UPDATE: ABF Freight, Teamsters Agree on 15 Percent Wage Cut

by Jan Cottingham  on Tuesday, Apr. 20, 2010 11:29 am  

ABF Freight System, the largest subsidiary of Arkansas Best Corp. of Fort Smith, and the Teamsters union have reached an agreement to cut wages 15 percent to help the less-than-truckload carrier deal with financial losses sustained during the recession.

The announcement was made on the Teamsters website, which said that leaders of freight locals across the United States had "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."

The agreement still must be ratified by Teamsters members. The union said about 6,000 Teamsters were employed at ABF while another 1,000 were on recall.

"We are cautiously optimistic about the potential for ratification," Danny Loe, a spokesman for ABF, said Tuesday. "We believe that the facts supporting ABF's need for ratification of this agreement are compelling and that our employees will understand the need for ratification."

The 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, which is in effect until March 31, 2013.

No changes were made to any health, welfare and pension contributions, the union said.

The Teamsters National Freight Industry Negotiating Committee and ABF management reached a tentative agreement on the plan on Friday, according to the Teamsters' announcement. Teamster leaders attending a meeting Monday in Chicago 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, 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."

The plan contains provisions to reduce the wage reduction or terminate the plan if ABF Freight's financial situation improves. Both union and nonunion members would face the same percentage wage cut under the plan and notes that during the last two 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."

Arkansas Best, the parent company of ABF Freight, reported an almost $100 million net operating loss in 2009. ABF, the seventh-largest trucking company in the state based on revenue, had revenue of $1.4 billion and accounted for about 94 percent of Arkansas Best's revenue in 2009.




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