time.”

 

 


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