Life on the Road – Trucking News Blog

In an article in Thursday’s Wall Street Journal http://online.wsj.com/article/SB124234450459821593.html,  YRC Worldwide Chief Executive William Zollars said he would be approaching the US Treasury to plead for $1 billion in TARP funding to help cover pension obligations. Yellow-Roadway Corp recently negotiated a pay reduction contract of 10% among its drivers, as all areas of transportation suffer from the continuing recession. Zollers apparently doesn’t expect to get the TARP funds, but is using the application as a method to get the administration’s attention in regards to the pension problem the Teamsters face.

What isn’t clear in the article is why Zollers feels he must try to escape the $2 billion indebtedness to the Fund for what he says are pensions to retirees that never worked for YRC. This is the part that will start the anti-trucking crowd on a rant, for sure-but it’s not rocket science:

Central States Pension Fund AGAIN!

Zollers is right-these retirees never worked for YRC, many of them. The problem is the combined pension funds of Teamster locals and companies that have, in many cases, gone out of business and are no longer contributing to the fund. Those remaining must raise their contributions to keep the benefits solvent. This has been going on for years-as companies either closed or shifted their operations to non-union divisions. Central States has had to fight many a court battle to get dollars they felt were owed the fund.

Much of this is the result of large carriers who engaged in ‘double-breasting’-having both union and non-union divisions. This was probably the first peal of the death knell for the Teamster’s strong union-and marked the beginning of the end of their guaranteed pensions. As carriers shifted more of their fleets to the non-union side, many engaged in a little quiet union-busting to discourage their union drivers from remaining loyal to the Teamsters. Of course, when you control the paycheck, it isn’t hard to do.

This is an ugly situation. You really can’t blame YRC for trying to get out from under costs they don’t think should be theirs to pay. But there are a bunch of retired truckers out there who’ve built the entire rest of their life around that pension. If a company no longer exists, how can you collect? For their part, Central States appears to have been mis-managing those pension funds for longer than most of us have been breathing. It’s a dirty business all the way around.

No doubt, the intent here is to have the Pension Benefit Guaranty Corp pick up some of the costs of these pensions-after all, that’s what its there for. Except, the Pension Benefit Guaranty Corp will likely be picking up pension costs for much of the auto industry and is daily having to take over pensions from companies closing down and going bankrupt in this economy. Pension Benefit Guaranty Corp is already looking strained-it’s apparent that it’s underfunded. That means the next ones coming to the Treasury for TARP funds may well be them. And, ultimately, the taxpayers will all be paying the price.