After the International Brotherhood of Teamsters seemingly averted a strike, Yellow Corp notified the union it was ceasing operations, leaving upwards of 30,000 employees jobless. Teamsters hold approximately 22,000 of the less-than-truckload transportation and warehousing jobs. Union members with less than five years of service are now in jeopardy of losing their pension benefits unless they secure jobs in Teamsters shops.
“Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry,” Teamsters General President Sean M. O’Brien reportedly said.
The Teamsters had been embroiled in heated — perhaps nasty — contract negotiations when officials from Yellow informed them that they would miss a $50 million benefits payment. A walkout was initially planned for the first week of August. After strenuous talks, the Teamsters tapped the brakes. Over the weekend, Yellow notified the union that its rank-and-file members needed to look for other employment as one of the largest trucking operations speeds into bankruptcy.
The 99-year-old company won’t see its centennial celebration as CDL holders that operate its 12,000 rigs are about to be sidelined. Company officials indicated they stopped taking new orders. Yellow earned a reputation for slashing freight rates to gain a business advantage, counting Walmart and Home Depot among its household-name clients.
Although competitors such as Old Dominion continued to turn steady profits through industry highs and lows, Yellow teetered on closure at several junctures. During the pandemic, Yellow managed to secure a $700 million federal loan by putting up about 30 percent of the operation as collateral. Now taxpayers are left holding the bag, so to speak, until the corporate assets are sold off to pay down existing debt. The outfit reportedly carries upwards of $1.5 billion in debt.
Financial experts indicate Yellow’s demise was caused by a series of self-inflicted wounds. Back in 2003, Yellow bought out Roadway, a unionized competitor. In 2005, Yellow leveraged a $1.37 billion buyout of USF just before the recession hit. Yellow also, reportedly, failed to maximize the potential profitability of these acquisitions. But what seems almost counterintuitive is that Yellow appeared to be turning a corner. After losing approximately $270 million over three consecutive years, Yellow posted a $21.8 million profit in 2022.
Sources:
https://teamster.org/2023/07/teamsters-notified-that-yellow-corp-operating-companies-have-closed/
https://www.wctpension.org/participants/plan-summary/participation-and-vesting
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