“All workers and employers should take note of our experience with the International Brotherhood of Teamsters and worry.”
By Wolf Richter for WOLF STREET.
Yellow Corporation, formerly YRC Worldwide and formerly one of the largest truckers in the US with 30,000 employees and 12,000 trucks, filed for Chapter 11 bankruptcy protection and said that it will liquidate, three years after having received a $700-million taxpayer bailout in July 2020 that has been condemned in maddening detail by the Congressional Oversight Commission.
On July 28, it told employees that it would shut down and laid off its non-union employees. It then also laid off 22,000 employees who are members of the International Brotherhood of Teamsters. Many drivers and other employees are likely to get hired by other trucking companies.
Yellow said today that it “has partnered with the American Trucking Associations ATA to launch its first searchable job database, specifically for Yellow employees. This initiative intends to streamline job placement while giving ATA member companies the ability to connect with thousands of skilled freight and operations professionals, mechanics, logisticians and more.”
Its customers have already moved on to other trucking companies. The freight business goes on, and trucks move a big part of it, but it’s going to be without Yellow.
The last two major trucking companies to file for bankruptcy and liquidate were New England Motor Freight, a less-than-truckload (LTL) carrier, in February 2019; and truckload carrier Celadon, brought down by accounting fraud, in December 2019. Celadon was the largest truckload carrier ever to file for bankruptcy. But it was much smaller than Yellow.
Yellow was a major contributor to the Central States Pension Fund, which was among the nearly insolvent multiemployer pension funds that got bailed out last December by the government.
The company has long been bogged down in debt — as of Q1, it had $1.47 billion in long-term debt – resulting from a series of acquisitions of competitors – the two largest were Roadway in 2003 and USF in 2005 – whose operations it then failed to fully integrate for cost savings.
The US government, Yellow’s largest creditor following the misbegotten bailout in 2020, is owed $700 million in unsecured debt, due in September 2024; the government also received 29.6% of the shares of Yellow. We hope that it dumped those shares in recent days into the laps of the meme stock traders, but probably didn’t.
A group led by PE firm Apollo Global Management is the second largest creditor, owed $567 million in secured debt, due in June 2024.
Yellow listed the top 30 of its other creditors in its bankruptcy filing, including BNSF Railway, Amazon, Home Depot, and Union Pacific.
Yellow said in its statement that it expects to enter into a debtor-in-possession (DIP) financing agreement that would allow it to wind down operations, including paying wages and benefits incurred before the bankruptcy filing.
Among its assets are 166 freight terminals, per its annual report for 2022, that other trucking companies might be interested in buying. It leases another 142 terminals.
In its Q3 2022 earnings call, it announced that it would try to sell 28 terminals. In July, it pulled off a big one; it sold a 24,000-square-foot terminal in Compton, California, for $80 million. Other terminals aren’t going to be worth that much.
Proceeds from the sale of the terminals and other assets will be used to pay back the DIP financing, which has priority over other creditors, and the remaining proceeds will go to creditors under the supervision of the bankruptcy court.
The stock will be delisted and will trade over the counter, but won’t represent anything anymore. Stockholders will get to ping-pong the shares back and forth amongst each other until they get tired of it. In early trading today, the shares gave up one-third of the crazy meme-stock spike since the July announcement.
CEO Darren Hawkins blamed the Teamsters for the demise of Yellow in stunning announcement.
He dedicated a big portion of Yellow’s press release about the bankruptcy filing to a review of the company’s issues with the Teamsters. For a CEO to make this public statement is just stunning.
There is lots of blame to go around, including and particularly with management, going back many years. But here he is singling out the Teamsters union as an organization (he is specifically not blaming the union members, but is lauding them, all of them).
Major excerpts:
“All workers and employers should take note of our experience with the International Brotherhood of Teamsters (“IBT”) and worry.
“We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.
“Several years ago, Yellow recognized that it needed to modernize operations to compete with non-union carriers that increasingly dominated the industry. Yellow developed the common-sense ‘One Yellow’ business plan to make Yellow more competitive while strengthening jobs and improving customer service. One Yellow called for raising employees’ pay and creating more jobs, while providing stability for all stakeholders. One Yellow aimed to put Yellow on the right path, fixing legacy issues created long ago, making Yellow the industry-dominant company it once was.
“The operational changes necessary to implement One Yellow required approval from IBT leadership.
“In August 2022, IBT leadership approved the first phase of One Yellow in the western U.S. and the plan was a success: redundancies were reduced, freight departed terminals earlier and customer service improved.
“Unfortunately, despite Phase One’s approval and success, IBT leadership implemented a nine-month blockade, halting the remainder of Yellow’s business plan. This caused Yellow irreparable harm.
“In the spring, while their blockade of One Yellow was ongoing, IBT leaders demanded that Yellow open its contract nearly one year early, and Yellow agreed, yet its goodwill was met with hostility. Instead of negotiating a contract, Yellow faced months of public insult from IBT, including a social media post depicting a tombstone with Yellow’s name on it along with the dates 1924-2023.
“This ruthless campaign included repeated public taunts calling for Yellow’s demise and was intended to put Yellow out of business. At the same time, IBT leadership spread false claims that Yellow was trying to exact ‘concessions’ from its union employees. Nothing was further from the truth.
“Combined with months of refusals to negotiate, IBT leaders’ campaign against Yellow caused grave concern among investors, drove away customers, and put 30,000 jobs at risk.
“By summer, Yellow’s losses from the delay in implementing One Yellow had reached more than $137 million in adjusted EBITDA.
“On June 26, 2023, Yellow filed a lawsuit against IBT citing breach of contract and loss of enterprise value. The lawsuit is pending, and the damages have grown since.
“As the IBT continued to stonewall and publicly disparage Yellow, Yellow management kept employees informed that the situation was increasingly dire.
“Yellow made it clear to IBT leadership that their blockade of One Yellow severely constrained Yellow’s cash flow and its ability to refinance debt.
“Yellow was forced to take measures to preserve liquidity to give IBT leaders more time to finally engage. Instead, IBT leaders announced a strike against Yellow’s then-significantly wounded company. Customers fled and business was not recoverable.”
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“including a social media post depicting a tombstone with Yellow’s name on it”
Yet another company destroyed by a Facebook post.
Yellow destroyed itself by diving into a cesspool of debt years ago. The only thing strange about its bankruptcy filing now is that they reportedly filed for Chapter 11 which is reorganization rather than liquidation and total closure of the firm.
Yellow filed Chap 11 to wind down operations and liquidate. Read the article before commenting.
I read your article and many other much more detailed accounts and they should have filed for Chapter 7 bankruptcy as they are no longer a going concern and are not ‘reoranizing’ but rather headed self-admittedly to full and complete liquidation.
Chapter 11
While Chapter 7 is about liquidating a business or personal debt, Chapter 11 is designed to reorganize crippling debt while keeping a business open and maintaining day-to-day operations. Many large companies file under Chapter 11 of the Bankruptcy Code rather than Chapter 7 because they can still run their business, control the bankruptcy process and attempt to become profitable again while seeking protection from their creditors. As in other bankruptcies, collection efforts by creditors are automatically halted. Management continues to operate the company, but all significant business decisions must be approved by a bankruptcy court, which can grant complete or partial relief of the company’s debts and contractual obligations. Typical contracts and debts that can be cancelled under Chapter 11 include supply and vendor contracts, loans, real estate leases, and other obligations. Generally, a Chapter 11 bankruptcy can take six months to a year in court, depending on the complexity. It is also a more expensive form of bankruptcy than Chapter 7, but the goal is to return a business to profitability.
Chapter 11 is frequently used for wind-downs and liquidations, including by Bed Bath & Beyond, which said in the announcement of its Chap. 11 bankruptcy filing that it would liquidate. And it did.
https://wolfstreet.com/2023/04/23/after-wasting-11-6-billion-on-share-buybacks-to-return-value-to-shareholders-lol-bed-bath-beyond-goes-bankrupt-will-liquidate/
What happens to all that inventory in a store like Bed Bath & Beyond when they file for Chapter 11 Bankruptcy.
@swamp creature
The reddit “stonks!” crowd will flock to the meme store to buy 90% off scented candles and lotion. They’ll finally smell decent for a few weeks until the GameStop stonk goes to the moon and their Olive and Tumeric perfume runs out.
Does perfume work on the moon anyways? I’ll tweet the prophet Mr. Musk, he’ll know. He’s the chosen one after all.
I have a good friend who retired from Roadway around the time they were bought by Yellow.
Chapter 11 basics link
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
You know exactly why. Apollo is going to get a whole trucking company for pennies. And without any legacy union contracts. Even if Yellow drivers immediately unionize, the legacy is gone. They got a whole new fleet of trucks on our dime from a loan that won’t be repaid. Absolute bargain here for them.
Hahaha! Apollo already did that once.
apollo got paid with $700m govt loan
of course I put union at 70% blame
saw 30 year union driver say he was planning on playing golf
but that his pension was gone
that my friends has nothing to do with company
—-
but central states pension fund has been stripped many times by mafia
so many dead companies were rolled into these pensions
it’s great reading for 1% on how to strip remaining assets
I also find these recent Chapter 11 reorganization-liquidations strange. How often are corporate officers paid a retention bonus or similar compensation in a Chapter 7 case? Probably never.
A so-called “liquidating” Chapter 11 is not unusual vs Chapter 7. In the latter, management is replaced by a Trustee who liquidates the assets and who might not cooperate with management when they seek legal “releases” from liability with respect to the collapse of the business. With a hostile Teamsters union on the Creditors Committee, such an outcome could occur, hence management wants to stay in control by overseeing a “liquidating” Chapter 11 process.
SoCalBeachDude (who I’m betting is not a lawyer):
Chapter 7 & 11 can both be used for liquidation; under the right circumstances, Chapter 11 gives management a little more control over the liquidation process.
Arguing with Wolf on this type stuff is like talking nuclear physics with an Alzheimer patient.
Maybe SoCal was less correct than Wolf.
Please don’t be subservient to Wolf. I’ll leave it at that.
Wolf knows a lot of stuff that’s obvious.
Occasionally I think he picks at some commentators more than deserved.
Not in this case, but others.
More generally though…
Mr. Javert: Can you us give the name of any economists or financial writers who can accurately predict where our economy will be 10 years from now ?
I’ll settle for 5 years ? Assuming no WW3 or other cataclysmic event occurs.
What is their batting average with predictions… lots of permabears, permabulls, etc.
How accurate is the cliche “economists have predicted 5 of the last 3 recessions” ? It may be 6 out of the last 3 if another year goes by w/o one.
Those are false positives. The GFC in contrast was for some/many a huge false negative. Were their careers (economists, financial pundits) impacted for not predicting it in 2005 ?
2006 ? 2007 ?
I’m not suggesting economists or financial people aren’t smart, but I am suggesting they may not be as smart as many are given credit. As compared to perhaps certain engineers (scientists, AI specialists) … although that is admittedly somewhat an APPLES to ORANGES comparison.
B.t.w. I was a very mediocre software engineer; worse a failure, well yes, at AI research (mid late 1980s)…mostly my shortcoming, partly the company (per hindsight).
Opinion: Top notch AI researchers are smarter and more interesting (BOTH) than the financial experts on this planet. But even they might have difficulty in predicting the economy.
To force a reduction in staff so they can’t be forced to sell portions of the company complete with unionized employees? Before a company with the same board members buys up the capital equipment at discount
why was it so crazy for the CEO to blame the union? unions are horrible, they are similar to government – completely non-productive and a leech on society. the dock workers union at the LA Harbor is one of the reasons for the problems with the supply chain.
if we have a problem with employees not being paid enough, we need to address it by returning manufacturing jobs to our country. and stop the flood of cheap workers crossing the border. it is the richest people that want to source cheap products from china and hire cheap labor domestically.
in the same way that higher rates always solve a lack of demand for Treasuries, more jobs and fewer workers would solve the problem of insufficient worker pay.
but the real problem with worker pay is inflation, which robs wage earners of the value of their earnings. once again, the rich love inflation because it increases their profits and asset values.
the WHOLE problem are government policies that are 100% focused on making the rich much richer.
there is an article on the Federal Reserve Bank of Richmond site that clearly states that there is a debate whether QE even stimulates the economy (dated third quarter 2022). so why would they do it? because it rescues asset prices (the paper didnt say that, that is my comment) what is clear is that the government fiscal policies are NOT intended to help working class people, it is there to help the super-rich only.
unions are not the solution to anything.
I think you are wrong.
In a free market, companies can freely consolidate (subject to anti-trust concerns), and employees should have that same right. To put restraints on union organization is anti-competitive, anti-market.
There is no legal requirement saying a company has to reach agreement with a union. Yellow could have hired non-union employees, like its competitors, by attracting them in the employment market. The fact they didn’t do this indicates they viewed the union contract as the best option.
If union leaders made harmful remarks that negatively impacted Yellow’s business, that’s not a union anybody should be associated with. Other companies and employee groups should take note. But to say all unions are bad is irrational and anti-market.
Bobber, by definition, union organization is monopolizing labor, creating the same anti-trust concerns that companies consolidating would.
In fact, unions were considered to violate the Sherman Antitrust Act until the Clayton Act carved out an exception for them.
Einhal if there were never unions ,people would be labor slaves .go back and look at history .I was union most of my life . If you didnt work were sent back to union hall and sat on bench . If enough employers won’t hire you ,then no job
There is no law that forces a company to hire union workers.
Look at Delta, the pilots are unionized and the flight attendants are not, while over at Southwest, the pilots and flight attendants are union members.
Arnold, that’s technically true, but it’s misleading. While there is no law that forces a company to hire union workers, the NLRA prohibits terminating workers who unionize, so there IS a law that forces a company to continue the employment of union workers.
Companies colluding to only sell their product for a certain price = illegal price fixing.
Employees colluding to only sell their labor for a certain price = legal & celebrated.
Einhal,
In theory a union could represent a monopoly over labor, if the union became too large. That should be handled via anti-trust regulation, not outlawing of unions.
Your arguments are anti-free market.
Also, the Sherman Antitrust Act was passed in 1890, about 30 years before women had a right to vote in the US. During that time period, the country’s view of labor was no better than its view of women. Labor proponents were quickly labeled communists.
Most people believe this extreme support of business led to the Great Depression. People wised up and demanded the New Deal in the 1930’s.
I wouldn’t look to the Sherman Act as support for anything.
bobber – i would say that I think the government should look very carefully at corporate mergers. in most cases, they reduce competition between firms, so they should not be allowed.
when you say “extreme support of business” that is way too broad. there are many different policies that are called pro-business that are really anti-competitive.
the biggest problem at the moment are government policies that increase costs in the areas of insurance, healthcare, higher education, housing, etc.
the problem isnt that people dont earn enough, it is that the cost of living has been made so much higher by government intervention/funding. take higher education for example. this nonsense about writing off student loans is a hand-out to the higher education industry. when people dont think they have to pay back loans, they dont care about how much the education costs. actually, we should be reducing government funding of higher education, which would give the industry an incentive to reduce costs. the same thing applies to healthcare. the same thing is true for housing. cut the government participation in the mortgage market and force mortgage originators to keep their mortgages on their books, that would cut the overfunding of homes and lead to more affordability.
government has done nothing except create bubbles and financialization of industries that then leads to massive inflationary pressures.
Gametv, I agree with almost all that. Too much government subsidization is a huge problem. I think unions actually help solve the problem. Unions are a free market solution that increases worker wages, so workers don’t need government welfare.
Walmart employees aren’t union, and that’s why lots of them are on various forms of welfare. Retail, restaurant, transportation, and many manufacturing and service employees barely get by.
Unions were necessary in the past because of abuse-of-power by management. I’ve been a unionized worker in the past, including being a Teamster, and believe the power has swung too far the other way.
At me last such job, the common joke was:
“What are you up to today?”
“Oh, as little as possible.”
I’ve never personally witnessed management trying to screw it’s workers but unions like to say that is the case.
Gee how many cheap labor countries and southern states have a organized labor movement?
You may not have noticed but quality of work performed and quality of products is directly related to quality of life.
I suggest you read the labor history of America and the struggles of the American worker then look at the quality of life you get to enjoy in this country.
Organized labor is organized which organization is the key to efficiency.
So last 3/4 of your argument actually describes why unions exist in the first place. Union formation is usually a reaction to real or perceived exploitation by the very people you call on to solve the problem through immigration controls and/or onshoring etc. The very same group of people causing the problem are expected to solve it, I’m not sure how, neither are the workers who turn to unionization.
Aside from allowing workers to leverage collective power, unions IMO are inflexible and cumbersome organizations that inevitably end up corrupt and a drain on the economy. In the case of 1 union here in Canada I know about, they themselves facilitate illegal migrant work.. I don’t even want to get into the details because it’s completely gross and ofcourse the leadership pocket the money.
So largely I disdain the unions as well, and your solutions sound wonderful, but humans act on incentives, crush the unions and that’s one less incentive for anyone with the power to make the changes you propose to actually do it.
“I don’t even want to get into the details because it’s completely gross and ofcourse the leadership pocket the money.”
Cool story bro.
Unfortunately there have been problems in the past with union management. But, if you think unions are unnecessary, read ‘The Jungle’ by Upton Sinclair to see what working conditions could be like without unions.
Unfortunately (but predictably) the most insulated unions have tended to be the worst actors here in the US (West Coast chokepoint port “longshoremen” until recent Panama canal widening and public school teachers/government workers…forever).
Their abuses (and the autoworkers’ unions’ before them) tended to create a pretty bad image for unions as a whole (most of whom got annihilated by foreign competition…which was originally embraced wholeheartedly – at least in part – because unionized industries tended to have abnormally large inflation rates…see education/healthcare industries today…).
In general, management/union negotiations require measured judgment and restraint…something in pretty short supply in the US for the last 60+ years.
As Wolf said, there is more than enough blame to go around.
The union-business relationship has always been a pendulum. Employees organized because management treated them poorly, provide terrible and unsafe working conditions, and barely paid a living wage. Eventually, the pendulum swung as unions gathered enormous influence due to their size and resulting bargaining power. Businesses made calculations that agreeing to contract demands was in their best interest and repeatedly caved in, eventually causing labor pricing that was not competitive with 3rd world countries. The automotive industry was particularly impacted. So did the unions cause the issues, or did management cause them? Chicken and egg discussion, but without unions, there would be terrible working conditions and even worse income distribution. But by giving them too much power we created the trade deficit and the downfall of many US businesses and industries, and ironically, the loss of millions of jobs to undeveloped and developing countries. To say that unions are the problem is only half of the answer.
“eventually causing labor pricing that was not competitive with 3rd world countries.”
Our econ seminar got into this and the prof pointed out main reason for the US becoming less cost competitive isn’t due to unions and labor costs–and in fact as far as labor costs go, ridiculous executive salaries and golden parachutes are a factor there too. Instead, it’s due to the USA becoming so reliant on rent seeking parts of the economy like overpriced healthcare, overpriced college education and of course the overpriced housing bubble and rent itself. All these things increase cost of living and force workers to demand higher salaries just to survive let alone to raise families, but without producing value.
The scary thing that was pointed out, is that China has become so cost competitive mainly not because of all the underpaid labor claims, but because it’s economy depends so much less on rent seeking. This is seen in a lot of stats, for ex. they now have by far the largest economy in PPP terms which shows Chinese people are able to afford cost of living more and more on their salaries esp basics like healthcare, housing and education. So they don’t need to demand as high salaries because their buying power is still high. But they’ve also moved way up the value chain in last decade, so they’re able to make high quality products, pay their workers a good salary (for their living costs there) and keep costs of their products low. The prof pointed out this was a big reason a lot of the classical economists warned how capitalism can eat itself alive if it isn’t careful to focus on actual productive activity and fails to control costs of living and rent seeking, it becomes cost uncompetitive. We’re also seeing this with the writers and actors strike that’s causing huge loss of production and revenue, it’s not just in California but a big driver of it is people in the industry can’t afford rent, healthcare and basic costs of living. American cars cost more partly because workers have to afford needlessly ballooning costs of healthcare and kids college costs that other countries don’t have.
Miller,
Your post makes me wish there was someway to recommend or highlight posts on this site so other readers can appreciate well written and logical posts.
I worked as a manager for 25 years at a unionized company. My responsibilities were to direct 40 to 50 tradesmen. I cannot think of one circumstance where the company benefited because they were union. It was a profitable company that never was financially stressed and before I started in 1977 the company had already created an environment that worker productivity wasn’t a priority. It was interesting to see the union guys in action. Their priority was themselves, then the union then the company. This a generalization but 10% earned their keep, 80% did the absolute minimum and the rest were next to useless. In 25 years I never saw anyone fired. I retired at 55 burned out from babysitting children who were supposed to be men.
Union Tradesman ARE highly skilled professionals-Carpenters, Pipefitters, Electricians, Operating Engineers. These are not jobs that are done in a rush but are done accurately and these tradesman are trained to be as such.
There is a lot to what you say. I’ll put it like this – another “box car” falls to inflation… I know a little here because I used to be a truck driver 5 years before 1992 and from 1992 – 1997 I owned my own small trucking company before I became a car dealer in 2002. I used to service my fleet at night myself. I sold that trucking company to Orange courier in 1998. The trucking industry is super competitive. You need to be cutting edge to make it and some of these old companies have not been able to keep up. There are a lot of expenses and pricing can get cutthroat. I’ll agree with Yellow that the Union drove this company the final nail in the coffin. They were probably just hanging on but the union pushed them over the edge with their wage increase demands being Inflation the real problem. Inflation and debt is a big problem for all business right now. Many are on thin profit margins and the increases in inflation and recession beginnings are crippling cash flow creating disaster. When you put it all together, inflation with outrageous debts and recession, what we have is an economic train wreck, one “box car” at a time. These unions don’t get it they just understand their own inflation needs. More union caused bankruptcies forthcoming. I’ve been telling every business lately the same thing – either lower your prices or you’re going to go out of business. So the choices are going out of business as I’ve been watching one by one business fold. And what can they do? expenses are just too high. Big weeding out of massive oversupply commencing. One box car at a time for the this train wreck. But with DIGUISES(called other names as excuses) Here’s some box cars so far: CRE, first banks to go, Certain big Techs, B2B starting, actors/writers starting, on and on. Most retail should soon totally succumb to online megacorps like Amazon and Ebay. Lots of excuses but one big reason. The reason why this economy is a train wreck in motion and I don’t buy into none of the prosperity and employment numbers, is because all the prosperity has come from fake Fed printed stimulus and scams which now lie at the debt side of Washington’s(and Feds) balance sheet. It’s an entirely fake economy now turned Banana Republic because the debts incurred never count against the prosperity they make. It’s an entire fake economy total scam fraud. Just think if all that debt actually counted against its input like a family’s balance sheet. Everything is now slowly getting exposed one box car at a time because the scam is running out of validity. But if they can keep piling/printing infinite debt perpetually than theoretically the economy can go on growing forever in that sense since debts don’t matter. Who’s going to stop the madness? Stand up please. Im a slave as the benefit of my hard work is made worth-less(inflation) I remember seeing those Yellow tractor trailers all over the road in the 90s they were big. Another box car falls… Thank you for your service Yellow. Next up…
Gheeeez!
Evelyn , not once did mention the skill level of the men, indeed they could all do excellent work in their respective fields. The problem was their work ethic. Being union and an unbelievable difficult procedure protecting them, like I said most of them did the absolute minimum of work. I worked at a bottling plant for a major liquor company. Selling liquor is just one step away from owning a printing press.
If it wasn’t for unions, everyone would work 90 hours a week, and would be paid 50cents for their trouble. They are all that stops executives ripping their employees off even more than they already do
More union propaganda with no basis in reality. Not everybody worked in a factory. And not every works a 40 work week to this day.
gametv, your post asserting that “unions are not the solution to anything” demonstrates a profound ignorance of the history of the trade union movement across the Western world in both the broadening of the electoral franchise and the passage of significant laws protecting workers’ rights — most of which are now taken for granted, but required working people to fight for many, many years to achieve.
” profound ignorance of the history of the trade union movement across the Western world”
True…but there is also the much more *recent* history of the most politically powerful unions in the US (public education, government workers, and healthcare workers) which have been far, far, far less beneficial for the general public.
…just curious, after all the previous sturm-und-drang, here, figures please on percentage of current union membership of the employed population? Ten years ago? Twenty? Fifty?
may we all find a better day.
“Yellow made it clear to IBT leadership that their blockade of One Yellow severely constrained Yellow’s cash flow and its ability to refinance debt.“
Translation: we demand that you accept these proposed standards for the lousy business and shady decisions we’ve been running.
Union can be good and bad, in this case the union run the company into the ground. Some Unions are totally not connected with reality and totally not reasonable with competition.
Bullshit. read the crooked and dishonest financial history of the executives of the company.
When the CEOs and Board are at fault the status quo is to blame the damn workers.
He is NOT blaming the workers. He is blaming the union as an organization.
I guess the question is whether the union’s actions had the support of Yellow’s teamster members?
If the union had the support of its members to take the actions it did, then it seems the union was just acting as a representative of the workers. In which case, blaming the union is essentially the same as blaming the workers. If the teamster members didn’t support the union’s actions leading up to the bankruptcy, then I think blaming the union as an organization makes some sense.
Here is what he said about the workers:
“Yellow employees took great pride in servicing customers from big box stores to small family businesses across America. Its 30,000 freight professionals, both union and non-union employees, were the unsung heroes throughout the pandemic, delivering goods to every state, ensuring that our supply chain kept moving and our economy remained strong.”
So the CEO doesn’t take much responsibility and pit the workers vs the union. Great. Welcome to Corporate America, where salary of CEO to average workers are getting larger and larger every day but when the SHTF, it’s someone else’s faults.
Not sure what would happen to America w/out unions when the corporation basically owned the political class. In the not distant past, unchecked capitalism is not very good to its workers.
CEO made sure to separate the two, noted employees contributions and how its rare for people to stay at same shop for 30-40 years. Given company’s situation they should’ve recognized situation and worked with management. Using the same tactics for UPS (doing incredibly well/financially strong) and Yellow makes no sense. Union forced it past breaking point after proposing strikes, knowing their customer base would shift deliveries to other firms. The big winner is non-union shops. Also think its good lesson for government, would rather lose $700m here so when semiconductor industry says it needs billions to support R&D, we can point to this and say gov’t has no role in propping up private sector.
This has been a poorly run company for decades.
Teamsters already agreed to massive paycuts back in 2011 when Yellow restructured and wiped out all of the share holders equity.
Expect Farley and Barra to work this angle, but it doesn’t really hold water when you’ve taken your profit forecast up by another billion. Tavares gets to be the nice guy, for now.
Waiting impatiently for Sep 14
Yellow is pointing the finger at the union/workers.one and the same. They over extended themselves and then somehow in the last 4-5 years of record carting revenue they somehow couldn’t make it.
How in the world do you go bankrupt in trucking when retail.goes.online and 3 years of overspending from a home bound country.
It’d be great to get a report on how they pulled failure from the jaws of victory.
Oh come on!!!! How is he not passing the buck? He is literally the person most in charge of a company that just died. There are plenty of union trucking companies that are doing just fine. The difference is these other companies didn’t overload on debt leveraging up their company at the absolute worst time.
When the literal highest person in charge if a company blames others for what happens when other similar companies are doing fine, he is only deflecting from his own poor decisions.
– And how much money was spent/borrowed for buy-backs ???
None in recent years. First thing I checked in 2020 during the bailout, LOL. They’ve been on the verge of bankruptcy for many years. They couldn’t get the cash for buybacks. Whatever cash they got, they used it to survive for as long as they could.
For a company with about 150M/yr loss. How did they manage to burn through all the FED $700M so fast? They should still have another 1-2 years of OPS.
Off the top of my head, I don’t know/remember all the places this went to, but they made big past-due payments into the pension plan, and they caught up on some of their other past-due obligations. Those expenses had already been accounted for in prior income statements and were part of the losses in these prior income statements. But those expenses became cash out-flow when they were actually paid. I would have to sort through their cash-flow statements to dig up the details.
$2M-$3M of that $150M/year loss came from paying CEO Darren Hawkins salary, as obviously he was lacking management skills and was grossly overpaid as such…
One might be forgiven for suspecting that the Teamsters deliberately forced Yellow out of business in order to gain leverage in the simultaneous UPS negotiations…
That’s an interesting point. I did read the Yellow contract ran through March 2024 and the union had said it didn’t want Yellow to jump the negotiating line. Perhaps the union feared making concessions to Yellow now, which were needed for its survival, put the other contract negotiations that were already on the table at risk. This may be a case of the union doing something that’s in the interests of all its members at the expense of members who work for one poorly managed company. I’m just speculating here.
Which is one problem with union representation. Lawyers often represent groups of people, but if a situation arises where they can’t ethically represent all members at once (because, for example, what’s best for one client is worse for another) then they have to withdraw.
Unions aren’t so required.
But that is the essence of what unions do, namely, benefit one group of workers (“decent union folks”) to the exclusion of others (“dirty scabs”). Creating artificial scarcity forces employers to pay more to some, but it is mathematically impossible for all to benefit.
Why do all police belong to unions?
kramartini, that’s not really accurate. It’s fine to benefit the group that you have a duty to represent. It’s not fine to benefit SOME of a group that you have a duty tor represent to the detriment of OTHERS whom you also have a duty to represent.
Arnold,
(from memory)
“To the extent government is instituted for the protection of property, it is in reality, instituted for the defense of the people who have property against those who have none”
-Adam Smith
So your answer is the people with a LOT of property can and DO collectively use their power to ALLOW ALL police to have unions, as they NEED them to be happy with their “function” in the property owner’s system….or as some might say, their “Jobs”.
Just remembered Smith said “civil government”…….it narrows his observation down much better…..the Military is another thing.
Nah. The factual considerations of each contract are unique. Union contracts are negotiated on a company-by-company basis, and union decisions are driven by employee consensus within each company.
Massive oversimplification, but somewhat on point. Unions would target one auto manufacturer back in the day, and then rotate to another during the next round, and related companies often deal with workers honoring other companies worker strike activities.
As far as employee consensus; they are very often strong armed to vote a certain way, without even knowing some of management positions and concessions and against their own interests.
That wasn’t my experience when I was a member of the UFCW in Southern California. The union represented grocery store workers and would only threaten to strike at one store, but the other major stores would lock-out their employees in solidarity with the company against whom the strike was directed. I was employed there for 2 contract negotiations and they were done, and still are, on an industry-wide basis covering many companies within a geographic area.
In this regard, all of the union members from different companies voted on the exact same contract. You may be right in certain cases, but not all unions operate the way you describe.
It would make more sense to me that they’d be in a hurry to finish up negotiations with UPS before Yellow went under.
They’ve got $1.3 billion in debt payments due in the next couple months, last year operating profit was $21 million, and there are 30,000 employees. As far as I understand the primary motivation for the strike was that they hadn’t been making payments into the pension fund. Anyway with 30,000 workers I’m having trouble seeing how exactly the union was going to take them under unless it’s because they didn’t agree to work for free for the next year.
I have no idea whether or not the IBT is culpable here. I would be interested, however, in how much the investment bankers and corporate executives got out of those unsuccessful acquisitions as fees, “integration bonus,” increased salaries because “we are now so much bigger, “retention bonus,” etc. ad infinitum
Boo-hoo. A CEO who is likely a clueless idiot with a golden parachute had a crappy zombie company collapse and it is of course the union who is the big bad. Unions are never perfect but in one of the absolutely most horrendously abusive industries to the workers, I’m willing to overlook a lot of bad stuff unions do. It’s funny how so many normal labor laws have exemptions in the trucking industry.
And don’t even get my started on scumbags that are the ATA. The whole industry needs to be burned to the ground and rebuilt. It’s beyond reform.
I’ve got a few more months and I’m quitting the trucking industry. It’s just repugnant. And I’m in a relatively decent teamsters job after being OTR for a mega carrier.
Preach it TG!
As you say, Unions aren’t perfect, but they only exist (barely) because so many employers throughout history treated their employees like garbage.
Best of luck to you and thanks for your years of vital, hardcore labor.
“I’m willing to overlook a lot of bad stuff unions do”.
Another ringing endorsement for unions.
Lesser of two evils
Yeah, because it is a well known fact that unions have done the same reprehensible things Corporate America has done.
You know, stuff like corporate towns forcing lifetime debt slavery, child labor factories and mines, locking workers in deprecated buildings until they burn down with everyone in them, giving kickbacks to government officials to call in the national guard to have striking workers killed.
Those dang unions and their corrupt leadership skimming money off the top of their members. How corrupt! We should just let the benevolent companies with such a spotless track record run everything instead.
Give me a break dude. I’m guessing you’re the same one who would chant to dismantle the EPA and OSHA because they’re an inconvenience to big business. Can’t wait to drink radioactive water from my jobs rusty water fountain plumbed with lead pipes. Good Lord, people trip me out.
You’ve cited many corporate sins from more than a century ago. Very germane to this discussion. Last I checked, of people don’t like a job, no one is forcing them to work there…
Happy….? A weird screen name for someone using the sickest far right reductio ad absurdum buzz line there is……..except for “leave the country if you don’t like it”.
I should have in 67, I’d be better off for it.
You shouldn’t dishonesty put quotation marks around words you make up that are not quoted. That is not what the person said, that is you dishonestly putting words in his mouth.
I had to join the teamsters in 1963 (no one could get a job unless they were in the union) so I am old as the hills. Back then when the Teamsters struck the country shut down. No one would cross a picket line. And when any other company was on strike the Teamsters would never cross a picket line so everything shut down and nothing was delivered. No company could survive a strike. So there were no scabs at least who lived to tell the tale. Trucking in those days offered a pretty secure career with a one earner family. I know it does not sound like much but I thought it was a fortune…..I would make 80 to 100 dollars per day back then!!! With that kind of money I was able to finance an Ivy League degree. I have done a lot of work for Yellow Freight in California over the years later in my career and I have seen that much of the trucking is now being done by non union workers. We are seeing a lot of drivers now from India and they work incredibly hard and self finance their trucks through family loans. They hire Mexicans to drive at incredibly low wages once they get a second truck. Their rates are dirt cheap in comparison to Yellow Freight. That is the economic reward of an open border. Yellow Freight drivers were well paid with good benefits and largely older, white, fat and about ready to retire and since layoffs are based on seniority at the end of the line the ones about to retire are the only ones who get to vote and they vote a hard line because they really do not care if the company goes down and they are the only ones voting. Kind of like what happened at Kaiser Steel in Fontana. So the handwriting is on the wall for union truck drivers and the unions themselves as diversity increases. I have always thought that a key component of international trade agreements should be to allow US international unions to organize workers in immigrant donating nations like Mexico and India. That would do so much for world poverty and the precarity in the US as well. The UAW should be representing Mexican auto workers especially since they are building cars for the US market that are advertised as US made (except for the small print no one reads). Unfortunately, our oligarchs are running the country. They learned our political and union leaders are cheap to buy. And a big benefit is that there are now quite a few Indian restaurants scattered through the US catering to truckers with more interesting food than we had back in the day.
Great comment
Ditto
The entire trucking (logistics) industry is going through another cyclical downturn. The weak and walking dead will be eliminated and survivors, who are well operated and financially responsible, will carry on and hopefully, profit.
We need exactly this sort of cleanout in 99% of our industries. Survival of the fittest … and the smartest, without government intervention and taxpayer bailouts.
We’ve had the cleanout for the last 30-40 years. If any doubt, check the Rust Belt and all the pictures of the decaying ruins of productive enterprises and once-thriving empty towns. And it’s not coming back unless wages and regulatory costs approach the level of the places that the heavy industry and attendant jobs went to. That likely won’t happen.
The ‘joint venture’ scam is what started it all.
It’s just part of the life cycle of nations. All those empty cities in the Ancient world are a reminder of how things end up when 99% of the productive economic activity vanishes.
Survival of the fittest! I hope everyone understands who is fit this time. You know how many unsustainable companies came out just from the pandemic? How many companies made it from interest rate repression? Debt piling without restraint. Just dumb business models? We have a long slow motion train wreck now with massive zombies and the like that inflation has now called game over. Absolutely massive. What to do? Think SURVIVAL indeed. Forget about making profit. Thats in good times. Now, to coin a major investor, “He who loses the least, wins”. The goal is to stay standing and keep cash flow and survive the storm, which may last longer than imaginable. I keep telling my businesses I deal with, either lower your prices or go out of business. Those sticky living standards…words fall on deaf ears. Greed never gets it, these business cycles(the biggest ever now). At least Subway gets it. When you see BOGO, its recession on.
This biggest union LTL shipper has been a zombie business for years. Big weak carriers were merged with debt to create it. Rising interest on that debt helped kill it. Wages were also a problem. Union drivers were earning 75 per hour versus non-union wages of about 52 per hour. 30 hours guaranteed in slow season, 50 plus with overtime pay in busy season. A really nice wage for semi skilled labor. The company could not afford that either. Unfortunately it should have been allowed to die years ago.
Apperently you never drove a truck ,wonder what it would feel like when 80,000 lbs runs your dumb ass over .I drove a truck in snow ,ice rain it’s very stressful
Walmart pays its truckers more than that.
No l, they most certainly do not.
Walmart trucker wages in California:
Annual Salary Hourly Wage
San Francisco $78,144 $37.57
San Jose $75,506 $36.30
Fremont. $75,493 $36.30
Oakland. $74,507 $35.82
Antioch. $72,883 $35.04
Hayward. $72,149 $34.69
Vallejo. $71,769 $34.50
Santa Cruz. $71,594 $34.42
Salinas. $70,927 $34.10
Sunnyvale. $70,754 $34.02
Walmart is also an incredibly difficult to obtain job in the truck industry. It is also one of the highest paid as well. The reason for that is they have very, very tight scheduling. They don’t allow for much wiggle room at all. You have to drive very aggressively to make Walmart loads as a company Walmart driver and not a contractor like Swift or whatever. Second, the rules and monitoring are like being subject to a panopticon. Every employee tries to rat the others out, any mistake is a termination, and they’re always watching to fire you. Third, you work 60-70 hours a week in many positions there.
I had a grand uncle who worked for them for about 8 years. It’s good money but it’s hard to not get fired over the smallest infraction and you have to drive like your life is entirely expendable. He drove from Denver to Grand Junction over the bad part of I-70. They didn’t care if it was a white out. That load was planned for 65mph and it better make it. He was breathing down the neck of 90k a year when he retired about 5 years or so ago. How he didn’t die in the road I’ll never know. Then again, I run the same way. 70 mph on top of 6″ of snow through Montana in the winter. Had some awful close calls. But that load being on time is far more important than your life is the mindset you gotta roll with.
Those income levels are more than a full university professor teaching in the science areas makes in Japan.
Lmao what trucking job pays 75/hr?
And in what fantasy world does a non union trucking job pay 52/hr?
Even the absolute most shitty miserable trucking jobs like food service barely break 30/hr in medium to highish cost of living areas. And this is only directly after this whole pandemic with skyrocketing wages.
Unfortunately, Yellow is not part of the discretionary government bailout loan program. I say this because the US just bailed out Ford with a $9.2B loan. It is all about who you know and how much money you contributed to the government. Heck, our government can send $64B to Ukraine! I don’t understand why people are upset at the CEO of Yellow for taken on debt to keep a company who employs people afloat and then says its repugnant.
The govt and the Fed bailed out all the asset markets by printing 7 Trillies in 3 years and all we got was a lousy Yellow bankruptcy.
The debt wasn’t incurred to keep the company afloat. It was originally incurred to purchase other carriers such as Roadways and USF which management never successfully integrated. The debt burden from those acquisitions left Yellow wounded and on the brink of bankruptcy in 2009. The union agreed to several wage reductions and benefit cuts in exchange for equity at that time. Management attempted to create an empire with debt, and it finally collapsed in a heap.
LOL
How naive of you to think the CEO took on debt to keep the company afloat.
The DOW is financially ‘gasming and peaking on this news. Another moonshot to infinity and beyond.
Makes sense. Companies going bankrupt means more stimmies and QE. For every bankruptcy, the eagerly awaited Pivot is one day closer! /s
The American Way, Big Business raids their workers pension fund by filing BK and awarding the insiders Billion dollar bonuses. US Gov Pension Guarantee Board Pays the union workers a pension retirement of maybe 25 Cents on the dollar if the workers are lucky. And the Corporation makes off like a legal Bandit. The Shareholders Nothing or a couple pennies a share? The unsecured Bond Holders maybe 10 to 25 Cents on the Dollar? C-Suite always blames the Unions. The difference is this time they made off with low interest 1% loans due to the PPP Covid Loans. Now, they must ask the US for Loan Forgiveness? These Dudes are Double Dippers? 1% Loans off Uncle Sam and Give their Workers Nothing.
Alex, how much did they receive in PPP loans?
I read that Yellow Freight was the recipient of $700 Million in US Gov Loans and Grants during Covid? The 1% are open to forgive and could be a free ride? The later 5% loans would need to be paid back. I would have to read their BK court documents to know the exact creditor and debtor amounts.
Howdy Folks and Mr Wolf. Read about this at other places, no surprise the truth is here. Thanks
From Wolf’s 29 July post: “In addition, the Teamsters hold a direct interest in Yellow as a result of the Teamsters’ ownership of Series A Preferred Stock. Yellow issued one share of Yellow’s Series A Preferred stock on July 22, 2011 to the Teamsters ‘to confer certain board representation rights.’ This share is valuable to the Teamsters because as the holder of this share the Teamsters are permitted to appoint two directors to Yellow’s board of directors.”
So why would a shareholder trash their investment?
The Class A shares are probably not Secured and therefore after BK become worthless? But, I would need to read the SEC filings to know the details.
So much of the economies efforts these days goes into dealing with non-operational issues: regulatory compliance, compliance with unions, simple incompetence etc. All of that is friction. Energy is expended to overcome friction. The energy left after overcoming friction is work. As friction grows, the share of energy available to work shrinks.
The friction in our economy seems to be growing. Part seems inadvertent and part seems very deliberate.
Mostly we don’t notice, but if we look, we can see. Store shelves not well stocked. More and longer and longer waits on “help lines” with fewer resolutions. Commitments not fulfilled. Packages don’t arrive or arrive damaged.
That’s one way to look at it, if your only lense is corporate profit. If you apply other lenses, all of that “friction” you mention is productive.
For example, regulatory compliance protects environments, ensure competition, protects consumers, etc. Therefore, it seems narrow-minded to say any efforts expended on regulation do not qualify as valuable work.
I respect the work done by Mr. Wolf, but I just don’t get the significance of this bailout. In historical context it was right in the main part of the 2020 election year. The bailout of $700 million is smaller than the visual resolution of the Federal Reserve’s balance sheet. Purportedly this was probably for that “supply chain” that Jerome Powell’s Fed used for a cover story to the main cause of the inflation woe; never mentioning his monthly $30 billion MBS purchases that have made young peoples home purchase life event into a hopeless “dream of home ownership” that even bronze age people had. The other $90 billion of treasuries Jerome Powell said was to heat up the labor market, but that just deflected from the government spending business bailout payments that the Federal Reserve’s monetization of debt (more inflation) allowed.
Seems more that this trucking company issue is a deflection of the population’s rightful attention of government deficits and continuing Federal Reserve policies that have damaged the nation beyond repair; and obvious to all further deepening with every passing day. Respectfully, trucking companies have been turning over for decades, there isn’t some great oversight debate going on of anything meaningful.
Sorry, just can’t get excited by anything less than $100 billion (i.e. the new $20 dollar bill).
This article was about Yellow, and NOT about Ford, or the Fed, or the federal Debt, or homeownership, or your personal grievances. One topic per article. If you want to read my articles about automakers, the Fed, the debt, homeownership, etc., you’re welcome to read them, this site is full of them.
autonomous trucks/ AI will fix the teamsters and a lot of lousy trucking companies – I loved it when they started changing their names to “logistic companies”
AI will be a long way off before a semi truck has a robot as the backup operator .
Or a robot that can get out of a truck and sling cases of food into a Wendy’s in a blizzard when all the pallets have fallen like Jenga blocks because the dock worker was stoned and didn’t load anything correctly.
Or any of the other thousands of trucking jobs where you have to do something other than drive from one dock to another. Which ya know, is the vast majority of trucking jobs.
Thanks for the clarity and update on CEO message. Regardless of one’s view of unions the postings of tombstones from the teamsters leadership is pretty childlike and unprofessional. Glad the CEO pointed these out . I would not see this statement any place else
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And yes, the good old capitalist company was implementing changes that would make everyone’s life better…It was the evil workers and their corrupt gangster unions that prevented the company from going forward. CEOs, knights in shining armor that save the world from unions. Oh those poor poor misunderstood CEOs, now they have to go to their 10mil villas and their 20mil retirement packages and cry alone on their sailboats while sailing the French riviera, with their eyes soaked in tears…
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It is interesting to note, that although Hollywood loves depicting bad guys to be specifically from certain countries, in every gangster movie ever the unions are represented as a bunch of corrupt, violent and ugly people ready to do anything for money…What is up with that?
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@ fellow readers, if anyone comes up with a counter statement of the union it would be nice to read it, and get the whole picture.
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While still in business, I had several customers with between a dozen and 100 trucks with Teamster drivers and contracts. As I recall, there were a number of company actions, including missing any monthy pension payment, that under the union pension laws would be termed a pension payment default or something similar. The exact erminology may have escaped me.
In any case, the applicable law was that the full pension liability for that firm automatically became immediately due and payable to Central States Pension Fund run out of Chicago. Judgements usually ran in many multiples of the firm’s equity, in the millions of dollars. I recall the liability to the pension fund was not extinquished in bankruptcy. The pension lawyers could pierce the corporate veil and go after the principals of the firm if they held any decision making powers for the firm.
Maybe all this has since been changed but it was a nightmare for years in the early 2000s. I wonder if Yellow’s pension liabilities have all been called due in full, and how that would be treated under this liquidation?
This is pretty close to our company’s home turf since freight companies are both customers and vendors to us. Yellow has been off our radar on both ends of the business for a decade, and I am surprised they held out so long.
The Teamsters share plenty of the blame here, but levering up for acquisitions, banking on “efficiencies” that never materialize in this low-margin industry is the primary sin. Trucking is a tough business, much like making their equipment. There is a reasonable case to be made that it’s gotten drastically worse after deregulation (especially for drivers), but regulation has its own tradeoffs too.
Too many managers think they’re geniuses by taking on debt to grow.
Debt is the same as drinking – It sure feels fun while you’re doing it, but you’re mostly just borrowing prosperity from tomorrow.
Deregulation was not even questionable if it ruined things for the drivers. We went from the 70s where trucking was a tough job but a solid beeline into the middle class to having truckers smoking meth to be able to run 8000 miles in a week to make the same money they made 5 years prior. Deregulation was about the worst thing the Carter administration did.
I remember when I was a kid in the 90s my family members who were mostly truckers were making about the same pay as I made when I started driving in the mid 2010s. Normal dry van cheap freight, they made 40-50k a year gross. And had way more time off. I ran 3 months on, 3 days off, and after the first year I had 45k gross to show for it or so.
They all absolutely detest Jimmy Carter and deregulation. Only one or two of the men ever had a union gig. Most were all company dry van or flatbed.
Having first joined the Teamsters in 1963 my impression is that the profession has been destroyed by deregulation for sure but also through massive excess labor looking for work because of uncontrolled immigration so non union carriers can thrive. The real criminals are in Washington in congress and the white house. Until we get corruption out of politics and campaign finance reform and much higher taxes and a national medical program to control costs the country is going to continue on a steady downhill course. I saw somewhere that AOC started a couple of years ago in Congress with essentially no net worth. Now she is worth 5 million by report. And still has not paid her government student debt. She is complaining that the government has not paid it off. Politics is a nice job if you can get it.
Anyone who uses the phrase “uncontrolled immigration” demonstrates that they use poor sources of information that take advantage of their lack of knowledge.
“They all absolutely detest Jimmy Carter and deregulation. Only one or two of the men ever had a union gig. Most were all company dry van or flatbed.”
Not to get all political, but I thought it was Ronald Reagan who was famous for deregulation. For example, the airlines and the air traffic controllers.
Reagan helped later on but most of the trucking deregulation was set in motion by Nixon and the big deal law signed by Carter in1980.
It’s a fascinating read. The Mob nearly took a massive political stake in the US around that time as well. That’s why there was such a backlash against teamsters. The US fed govt was close to losing some serious control to the Mafia.
Airline Deregulation took place in 1978 (Carter).
Trucking Deregulation took place in 1980 (again Carter).
Air Traffic Controllers have NEVER been deregulated… they are still government employees employed by the FAA.
A little over a decade ago, I was a member of the Teamsters working for another large logistical company. I was often disgusted by the tactics used by certain IBT members and frankly surprised that the company kept itself above water. Many other union members felt the same and would openly question why they were paying dues. The Teamsters are thugs, always have been, always will be (I’m talking about the Union, not the individual members, most of whom are salt of the earth, hard working people). The Union only cares about the Union, it does not care about workers.
Thanks, Delred,
In my business (Facility Manager) I deal with a LOT of tradespeople (HVAC, electrical, plumbing, access, etc.) I try NEVER to contract with unionized companies. My general experience: higher cost, harder to deal with, and no discernibly better work. Why should I pay for their bloated salaries, not to mention their health care and pensions?
The way you know that unions have outlived their usefulness is when their defenders have to point to things the unions did that benefited society nearly 100 years ago…
Are you one of the people who back the blue? Nearly every cop is a union member.
Do I “back the blue” blindly? No. I oppose police unions just as much as I oppose teacher unions.
Escierto, the difference is public sector unions milk the taxpayer, who won’t declare bankruptcy.
LOL… my cousin is a Union Rep for his Post Office. He is always citing things that the unions supposedly gave us in the 1920s and 30s. The way to shut him down at Thanksgiving is to ask him “what have you done for us lately? Give examples from OUR lives rather than our grandparents lives.”
Ha ha yes, they want to talk about “The Jungle” and such, like it has any bearing on 2023.
…and business after extirpating unions would NEVER drink ‘backslider’s wine’ anymore than the banking and finance sector misbehaved in the wake of ending Glass-Steagel (/s).
may we all find a better day.
The conventional narrative mostly holds true that corporations can be evil/cold/heartless in their pursuit of profit and instead of benefiting stakeholders, sacrifice everyone for shareholder gains. And that unions are always a solution to worker exploitation.
However in this case union bosses may have contributed to a meaningful demise of an already fragile business that was surviving on smoke and fumes (and bailout).
We need strong unions, but we also need accountability. Here’s looking at you teachers and police unions, where your only job sometimes is to protect the worst members, instead of benefitting the majority of workers who deserve a livable wage and benefits, in line with exec pay.
Well said SK – in this case it seems like a terrible company was treated terribly by terrible union leadership.
Many times there just isn’t a good guy
Howdy Folks. Wonder just how much the Teamsters are worth? I do.
Wolf,
I noticed the LA public unions are planning a strike, and it looks like the Hollywood strike isn’t getting resolved.
Do you think this is more specific to certain industries/regions, or do we need to keep a closer eye on wage/price spiral, union activity, and second wave of inflation?
“…do we need to keep a closer eye on wage/price spiral, union activity, and second wave of inflation?”
Yes.
Others include the wage demands automakers just got from the UAW (40% over 4 years, including 20% upfront). Obviously, this will be negotiated hard and long. Unions have a lot of confidence now.
The labor actions, though huge in these locations and industries, are still not a major component of the overall gigantic US labor market. But it is something to watch. I have the impression that this inflation has gotten the ball rolling on wages.
Wow, 40% is a lot! Reading the airline pilot pay raises also seems pretty big, too. Someone will pay for it so profits down and prices up in some combination. I will likely have to leave my job in 6 months to get a higher raise than they will offer (if any)…I don’t see inflation coming down anytime soon.
I noticed that the union representative for one of the Hollywood unions said on TV that she was demanding inflation adjusted wage increases. She said something to the effect that the current offer would offer real wages below 2020 levels.
This appears to be the first step towards unions demanding CPI adjusted increases in contracts.
If this actually gets traction, it seems like confirmation that a wage price spiral is in motion and very hard to stop.
I read UPS drivers compensation package will average $170k after 5 years with the newly signed deal. That’s more than some primary care docs who keep getting Medicare reimbursement cuts! That UPS deal and airline pilots getting 40% raises and writers still holding out for probably a decent raise eventually. Sounds like wage price spiral is underway…
Before there was money [about 600 BC], there was credit and debt along with the peculiar creditor-debtor relationship.
Forms of credit and debt were coincident with or preceded lawyers.
Arguably but of terrible significance,, creditors and lawyers were the original gamers of systems.
You’re forgetting about clergy. The high priests were gaming the system long before lawyers & creditors.
From article:
“Yellow was a major contributor to the Central States Pension Fund, which was among the nearly insolvent multiemployer pension funds that got bailed out last December by the government.”
What are the ramifications of Yellows bankruptcy and cessation of employee contributions to the Central States Pension Fund?
What stresses will the Fund likely experience, if any?
Is there further taxpayer bailout potential?
Is there a systemic risk aspect to pensions in general?
Thanks for any elucidation.
These issues will all be resolved during the bankruptcy proceedings. Further bailout potential? Ha!
Yellow is/was past due on I believe $50 million in payments to the pension fund (which was one of the items that caused the union to threaten a strike a couple of months ago). If all the past-due contributions to the pension fund are made — I think they will have to be in bankruptcy court (would be nice to hear from a bankruptcy lawyer on this) — then there shouldn’t be much impact. The fund was already in terrible shape because for many years, the companies overpromised pensions and then underfunded them. That’s a long-term structural issue unrelated to the Yellow’s bankruptcy.
I have often believed that much good in our society could come from restructuring of ofir bankruptcy laws. Currently, their is a rough hierarchy of who gets paid when a company goes bankrupt.
Right now, the hierarchy is:
Employee payroll (immediate wages).
Suppliers (i.e. companies that have supplied the bankrupt business with goods).
Bondholders.
Long term employment compensation (like pensions).
Stockholders.
This is a really rough order and is definitely dependent upon all sort of caveats, nuances, and who has the best lawyers. For example, a supplier who has a long term contract to supply X amount of widgets per year. How much of that contract should go before bondholders?
All of that is fluid and arguable before a bankruptcy judge. It varies.
I would make two changes:
1. I would insert some sort of clause about clawing back executive compensation. Bankruptcy judges should do more to claw back compensation to executives from the past 5 years. At the very least, any bonuses Pais to executives in the last 5 years should be able to be clawed back by a bankruptcy judge.
2. Move long term employee compensation above bondholders in the priority list. Bondholders are the gatekeepers of last resort. If they find a company that has shaky pension funding, they will be more reluctant to lend to that company.
Pensions will immediately see better funding and their will be less of an incentive to dump underfunded pensions on the government.
I worked for a corporation once that had a consultant come in and he said the only plan that was proven to work was a short term profit sharing plan. All employees got a quarterly bonus based on how the company was doing. It was a great program to get people working toward a common goal. We ran under the program for about a year before we were bought.
The next company focused on individual goals and then things reverted to an ugly conflict oriented mess where people didn’t work together.
As a former unloader of trailers and train cars, a warehouse order running, Teamster professional, 50 years ago, makes me qualified to make a comment among this throng of genius of the previous comment stream.
Without having read the article, using the rational gift from above, this seems like a financially structured plan, unfolding.
First off, how bad does the business plan have to be for one of the largest, American, OTR shippers to fail, financially. It would seem unlikely that it was an incompetent executive suite is the cause.
The big question is who gains and who loses. The basis of accounting in the old days.
Okay. I am now going to read the article.
“It would seem unlikely that it was an incompetent executive suite is the cause. ” weird. Almost like something autocorrected what I actually thought I said. Naw
What I meant to say is, “It would seem unlikely that it was anything other than an incompetent executive suite as the cause of this business failure.”
Which, of course, categorically, not an accusation. It is simply a natural thought which no human being has control of, yet.
The last thing in the world we would like to focus the light on are obviously, innocent, people like what’s his name.
As the Black Knight said, “Tis but a scratch.”
“It’s only a flesh wound.”
Yes of course, that’s what he uddered but what he actually said was something quite different. Since it remains a relevant phrase in the search of current human beings for the reason for life, these snippets of sound of what must have been incredible personal distress, having one’s leg sliced off, and all that happened to a dear, Monty Python, character.
RIP Yellow. Everybody out of a job – union, non-union, whatever. Sad.
I suggest that we take a breath and get beyond the union bashing and look at how Yellow has able to get the $700 M. by claiming to be essential like the airlines. There are press reports of considerable lobbying involving senior Trump administration officials. Some reports can be found by using Google. Yellow got its money before the airlines. We need to let the investigative financial press and congress look at this and then try to understand how this all fits together.
The role of PE giant Apollo Management needs to be included in any assessment.
After Prohibition was lifted, the new Capones had to look elsewhere. Drugs? No, until Gotti the Mafia stayed out of this area, not least because the sentences for heroin were so long a convicted member would be likely to flip.
Post Prohibition, the big earner was labor racketeering. The supply of ‘muscle’ was a natural for them, that was the essence of the operation. The Teamsters Pension fund was one of their most sought after conquests and a lot of it ended up in Vegas building casinos.
This is history, which anyone can read. How much today resembles the past, I don’t know. However, any ballot that is not secret, i.e., confidential, is subject to possible intimidation.
NK, good observations, as usual. But what got the ball rolling was “Prohibition”. What a friggin’ bad idea that was!
Are we headed for something similar with the banning of abortions? Probably.
Huh? Vagas didn’t get fresh water until the 50s. Unionization was well underway by then in Seattle and Detroit, for example. Perhaps I’m an idiot or maybe you watch too many gangster films. Vagas was the birth of uninizatin in the US? Wasn’t the population of Las Vagas rather small in the 50s? Ports? An auto industry or factories worth fighting for?
I don’t know if you are an idiot but I do know I almost never watch movies, preferring print, which does not have to be on paper. Just enter anything like the ‘Mafia in Vegas’ and a whole bunch of print pops up. A library.
One can make the case that after Nevada became the first state to legalize gambling in I believe 47, the mafia was the only source willing to plow money into the town. As you point out there was little else there. I think they bought their first resort, the Sands? and converted it but then came the boom.
The cherry on top was the ‘skim’. Back then folks gambled with cash. There were no records. The take was counted in the back room.
Unions oppress poor people. Anyone who supports the modern system believes in oppressing poor people.
Some of the comments above taking potshots at illegal immigrants reveals this hostility to more productive, more competitive workers. Poorer workers are the hungriest, especially compared to fat-cats who get paid to do so little in a legal environment that shields them from competitive free market forces.
Unions exist because of anti-free market government laws: the government criminalizes negotiating with the workers directly to get a better deal for everybody (except the union bosses).
So workers who would gladly offer to drive a truck for a lower wage than what the union workers demand are blocked.
More competitive workers are forbidden by the government from bidding against the union workers.
They are forbidden from working more hours for the same pay.
They are forbidden from working the same hours for less pay.
The federal government oppresses a large pool of workers to benefit a few privileged workers.
Consumers are relentless. We demand cheaper prices and better service. And sometimes, we demand cheaper prices for lower quality service. Competitive workers are aligned with the consumers. Unions enlist the government with its badges and guns because both hate the consumer and their relentless demands for increased performance at lower prices.
This is a un-American, anti-free market as it gets.
Good riddance to bad rubbish.
Pancho…in the macro, it still pencils out as racing to the bottom for most…
may we all find a better day.
Kinda of Hostess-seque (“Twinkies”) with Yellow : lots of debt, labor issues, and structural (maybe stay away from companies associated with the color yellow). Unfortunately, the unions are MSM blamed for both, when things are bit more complicated.
Apollo was party for both companies and Apollo will feast
on the corpse of Yellow, like they did on Hostess. Not a value judgement, just the nature of business and politics.
“Teamsters union as an organization (he is specifically not blaming the union members…)”
Well, duh.
Union leadership doesn’t always seek the well-being of union members.
Same as a country’s leadership doesn’t always look out for the well-being of its citizens.
Power hungry seek power at the expense of plebs.
I once served with an Lieutenant Commander in the Navy who had a Masters Degree in Labor Relations from UCLA. He said something that changed my perspective on unions… “Employers who get unionized employees are generally employers who DESERVE to get unionized workforces.”
Every situation is different and I don’t know what the story with this company is. Nor do I know what will happen to the 22,000 IBT members who lost their jobs here… they may find it hard to get on with another unionized trucking company. But I doubt anybody here has clean hands. I have had friends in the Reserves who were airline pilots and it is not always the case that the union is looking out for the employees best interest at every firm.
I worked in management at an outfit full of unionized employees, both as the manager in charge of individual locations for a decade and as a member of the senior leadership team for a further eight years. In all of that time I was grieved precisely once.
I completely agree with your Lt Commander, SpencerG — unions aren’t the problem.
Yellow was dead 20 years ago. Then they bought good companies Roadway, Holland and Penn and killed them.
The cheapest labour/lowest possible wages delivering the cheapest price for consumers is not necessarily the best outcome for society.
Not when 50% of Americans can not afford a $1000 emergency.
America thinks gratuities to low paid workers reflects its generosity, but it may be the mark of a country so mean it will not pay half its workers a livable wage.
“Not when 50% of Americans can not afford a $1000 emergency.”
This effing clickbait headline bullshit about Americans being poor needs to stop.
Read this (Federal Reserve data):
https://wolfstreet.com/2023/05/27/americans-ability-to-pay-for-emergency-expenses-or-three-month-job-loss-with-cash-or-cash-equivalent-by-selling-assets-by-borrowing-or-not-at-all/
Here is an excerpt (let me emphasize that in the US, three months expenses are a lot lot more than $1,000, LOL)
54% had enough cash for three months of expenses.
16 % said they would deal with the loss of income by:
– “Selling assets”
– “Drawing on other savings”
– “Borrowing.”
30% could not cover three months of expenses by any means.
In other words, 70% would get through this three-month period just fine, either having the cash, or being able to sell assets, or draw on other savings, and some by borrowing. But 30% would be in deep trouble if they have no income for three months.
Yeah, I’m sure the CEO is going to come out and say, “Years of mismanagement by myself and our executive staff led to an unresolvable debt crisis” Hell no. If he’s going down, he’s taking the teamsters union leadership with him.
Plus it makes for a neat little answer to the interview question, “We see that you presided over the collapse and bankruptcy of your previous company. Why should we trust you to lead XYZ?”
“We had a plan, but those MEDDLING TEAMSTER BOSSES”
Anyway we’ll never know the truth so whatever
Charlie Gasparino of Fox Business reporting that Yellow may realize more than $1.4 billion from liquidation meaning that shareholders might actually get some cash!?!?!?! The plot thickens. Stay tuned…
This is the kind of uninformed or insidious BS that causes people to do stupid things.
If they get $1.4 billion on asset sales, it will not be anywhere near enough to cover all their liabilities of $2.6 billion as of Q1 and likely more now.
Their long-term debt is $1.6 billion as of Q1. Total short-term debt is an additional $55 million. In addition, there are their other liabilities, such as accounts payables ($176 million). Their total liabilities are $2.6 billion. They will have to pay all their liabilities first, before stockholders get anything.
Because business collapsed over the past few months, they burned a lot of cash since Q1 and slowed payments, and the liabilities might be even higher. Looks to me like if they get $1.4 billion on asset sales, they may be about $1 billion short, and lots of creditors will not be paid back in full. And stockholders get zero. I know, balance sheets are boring. It’s just so much more fun to listen to some Wall Street bullshit.
Gasparino did add a caveat that other liabilities could pop up…I guess they likely will.
Question. Is the $700 billion government loan secured by Yellow’s assets? If so, is it senior to other secured liabilities or is it pari passu with the likes of Appollo?
Just trying to figure out where taxpayers stand in the pecking order.
Kind of…
The Treasury’s loan to Yellow contains two parts.
The first tranche of $300 million is secured by a third lien, behind the claims of Yellow’s senior secured asset-based revolving credit agreement (“ABL revolver”) and the company’s senior secured term loan, which are both cross-collateralized. The ABL revolver and the term loan creditors will have claims on Yellow’s assets of up to $1.05.
The second tranche of $400 million was used to finance the purchase of tractors and trailers. The Treasury has a first lien on all equipment purchased under this tranche.
I noticed the CEO didn’t mention taking on massive debt for mergers so he could fraudulently boost his own pay.
That’s how you get to the top. Conceal your own rapacious greed. Pass the buck skillfully. Never concede a mistake.
Here’s what I saw as a software engineer at Delco (GM division):
– Electrical engineer designers were not allowed to start a machine they were designing nor work on it. They had to have a union electricion do it. If you even looked at a machine without an electrician, they’d file a grievance and get double time for not doing anything.
– You were not allowed to pick up anything, like a computer, and move it even for a few feet. You had to have a union millwright do it. If you picked anything up they’d file a grievance and get double pay for not doing anything.
– A union member brought in a gun and threatened management. He wasn’t fired.
– A union member on an assembly line wanted to read his book so he’d put fat from the cafeteria in the circuit board bath. It would shut the line down each day. He was not fired.
Delco – then Delphi went bankrupt.
…upon more reflection, given the significant reduction in U.S. union membership in the last 50+ years, a lot of the antiunion sentiments appear to me as whistling in the dark of our current levels of national income disparity…
Not saying unions are or aren’t the solution, but without some genuine answers (and not the usual ones dumping the costs on a co-opted government to maintain reasonable social order and a population’s willingness to soldier) from business&finance, and soon, it’s not too difficult to see unions resurging, warts and all…
may we all find a better day.