ABF Freight workers are deciding whether to accept a new labor contract after ArcBest Corp. and the Teamsters recently reached a tentative five-year agreement.
The sides unveiled new terms after several months of negotiations to replace a contract that expired on March 31. The proposed 63-month deal includes wage increases for drivers in each year of the contract, one-time bonuses for full-time workers and the restoration of a vacation week that was eliminated in the previous agreement between ABF Freight and the Teamsters.
Ratification of the agreement is now subject to a vote among ABF Freight's union workers, who were mailed ballots last week. Ballots will be accepted until May 8 and the votes tallied May 10.
Fort Smith-based ArcBest, parent company of ABF Freight, has encouraged its union employees to vote in favor of the new contract and said doing so will help them continue to have the "best-compensated jobs" in the industry. About 8,400 ABF workers are union members. ArcBest has around 13,000 employees.
"At the start of negotiations, ABF said our goal was to reach an agreement that was fair to employees and affordable for the company," ArcBest said in a statement. "Ratification of this beneficial agreement for both parties will allow ABF to continue serving our customers with the excellent experience they expect and provide additional opportunities for the company to grow."
ArcBest declined further comment on the tentative agreement when contacted last week, but key details include driver wage increases of 30 cents per hour as of July 1. Wages will increase 35 cents an hour in 2019, 40 cents an hour in 2020, 45 cents an hour in 2021 and 50 cents an hour in 2022.
Dock workers will also receive annual pay increases, earning $16.25 an hour in 2018 and an additional 25 cents each year for the length of the contract. Meanwhile, active full-time employees will receive a $1,000 lump-sum payment, while "casual" employees who have worked at least 300 hours between Sept. 1, 2017, and March 31, 2018, will receive $500.
The company will maintain its current pension contributions as the previous contract, while six weeks of vacation based on eligibility and years of service were restored.
The Teamsters were better positioned for the current negotiations than 2013, when the group believed it accepted a concessionary contract with the transportation industry battling a difficult economic environment. ArcBest -- then known as Arkansas Best Corp. -- reported a net income loss of $7.7 million in 2012. The 2013 labor agreement between ABF and the Teamsters included a 7 percent wage cut that would be recouped by employees by the final year of the contract.
Ernie Soehl, director of the Teamsters National Freight Division and co-chairman of the negotiating committee, said in a statement union members had to make tremendous sacrifices in order to maintain jobs and keep the unionized freight industry alive during the previous deal. But Soehl believes the proposed agreement reverses the trend by providing members with numerous improvements, pointing to the annual wage increases and the restoration of one week of vacation.
"There are no concessions," Soehl said in a statement. "We strongly believe this contract protects our members and their families over the next five years."
Stephens Inc., which is based in Little Rock, believes the details of the tentative agreement "generally favor the Teamsters more than what we previously would have expected."
The note, which was written by analyst Brad Delco and associate Scott Schoenhaus, said ArcBest didn't get any concessions on wages -- which weren't expected -- or breaks on health and welfare benefits. Delco, citing Soehl's conference call announcing the agreement, said ArcBest's compensation packages under the proposed contract is $9 an hour better than less-than-truckload competitor YRC Worldwide Inc. and $10 to $14 per hour better than nonunion competitors.
"Given how much higher wages and benefits are for ArcBest versus their competition, it structurally puts ArcBest in a disadvantageous position and my fear, along with employees at that company, should be that it will be increasingly more challenging for ArcBest to remain competitive in [less-than-truckload]," Delco said.
If ratified, Stephens Inc. believes the contract would translate to a $150 million to $200 million disadvantage per year compared with YRC Worldwide and other nonunion carriers.
But Ken Paff, national organizer of Teamsters for a Democratic Union, said there also are concerns among workers about the proposed contract.
He said members are concerned the annual wage increases are low, considering the concessions in the last contract and rapidly rising pay rates for nonunion carriers. Paff added that workers he has spoken with are upset the week of reclaimed vacation lost in 2013 won't go into effect until 2019.
Paff also said the agreement to maintain the current pension contribution rates could be problematic for a smaller portion of workers in states like Pennsylvania and West Virginia, whose pension plans require increased contributions. The tentative agreement offers protections for members if their pension plans expel the company by enrolling them into a 401(k) retirement savings plan, which Paff described as a "company's dream."
"Those are some of the issues that people are very concerned about and would like to see renegotiated in a second offer," Paff said. "People don't want to strike. They want to renegotiate."
Union leaders explained in an April 12 update the union negotiations with ABF Freight were "very complex" because nonunion less-than-truckload market share had been increasing at the expense of union carriers and ABF's labor costs are significantly higher than all of its competitors. According to the group, ABF can't continue to pass along significant labor cost increases without pricing itself out of the market and losing market share.
So the challenge in the negotiations was to obtain as much as possible for members without leaving the company "so uncompetitive that it would be doomed."
"It would make no sense to squeeze so hard that it left the company on death's door so that catastrophic cuts would be needed in short to keep it alive," union leaders said in the note to members.
SundayMonday Business on 04/22/2018