ABF Teamsters Reject Wage Cut

Teamsters at ABF Freight System rejected a 15 percent wage cut by a solid majority, sending the less-than-truckload carrier and union back to the negotiating table.

The ABF employees rejected the proposed wage cut 56 percent to 44 percent, with about 80 percent of the company's 7,400 union workers participating in the vote.

The rejection of a wage cut and gain-sharing plan negotiated by the international union will make it tougher for ABF to return to profitability, transportation analysts said.

ABF, the country's fourth-largest LTL carrier, lost $99 million in 2009, compared with a $45 million profit in 2008. It had an operating loss of $35.7 million in the first quarter.

The tentative pact with the Teamsters would have saved the less-than-truckload carrier $60 million to $75 million a year -- up to $225 million over three years.

ABF said the wage concessions would level the playing field with larger unionized rival YRC Worldwide, which won a 15 percent wage cut from its Teamsters last year.

"ABF now must rely on industry pricing improvement and federal legislative pension reform," said Jon A. Langenfeld, a transportation analyst at R.W. Baird & Co.

"We would not be surprised if the company goes back to the negotiating table with the Teamsters," said Justin Yagerman, an analyst at Deutsche Bank Equity Research.

The Teamsters will "regroup," said Tyson Johnson, director of the union's freight division. "Our first priority continues to be the members' best interests," he said.

The Teamsters leadership negotiated the wage cut after discussions with ABF executives and a review of the company books pointed toward mounting losses in 2010.

"We took a proactive approach to help ABF get through the worst economic recession since the Great Depression, but our members have rejected the plan," said Johnson.

-- Contact William B. Cassidy at wcassidy@joc.com.