ABF, Teamsters at odds over costs

— After two opening days of labor-contract negotiations, ABF Freight System Inc. said late Wednesday that it seeks “dramatically lower” labor costs from its International Brotherhood of Teamsters workers.

The Fort Smith-based trucking company said that without those cuts, it will have to close terminals and distribution centers and “job loss will certainly result.” In a statement, the company also disputed union claims of excessive management labor costs.

The Teamsters union said in a statement Thursday that it “will fight the company’s attempts to harm ABF Teamsters’ livelihoods. In its initial contract proposals, ABF is proposing to slash workers’ benefits and gut working conditions.”

ABF and Teamsters union leaders held opening negotiations Tuesday and Wednesday in Kansas City, Mo., to consider terms for a new contract to replace the one that expires at midnight March 31. The two sides have adjourned until the week of Jan. 7, according to a Teamsters statement posted on its website.

Beyond the initial statements, neither side would comment Thursday on this week’s talks.

ABF, the nation’s 13th-largest trucker, has not disclosed details of what it proposes.

The Teamsters union posted on its website that it wants to continue current pension, health and welfare benefits and seeks a $1-perhour wage increase each year for two years.

ABF, a less-than-truckload carrier that hauls two or more shippers’ goods in the same truck, employs about 7,500 Teamster members. Besides contract negotiations, ABF and the Teamsters are also involved in a 2-year-old lawsuit. The trucker sued the Teamsters in November 2010, saying the union granted wage and other concessions to its chief rival, YRC Worldwide of Overland Park, Kan. ABF has said the concessions made it impossible for ABF to compete.

In a statement issued late Wednesday, ABF said laborcost issues have led to $230 million in losses since 2009.

The trucking firm also said ABF-Teamster employees are paid at the highest levels compared with their peers in the less-than-truckload industry. ABF has paid $244 million in union pension, health and welfare costs, the statement said. More than half, $132 million, went to pension expenses alone.

The trucking company also disputed a Teamsters statement posted before talks started, which pointed to management labor costs as a bargaining issue and said “cash compensation (salary, incentive plan, etc.) for executive leadership at ABF’s parent Arkansas Best Corp., has not suffered.”

The Teamster statement cited a 50 percent raise in cash compensation between 2010 and 2011 for Judy McReynolds, chief executive officer of Arkansas Best Corp., ABF’s parent company. Filings with the U.S. Securities and Exchange commission show McReynolds’ total compensation climbed from $997,769 in 2010 to $1.35 million in 2011.

ABF said McReynolds’ salary and incentive pay in 2011 “was 58 percent of the average” of publicly traded peer companies. SEC filings show McReynolds’ total compensation was below that of James Welch, CEO of YRC Worldwide, which filed for bankruptcy protection because of large losses. Welch’s total compensation in 2011 was $2.5 million, which was for half the year, as he wasn’t hired until July.

All compensation of ABF officers, including McReynolds, makes up “less than one-half percent of ABF’s costs,” the company’s statement said.

The Teamsters’ statement Thursday said ABF is “misguided when it blames labor costs for its losses. ... The poor state of the economy over the past four years created losses at all large [less than truckload] companies.”

Teamsters said ABF’s proposals include: reducing paid time off, eliminating the current grievance procedure, expanding the use of subcontractors and surveillance and computer-tracking devices, and creating part-time positions in most job classifications.

“As for pensions, the company’s pension costs in its largest fund, Central States, have been frozen for the last two years with health and welfare costs only seeing modest increases during that time as well,” according to Teamsters’ statement.

Teamsters urged ABF officials to look at management costs, saying, “We will not accept any proposals that are made solely on the backs of our members.”

In 2010, ABF and the International Brotherhood of Teamsters leadership agreed to a 15 percent reduction in gross wages and mileage rates for ABF union workers. However, rank-and-file members voted this down.

Arkansas Best stock closed Thursday at $9.34, up 14 cents or 1.5 percent. Its stock has traded in the last year between $6.43 and $22.79.

Business, Pages 28 on 12/21/2012

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