-----Original Message-----
From: Wes Kemp [mailto:
[email protected]]
Sent: Wednesday, April 21, 2010 5:02 AM
Subject: Wage Reduction - Job Security Plan
Wesley B. Kemp
President and Chief Executive Officer
Dear Fellow Employees,
As you know, ABF lost almost $100 million in 2009, the greatest loss in our history, due largely to the worst economic conditions since the Great Depression of the 1930s and our inability to adjust spending to the levels of our competitors. In addition, our parent company's unrestricted cash reserves have dropped 44% and we're starting to take on debt again. While some segments of the economy are showing signs of recovery, the LTL sector of our industry is still lagging. There continues to be excess capacity, and companies with significant cost and operating advantages are taking a toll on our margins. Very simply, we need more business and better yields which doesn't appear likely in the foreseeable future. There are just too many LTL carriers for the volume of business currently available in the market.
In light of this situation, we approached the IBT some time ago in an effort to negotiate a Wage Reduction - Job Security Plan (The Plan) similar to that of our primary competitor, YRCW. After many days and weeks of discussions and negotiations, we've reached a tentative agreement that I believe is fair, appropriate, and the absolute minimum necessary given our circumstances. I assure you this is not something I relish doing. What's made ABF great is the caliber of our people and I'm finding it most difficult to ask you to help solve a problem that is not of our doing. However, in reality, I feel we have little choice if we're to insure the long-term security of our jobs and the viability of our company. Consequently, we're asking our contractual employees to approve a 15% wage and salary reduction for the duration of the current 2008-2013 National Master Freight Agreement (NMFA ). In exchange, we've agreed with the IBT to include multiple snapback provisions that would restore some or all of the wage and mileage rates if ABF's operating metrics improve sufficiently. In addition to snapback provisions, we've agreed to establish the Earnings Plus plan. Under Earnings Plus, employees will receive cash payments every calendar quarter for which the company's public operating ratio is better than 99. The better the company operates, the more employees will receive. It's actually possible to earn more than was originally sacrificed in a quarter although, that will require a considerable improvement from where we are today. The snapback and Earnings Plus provisions are automatic. When company performance improves sufficiently, employees will earn additional income without our having to return to the bargaining table which, as you know, can be a very time consuming process. Earnings Plus will apply to both union and non-union employees.
The Plan requires the company to continue making full contributions to the health & welfare and pension funds of our contractual employees. In addition, it stipulates equal sacrifice of all employees, union and non-union alike, including management. However, the sacrifices already borne by our non-contractual employees since the beginning of 2008 will be taken into account.
Full details of The Plan are available online and I ask that you keep an open mind and exercise patience until you've been fully informed of its content by both company and Teamster officials. It's important that you make a decision based on facts rather than what you may have heard in the rumor mill. There will be meetings held by local unions as well as the company. I encourage you to attend those meetings and get your questions fully addressed. You will also be receiving a Team Report DVD at home covering our results for the first quarter of 2010 and key points of The Plan. In addition, starting today you may call the toll-free job security hotline devoted exclusively to answering your questions - just dial 877-321-8270 at any time. It's available 24 hours per day, 7 days per week until this matter is concluded. You may also send me an email at
[email protected] or post a question under the new InfoRoundtable subject, ABF and IBT Job Security, found at abfatwork.com.
I'm most pleased to learn of the IBT leadership's overwhelming endorsement of The Plan and ask for your full support during this particularly challenging time in our history.
