YRC Worldwide's truck drivers and other employees, represented by Teamsters Union, have rejected a proposal to extend the current labour contract to 2019.
Members voted over the past several weeks and ballots were counted Thursday. The proposal to reduce pay and benefits in order to help the financially-struggling truck giant was rejected 61 percent to 39 percent.
"Our members have made huge sacrifices to keep this company alive and a majority made the decision not to sacrifice anymore," said Tyson Johnson, director of the Teamsters National Freight Division and co-chairman of the Teamsters National Freight Industry Negotiating Committee (TNFINC).
YRC's employees have made sacrifices in the past, beginning six years ago with a 15-percent wage concession from the National Master Freight Agreement rate and a 75-percent reduction in pension contributions, the union claims.
"Our members have sacrificed billions of dollars in wages and pension benefits over the past five years and yet the company has been unable to recover from the disastrous policies of the previous management," said Jim Hoffa, Teamsters general president and co-chairman of TNFINC.
YRC is seeking $1.15 billion dollars in loans following annual losses and increasing debt since 2007. The company's was on the verge of bankruptcy in 2011 and come February 2014, has to start repaying debt of more than $1 billion.
"While we are disappointed in the outcome of the vote, we believe that timing of events related to our refinancing did not work in our favor. Many employees had already returned their ballots prior to Dec. 23, the date the company announced it had a refinancing agreement in place. We believe that was information employees needed to make a fully informed decision," said YRC Worldwide CEO James Welch after the vote results were released.
"Despite the vote results, it is business as usual as we have approximately 15,000 trucks on the road today serving 250,000 customers. We will keep our customers, employees and stakeholders advised of our efforts," Welch said.
Welch is reportedly scheduled to meet with lenders Friday in New York to discuss the debt refinancing.
In November, BB&T Capital Markets analyst Tom Albrecht said that the company could get debt relief even without a contract extension, if operational results were to improve, but that it was unlikely.
The company's shares had more than doubled to Wednesday's close since YRC said on December 9 that it expected annual savings of up to $100 million if union members voted to extend the contract. On Thursday, shares dropped 17 percent on early speculation that the union might reject the company's proposal.
