Freightmaster1
TB Legend
- Credits
- 322
But rising freight prices account for only one part of the explanation as to why YRC Worldwide's shares are undervalued. In our view, the company's true potential remains largely unappreciated due to the pending labor agreement renegotiation with the Teamsters Union. The current agreement expires at the end of March next year.
Some research suggests that labor unions have lost much of their collective bargaining power over the last decade. Additionally, the U.S. Supreme Court's recent ruling against collective bargaining fees applied to non-union workers dealt a to blow organized labor. President Trump even took to Twitter to praise the decision, indicating that the administration in power may not be too fond of labor unions. While this may be true, company management remains optimistic of its ability to reach and equitable agreement between the two parties.
Investors can gauge this outcome by judging from the recent labor agreement between ArcBest (ARCB) subsidiary ABF Freight and the Teamsters, which was ratified July 29th. Based on that contract, YRC's terms are likely to remain fairly unchanged except for some form of contractually obligated pay raises. The possibility of those pay raises being offset by a deal for split healthcare expenses remains unlikely. Under the current labor agreement, healthcare remains fully funded by the company at a time when the cost of healthcare continues to rise. Teamsters refused to budge on that negation with ABF in July. Nonetheless, a viable agreement is essential to both parties involved, as the stakes remain too high for the roughly 30,000 union employees to put the company's financial stability on the line.
This high dependency on union drivers is both a pain and a blessing for the company, which has benefited from having the lowest driver turnover in the industry. Drivers and dock workers have guaranteed healthcare, 401(k)s (or pensions), and competitive wages. This stability also helps relieve some of that upward wage pressure which other carriers are facing. For this reason, investors should not penalize the company as heavy as others. As mentioned earlier, the company's ability to attract 4,000 drivers so far this year should also take a little more investment risk off the table for those concerned about the pending union negotiation.
https://seekingalpha.com/article/4206227-yrc-worldwide-shares-deutsche-bank-upgrade#alt1
Some research suggests that labor unions have lost much of their collective bargaining power over the last decade. Additionally, the U.S. Supreme Court's recent ruling against collective bargaining fees applied to non-union workers dealt a to blow organized labor. President Trump even took to Twitter to praise the decision, indicating that the administration in power may not be too fond of labor unions. While this may be true, company management remains optimistic of its ability to reach and equitable agreement between the two parties.
Investors can gauge this outcome by judging from the recent labor agreement between ArcBest (ARCB) subsidiary ABF Freight and the Teamsters, which was ratified July 29th. Based on that contract, YRC's terms are likely to remain fairly unchanged except for some form of contractually obligated pay raises. The possibility of those pay raises being offset by a deal for split healthcare expenses remains unlikely. Under the current labor agreement, healthcare remains fully funded by the company at a time when the cost of healthcare continues to rise. Teamsters refused to budge on that negation with ABF in July. Nonetheless, a viable agreement is essential to both parties involved, as the stakes remain too high for the roughly 30,000 union employees to put the company's financial stability on the line.
This high dependency on union drivers is both a pain and a blessing for the company, which has benefited from having the lowest driver turnover in the industry. Drivers and dock workers have guaranteed healthcare, 401(k)s (or pensions), and competitive wages. This stability also helps relieve some of that upward wage pressure which other carriers are facing. For this reason, investors should not penalize the company as heavy as others. As mentioned earlier, the company's ability to attract 4,000 drivers so far this year should also take a little more investment risk off the table for those concerned about the pending union negotiation.
https://seekingalpha.com/article/4206227-yrc-worldwide-shares-deutsche-bank-upgrade#alt1
