Arkansas Best Corp. Reports Loss, Seeks End to Teamsters Talk

by Chris Bahn and Lance Turner  on Wednesday, Jan. 30, 2013 11:47 am  

Despite the losses, CEO Judy McReynolds says she's encouraged by trends she sees in the company's expedited and premium logistics services businesses.

ABF Freight System Inc. expects contract negotiations with the International Brotherhood of Teamsters to be resolved by a March 31 deadline, but the CEO of its parent company said Wednesday that the firm is exploring options in case a new agreement can't be reached.

Judy McReynolds, CEO of Arkansas Best Corp. of Fort Smith (Nasdaq: ABFS), said Wednesday during the trucking and logistics company's fourth-quarter earnings call that without a new contract, ABF would consider closing terminals and distribution centers as a cost-cutting measure.

ABF is seeking a single contract to help "lower expenses" through uniformity in cost structure, time off, scheduling, benefits and other areas related to the company's 7,500 Teamster employees across the United States.

"We're very focused on having this accomplished by the end of March," McReynolds said "… But there are options."

McReynolds declined to give specifics on the number of terminals or distribution centers that ABF would consider closing. But she said a plan is in place if ABF isn't satisfied with the end result of negotiations. 

McReynolds' comments came the same day the firm reported a fourth-quarter net loss of $7.9 million compared to a profit of $1.4 million during the same quarter last year, and a full-year net loss of $7.7 million compared to a profit of $6.2 million in 2011. In the company's earnings release, McReynolds said the loss was troubling given that revenue remained roughly the same and said she hopes the labor negotiations will result in savings for the company.

In all, the company's preference is to replace an operating structure with the Teamsters that McReynolds described as "outdated and cumbersome." Beyond the National Master Freight Agreement, there are as many as 15 supplemental contracts that make operating more difficult and costly, she said.

Last month the two parties exchanged initial contracts. ABF's position is that a uniform deal will help lower costs and provide more flexibility in operations. The two sides were reportedly "far apart," following the initial meeting. They met Jan. 7 in Kansas City and are on schedule to meet every other week, McReynolds said.

ABF is handling contract talks with the Teamsters on its own for the first time. Previously, the company has been part of group negotiations.

Teamster’s negotiating committee co-chair Gordon Sweeton released a statement earlier this month and said ABF’s proposal seeks "to destroy the NMFA standards that have been in effect for decades and served ABF well. We hope the company will bargain in a traditional manner so that we can make progress on the important issues from the start."

Eliminating terminals and distribution centers — thereby cutting jobs — is just one of the options on the table, McReynolds stressed. 

"We’re prepared for any of the paths to occur," McReynolds said before later adding, "We really don’t need to have a discussion at this point about potential outcomes. Obviously you have to plan for things. We do have a plan."



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