Major Trucking Company Will Not Apply for Bailouts

June 12, 2009 – 12:59 pm – No Comment

YRC Worldwide, Inc., a major trucking company that operates as both “Yellow Transportation” and “Roadway,” said that they planned on asking for $1 billion in bailout funds from the government, known as TARP (Troubled Asset Relief Program). Last month, YRC CEO Bill Zollars told the Wall Street Journal that in applying for TARP, dialogue may begin with lawmakers about YRC’s pension obligations to long time employees and retirees.

The company’s pension obligations are roughly $2 billion, considerably more than many employers pay, not counting the heftier employers, such as automakers. Zollars claimed the pension obligations are unfair because YRC must now pay for employees who never worked for the company. Due to the multi-employer plans of which they are a part, they are actually paying pensions to other companies’ employees – some that never worked for YRC. Zollers made it clear that he thought this was extremely unfair and would like to address these obligations with lawmakers.

In a letter sent yesterday to employees, also for distribution to customers, YRC said it “has no current intentions of applying for TARP funds,” but that they “want to address the structural inequities created by multi-employer pension plans.” YRC sent a fact sheet with yesterday’s letter in which executives claim the company contributes about $540 million each year to 36 multi-employer pension plans “supporting hundreds of thousands of retirees who never worked for YRC or our subsidiaries.” Those retirees worked for companies that are now out of business, but due to the obligations in the multi-employer pension plans, they are stuck with pensions of retirees from those companies. “With the multi-employer pension plans, when one employer fails, the obligations shift to surviving union companies. It is the ultimate penalty for success,” that letter went on to say.

YRC also indicated a search for government support to address their concerns with the pension issue in the letter. YRC indicated ongoing discussions with its union pension plans, but that the issue is not with pension funds paid to its own employees and that it remains committed to funding those plans. So far, YRC has laid off thousands of workers, negotiated sizable pay cuts with remaining employees and drastically cut costs in other areas as the trucking industry, along with the rest of the economy and business in general, suffers from the worst drop in business and revenue earnings in decades.

YRC stock shares finished yesterday up 11 cents, or 4.5 percent, at $2.58. (Expect them to continue going up as they negotiate those pension plans and prove they really do not need TARP money.) So far, AP, Reuters, and other miscellaneous news reporting organizations have been attempting to get a further comment from a spokesperson at YRC but to no avail.