Yellow | a bit of positive news for once.
- Thread starter Cnwdick
- Start date
Apparently the link doesnt work so here it is copied. True or not it's just nice to hear something postitive.
January 7, 2009
Will YRC Make It? Here's One Vote That Says "Yes."PrintEmail to a FriendAnalysis of: Will Teamster Givebacks Be Enough to Save YRC? (DC Velocity – Logistics News, Analysis & More)
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Author of this analysisJohn Schulz
Independent Analyst - Contributing Editor, Logistics Management Magazine
Implications: The Teamsters' concession to give back 10 percent of its wages, and freeze all wages through 2013, is all but official. It is expected to save the $9 billion trucking concern at least $220 million a year. While LTL competitors are eager to paint YRC as a dying company, YRC may have more staying power than many expect.
Analysis: It's the oldest trick in journalism. Find a company in financial difficulty, call a competing company, offer to go off the record with an executive, and write the financial obituary of the company in question.
This story by respected transportation journalist Mark Solomon in DC Velocity falls into that trap. It's hardly Solomon's fault. YRC Worldwide has been a punching bag for so long that everyone wants to be credited with the knockout punch.
This report quotes an unnamed executive of a competing company saying there is a "75 percent chance" that YRC won't survive.
Hey, rival trucking executive, I've got an offer for you.
If YRC is still operating two years from now, would you care to go on the record and identify yourself?
Trouble is, as Mark Twain would say, reports of YRC Worldwide's demise may be greatly exaggerated.
True, YRC Worldwide is not exactly on a growth path. With losses in four of the last five operating quarters, a union company operating in a mature industry with plenty of top-flight non-union competition, YRC Worldwide has dug itself into a nice hole.
Its troubles are legion. Burdened by as much as $2.5 billion in debt from two foolish purchases (long-haul trucker Roadway Express in 2003 and regional operation USF Corp. two years later), YRC overleveraged itself just as a deep freight recession was taking hold in 2006.
No question, YRC has dug itself a nice hole. CEO Bill Zollars overestimated his company's ability to service its debt load, greatly overestimated the value of its new acquistions (particularly, the USF companies, whose financial deterioration has been nothing less than stunning), and YRC has lost scores of top flight executives weary of the the massive changes under way at the once-stoic Overland Park, Kan.-based company.
But let's give YRC some credit while were at it.
1. Nobody foresaw the depth and breadth of this economic recession.
2. No company has changed more in the past two years than YRC in both operations and strategy.
3. Its relationship with the Teamsters is excellent, as proven by this approval of the wage giveback.
4. It is sitting on millions of dollars of valuable real estate associated with its more than 600 terminals, many of which can be sold for handsome sums and leased back with virtually no detriment to its operations.
5. Last but not least, YRC controls more than 22 percent of the $45 billion LTL sector, giving it huge sway over rates and customer preferences. Many of these customers could not bolt to rival companies, which would be overwhelmed by service woes by YRC's closing.
True, YRC's debt is just above junk status. But there are some changing fundamentals that should service all the trucking industry well--assuming that the $800 billion economic stimulus the Obama administration is working on actually succeeds.
First, when an economic recovery occurs, trucking will see it first. The pent-up demand for shipments and inventory will be stunning.
When the credit markets recovery, interest rates promise to be at practically all-time lows, another plus for trucking and its customers.
The collapse of the oil market has brought diesel fuel back to manageable levels, another plus for trucking.
Finally, the landmark agreement with the Teamsters will save YRC in excess of 10 percent of its labor costs going forward. Considering the Teamsters also are giving up cost of living adjustments for the length of the contract, the exact savings for the company will actually be more than 10 percent going forward. This is likely to bring YRC nearly on a wage parity with the likes of FedEx Freight, Con-way and other non-union competition.
And then there are changes that YRC is making that should be of benefit. It has abandoned large chunks of unprofitable business, especially in the regional LTL sector. When the auto industry recovers, one of the big beneficiaries figures to be its USF Holland unit, which has nearly 80 percent of its revenue auto-related.
The long-anticipated combination of the Roadway and Yellow long-haul networks also figures to be a plus. This should have been done five years ago when YRC bought Roadway, but better late then never.
Also, there are signs that YRC is getting choosier about the contracts it chooses to keep. In this case, smaller might be better. It's entirely possible YRC could be a more profitable carrier as a $6 billion concern, than it is today as a $9.6 billion company.
For these reasons and more, it is entirely possible to be somewhat optimistic about YRC's future. Of course, the wild card is the health of the overall U.S. economy. But assuming that the Obama administration tackles that, and there are signs everywhere that the groundwork is being laid for a recovery, YRC may just make it after all.
And that's on the record.
January 7, 2009
Will YRC Make It? Here's One Vote That Says "Yes."PrintEmail to a FriendAnalysis of: Will Teamster Givebacks Be Enough to Save YRC? (DC Velocity – Logistics News, Analysis & More)
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Author of this analysisJohn Schulz
Independent Analyst - Contributing Editor, Logistics Management Magazine
Implications: The Teamsters' concession to give back 10 percent of its wages, and freeze all wages through 2013, is all but official. It is expected to save the $9 billion trucking concern at least $220 million a year. While LTL competitors are eager to paint YRC as a dying company, YRC may have more staying power than many expect.
Analysis: It's the oldest trick in journalism. Find a company in financial difficulty, call a competing company, offer to go off the record with an executive, and write the financial obituary of the company in question.
This story by respected transportation journalist Mark Solomon in DC Velocity falls into that trap. It's hardly Solomon's fault. YRC Worldwide has been a punching bag for so long that everyone wants to be credited with the knockout punch.
This report quotes an unnamed executive of a competing company saying there is a "75 percent chance" that YRC won't survive.
Hey, rival trucking executive, I've got an offer for you.
If YRC is still operating two years from now, would you care to go on the record and identify yourself?
Trouble is, as Mark Twain would say, reports of YRC Worldwide's demise may be greatly exaggerated.
True, YRC Worldwide is not exactly on a growth path. With losses in four of the last five operating quarters, a union company operating in a mature industry with plenty of top-flight non-union competition, YRC Worldwide has dug itself into a nice hole.
Its troubles are legion. Burdened by as much as $2.5 billion in debt from two foolish purchases (long-haul trucker Roadway Express in 2003 and regional operation USF Corp. two years later), YRC overleveraged itself just as a deep freight recession was taking hold in 2006.
No question, YRC has dug itself a nice hole. CEO Bill Zollars overestimated his company's ability to service its debt load, greatly overestimated the value of its new acquistions (particularly, the USF companies, whose financial deterioration has been nothing less than stunning), and YRC has lost scores of top flight executives weary of the the massive changes under way at the once-stoic Overland Park, Kan.-based company.
But let's give YRC some credit while were at it.
1. Nobody foresaw the depth and breadth of this economic recession.
2. No company has changed more in the past two years than YRC in both operations and strategy.
3. Its relationship with the Teamsters is excellent, as proven by this approval of the wage giveback.
4. It is sitting on millions of dollars of valuable real estate associated with its more than 600 terminals, many of which can be sold for handsome sums and leased back with virtually no detriment to its operations.
5. Last but not least, YRC controls more than 22 percent of the $45 billion LTL sector, giving it huge sway over rates and customer preferences. Many of these customers could not bolt to rival companies, which would be overwhelmed by service woes by YRC's closing.
True, YRC's debt is just above junk status. But there are some changing fundamentals that should service all the trucking industry well--assuming that the $800 billion economic stimulus the Obama administration is working on actually succeeds.
First, when an economic recovery occurs, trucking will see it first. The pent-up demand for shipments and inventory will be stunning.
When the credit markets recovery, interest rates promise to be at practically all-time lows, another plus for trucking and its customers.
The collapse of the oil market has brought diesel fuel back to manageable levels, another plus for trucking.
Finally, the landmark agreement with the Teamsters will save YRC in excess of 10 percent of its labor costs going forward. Considering the Teamsters also are giving up cost of living adjustments for the length of the contract, the exact savings for the company will actually be more than 10 percent going forward. This is likely to bring YRC nearly on a wage parity with the likes of FedEx Freight, Con-way and other non-union competition.
And then there are changes that YRC is making that should be of benefit. It has abandoned large chunks of unprofitable business, especially in the regional LTL sector. When the auto industry recovers, one of the big beneficiaries figures to be its USF Holland unit, which has nearly 80 percent of its revenue auto-related.
The long-anticipated combination of the Roadway and Yellow long-haul networks also figures to be a plus. This should have been done five years ago when YRC bought Roadway, but better late then never.
Also, there are signs that YRC is getting choosier about the contracts it chooses to keep. In this case, smaller might be better. It's entirely possible YRC could be a more profitable carrier as a $6 billion concern, than it is today as a $9.6 billion company.
For these reasons and more, it is entirely possible to be somewhat optimistic about YRC's future. Of course, the wild card is the health of the overall U.S. economy. But assuming that the Obama administration tackles that, and there are signs everywhere that the groundwork is being laid for a recovery, YRC may just make it after all.
And that's on the record.
