Drivers Vote to Keep Employer Afloat
By Peter Whoriskey
Washington Post Staff Writer
Friday, January 9, 2009
Every weekday, Tom Sorrell rattles around Northern Virginia in a noisy tractor-trailer, struggling through tight turns and traffic, picking up and dropping off cartons and pallets of just about anything until there's no more to be done. For this, the 16-year veteran driver makes $22.71 an hour.
Yesterday, his pay dropped 10 percent.
In what some say is a forerunner of the concessions U.S. workers will be asked to make during the recession, the 40,000 members of Sorrell's union, the International Brotherhood of Teamsters, voted to approve a wage cut to keep afloat their employer, YRC Worldwide, a Fortune 500 trucking company.
Truckers around the country viewed the vote as a choice between a pay cut or no job at all.
"It's going to be a hardship," said Sorrell, 46, of Manassas, adding that he had already cut down on his groceries and driving to save money. "The shame of it is the employees didn't get the company in this situation. If we're all in the same boat and we're sinking, why didn't management take the same cut we are?"
The chief executive of Kansas-based YRC Worldwide, William D. Zollars, made $5.7 million in 2007, according to the company's regulatory filings.
He agreed to a 10 percent pay cut for the next six months and a 5 percent pay cut for the following six months. He also will not get bonuses. Although the truckers' pay cut remains in effect longer -- through 2013 -- Zollars noted that his pension has been cut by 30 percent.
"The pain has to be shared equally," he said. "The [company's] prospects for success are very high now that we've gotten this done."
As the downturn wears on, more and more workers, unionized or not, will probably face requests to trim their pay or benefits to keep their employers viable, economists say.
The United Auto Workers is being pushed to take wage and benefit cuts for General Motors and Chrysler to get a $17.4 billion federal loan. And labor leaders expect recessionary trouble to play a role in collective-bargaining agreements expected to begin this year at United, Southwest and Continental airlines as well as AT&T and Kroger.
This month, Gary Beevers, international vice president of the United Steelworkers, will represent 30,000 workers in contract negotiations with the oil companies.
"We'll find out at the bargaining table just how bad the oil companies think they're doing," he said. "There's no doubt they made good money over the last few years. But there's also no doubt that their margins have been bad since the recession hit."
Harley Shaiken, an economist at the University of California at Berkeley who specializes in labor issues, said there would be "fierce pressures for unions to give back in the coming year . . . Right now, unions are willing to do painful things to make sure the companies are successful."
The fortunes for YRC Worldwide, which includes Yellow, Roadway and USF Holland, began to unravel about 18 months ago, when the stock price began a slide from $37 to about $4. Its descent accelerated in September during some of the country's worst economic turmoil.
The amount of regional freight it carries per day has plummeted 20 percent over the past year. Moody's, the rating service, downgraded its credit.
Some analysts attributed the troubles to management's decisions to buy other companies.
"They were stupid acquisitions," said David G. Ross, an analyst at Stifel Nicolaus who follows the company.
And even though the truckers have given up some of their pay, the company's fate -- and the truckers' jobs -- are far from secure.
"Even with the union concessions, it could still go into bankruptcy and close the doors," Ross said.
Of about 30,000 ballots cast, 77 percent of the union members voted for the pay cut, the union said last night. The agreement does not affect health and pension benefits.
"We are facing the worst economy in our lifetime, so we needed to act now to protect our members and their families," James P. Hoffa, Teamsters general president, said in a statement.
Chuck Deaver, 50, a Seattle area trucker who works for YRC Worldwide, said he was outraged at the idea of giving back wages. But in the end, realizing that he is just a few years from a pension, he voted for it.
"Ten percent seems like a small price to pay to keep your job," he said.
Deaver and his wife are halfway done remodeling their home but stopped because of the downturn. And even now that the union has given the company the concessions, he wonders, as many do, what lies ahead.
"Maybe we'll keep our job -- maybe we won't," he said. "There's no guarantees in any of this."
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