The International Brotherhood of Teamsters said late Sunday that it had been notified that less-than-truckload carrier Yellow Corp. has ceased operations and will file for bankruptcy.
“Today’s news is unfortunate but not surprising,” stated Sean O’Brien, Teamsters general president. “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.”
The 99-year-old company posted signs on locked gates at its terminals at noon on Sunday, saying it was ceasing all operations.
After a heated battle with Teamsters over the better part of the past year, Yellow (NASDAQ: YELL) was unable to push through a proposed change of operations it said was the linchpin to its survival. A breaking point occurred on July 15 when Yellow missed contractually required payments to Central States Funds, a multiemployer fund manager overseeing its health, welfare and pension benefits.
The debt-heavy, cash-strapped company had previously asked to defer the payments with interest, but that request was denied by Central States even though similar requests had been granted in the past. The company’s delinquent status with the group would have left employees at operating companies Holland and YRC Freight without health insurance. However, a last-minute extension provided by the fund allowed Yellow to avert a planned work stoppage.
Teamsters announced the same day that it had officially reentered negotiations with the company for the first time in weeks.
However, the damage was done. After weeks of customers and brokers pulling freight from its network over concerns it would ultimately be forced to close, time ran out on the clock before it could hatch out a contract with the union, which in turn was expected to produce a lifeline from its lenders.
No change of operations, no more Yellow
The company maintained all along that the Teamsters’ refusal to approve the change of operations would eventually lead to its closure.
Yellow embarked on a second phase of a multiyear restructuring called “One Yellow” nine months ago. The plan was to follow similar changes the union blessed across its western network (Reddaway) last year. Initiatives included consolidating redundant terminals, increasing the number of utility positions requiring drivers to move freight on the docks and upping the percentage of third-party capacity the carrier could use, among other changes.
The goal was to emerge from the overhaul as a super-regional carrier with a national service platform and a much leaner cost profile. Yellow was also hoping to use momentum from the turnaround to restructure $1.3 billion in debt that matures next year.
However, the second phase would involve consolidating operations at regional carriers New Penn and Holland with its national freight network — roughly 70% of the network. The proposal received pushback initially, was reworked by Yellow and then officially rejected by the union.
Months of bad blood and finger-pointing would ensue.
Some hope for a resolution was seen when both parties agreed to pull forward negotiations on the five-year collective bargaining agreement and negotiate those issues (including wages) in conjunction with the change of operations proposal. That plan would be short-lived, however. The Teamsters decided it would not give any more after years of wages, benefits and work rules concessions it estimates to be in the billions.
Running out of options, Yellow sued the Teamsters for breach of contract. In the $137 million lawsuit filed late last month, the company said the union didn’t have the authority to block the operational changes and that the Teamsters violated the collective bargaining agreement by backing out of a required hearing on the matter.
As the months-long back-and-forth continued, Yellow’s financial position weakened, with the carrier losing market share and booking losses. Its credit ratings would take another hit as well.
Calls to senators and the White House and last-minute negotiations with Teamsters would prove fruitless. Yellow’s lenders, which include the U.S. Treasury, didn’t offer much of a lifeline, only agreeing to temporarily waive debt covenants.
The company lost a hearing to block the strike in a federal court earlier this month, but was ultimately spared the work stoppage when Central States provided the extension. Legal counsel for Yellow was hopeful more time could save the carrier.
“Your Honor, the situation here for Yellow and the stakeholders is binary,” said Yellow attorney Marc Kasowitz in court on July 21. “If there’s a strike, the company is gone. If a strike is at least temporarily enjoined … then there’s some possibility for the company to survive.”
The bankruptcy leaves 30,000 Yellow employees, including 22,000 Teamsters, without jobs.
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Dick Bischoff
Soup Line Sean got what he wanted, way to go buddy!
Good Day
cfdockman
Good luck to everyone.
RENEGADE
Lets get it straight. The “refusal” is because of Yellows mismanagement tactics that were based solely on Greed & Spite, as well as Stupidity & incompetence DH! Not to mention their inability to make “SENSIBLE & ECONOMICAL” business decisions based on Greed & Spite to cover their asses on shareholder, financial intitutions & governmental loans that were SQUANDERED & ABUSED to line their pockets FIRST!, & then try to make up the money through Senseless Premeditated attempts at previously REPEATEDLY FAILED approaches to turn the business in a positive direction. And that includes INSIDER TRADING, MANIPULATION OF STOCK & MISLEADING STOCKHOLDERS via “BOGUS RESTRUCTURING TACTICS” with NEW SIGN ON BONUSES, PREFERRED SHARE DISBURSEMENT ON SAID RESTRUCTURING PLANS that were Filed with the SEC! As for Obrian, NO COMMENT! He knew damn well what he was doing from the jump, isn’t that right Mr Boston Investment Co?? But I digress. I recall a international “suit” that betrayed the organization in the past but, that’s “nicked in the black” now. There were MANY OPTIONS to keep this once PHENOMENAL COMPANY operating, but that would entail a MEYERS WAY of dissecting the Blood Sucking Current MISManagement team starting with DH, MM, ML, ME plus Many Many more USELESS MONEY HUNGRY UNQUALIFIED A-HOLES FROM WITHIN! The SEC should get out their Microscopes, put on some Hazardous Material Suits & dive in their asses to see what they can find! FOLLOW THE MONEY TRAIL! IMO of course. Hope you ALL BURN IN HELL & WIND UP ON SKID ROW PENNILESS YOU ROTTON STUPID NO GOOD BASTARDS! PS I COULD HAVE TURNED THIS COMPANY AROUND IN 12 – 18 MONTHS OPERATING AT LEAST AT A 0.965 WITH A FEW OF MY INDUSTRY FRIENDS WITH MORALS & BETTER BUSINESS SENSE THAN THESE FKSTICKS, “GUARANTEED”!! AND IN 36 MONTHS, THE RATIO WOULD BE EVEN LOWER! & YELLOW WOULD BE THRIVING!! EFFORTLESSLY! BUNCH OF LOSERS! YOU ALL HAD ONE FKN JOB, ONE! AND YOU FKD IT ALL UP! 🖕🏽
Francis w Gallagher
Screw you Sean O’brien
Bardo
This is why I’ve never understood or backed the presence of labor unions. Instead of making life better for workers they only make it much worse by demanding union fees as a self-interested and third party that complicates and derails negotiations made between employers and employees. I know the labor laws of my state and I know my rights. I don’t need to pay someone else to interpret them for me or ensure that they are applied to me.
Mike
Yellow was finally trying to modernize and the Union fought them every step of the way. Yellow was very transparent with the Teamsters that they were running out of money. Sean O’Brien was very transparent with the Teamsters that he didn’t care and would let it go under. For some reason, the rank and file didn’t pick up on what was happening until it was too late. I truly think all these people thought the union glory days were coming back.
The Union miscalculation is pretty obvious, but there were two key miscalculations on Yellow’s part and all related to extremely poor change management which is a death sentence in today’s rapidly changing industries. Merging the companies was a disaster. I’m sure the executives never calculated how much money, customers and bill count they would lose when their regionals went the YRC way. A downgrade in many areas combined with poor training, poor planning, poor execution, and a different set of union rules to work with at almost every terminal. It quickly sucked the CARES loan up.
The second misstep was the super carrier initiative. Again, YRC led the way, which was another poor decision from executives. This was a carrier with no history of on-time shipping, ridiculously unproductive union work force rules, and it’s suddenly going to imitate FedEx operations? You’re telling me none of the execs foresaw their union workforce full of old men only driving linehaul for 25 years refusing to change? This was a restructure that depended on precise schedules and execution, and they had no help from the union as most employees refused to take the dock/driver role out west along with many terminal managers and executives who had no idea how to execute the process. The execs tried to adjust the contract so the dock role would work in the central regions, and thus the huge Union fight, no compromises, and the rest is history.
Hoping for the best for the 30,000 people looking for jobs, especially those who were never part of the problem, and tried to faithfully execute through the changes. Many longtime veterans in that company. It will be a reality shock in a new role and Company.
Pete Stevens
Yellow executives need to read the first paragraph of this article and then reread it instead of pointing fingers at the government who’s bailed them out financially twice. Teamsters have taken many various cuts to benefits and pay and pto all while the 60+ executives take their ridiculous bonuses for running this company into the ground! Good riddance Yellow!
Cam
Since Yellow is now headquartered in Nashville, let the Vanderbilt school of business study how the company was managed and the truth will show that the Teamsters are not to blame!