MOST EMPLOYEES FIND A HOME WITH NEW ABF STRONG BUSINESS STAVES OFF LAYOFFS IN WAKE OF MERGER

MOST EMPLOYEES FIND A HOME WITH NEW ABF STRONG BUSINESS STAVES OFF LAYOFFS IN WAKE OF MERGER

Most of the executives have cleared out their desks, but a majority of drivers and dock workers from Carolina Freight Carriers Corp. and Red Arrow Freight Lines Inc. still have jobs with their new employer - ABF Freight System Inc.

The two troubled carriers were merged into ABF on Sept. 25, the beginning of what is probably the busiest week of the year. With ABF agreeing to handle the two carriers' freight at the discounted prices through the rest of the year, it has been able to retain more of the business than it expected and the companies employees.The two carrier's parent, WorldWay Corp., was purchased by Arkansas Best Corp., the Fort Smith, Ark. owner of ABF, in August.

"Business is pretty strong with the combination of the two, so it's not nearly the layoffs everyone has indicated would take place," said David Stubblefield, ABF's president. Estimates are that 4,000 employees will eventually lose their jobs.

"I talked to a manager in one major city," Mr. Stubblefield said. "He had everyone from ABF working, and everyone from Carolina, and the folks from Carolina who were on permanent layoffs, he was trying to reach them."

Mr. Stubblefield said ABF's policy of honoring Red Arrow and Carolina contracts and rates through the end of the year has meant that freight has not fallen off as much as anticipated. He said new contracts and rates will be negotiated toward the end of the year, and that and normal seasonal decline will probably lead to a drop in business, and employment levels.

He said how many are eventually laid-off will depend on how much of the Carolina and Red Arrow business they are able to retain. At the time of the merger, ABF had 13,413 full- and part-time employees, of which 11,125 were Teamsters. The two WorldWay carriers had about 7,400 full-time employees.

Mr. Stubblefield said that business is strong at the moment, after months of soft demand across the industry.

"Last week is always going to be the busiest week of the year," he said. ''It ends a quarter, and it's in a fall season. It's holding up so far in October."

Analyst H. Perry Boyle with Alex. Brown & Sons in Baltimore said that overall freight levels have not picked up in the LTL industry. He did not predict a serious improvement until late in their first quarter at the earliest.

Meanwhile, Mr. Boyle said it makes sense for ABF to continue to handle the Carolina and Red Arrow freight, even at deep discounts.

"They're getting a better understanding what network balance of freight will look like, and what their cost structure will look like. That is what they need to know to find out which freight doesn't make sense for them," Mr. Boyle said.

The change is coming down hard at Carolina's Cherryville, N.C., headquarters, where Mr. Stubblefield said that only 140 of the 400-plus staff remains, and many of them will be gone soon. Red Arrow had a much more modest office staff at its Dallas headquarters, which also has been downsized significantly.

Lary Scott, the last chairman of WorldWay, is working for Arkansas Best for Robert Young III, its chief executive. James Hertwig, whom Mr. Scott brought in from Con-Way Transportation Services to run Carolina, has left the company. WorldWay's last proxy statement said Mr. Hertwig had a contract calling for two years of pay after termination at not less than $135,000 a year. Mr. Scott's contract runs through March 1998, at not less than $250,000 a year.