Less-than-truckload (LTL) carrier ABF Freight System hit back yesterday at a Teamsters union official who urged members to reject a tentative contract hammered out by management and Teamsters negotiators, saying the official speaks for a small fraction of ABF's union workers and is misleading members about what is at stake for the company and its workers.
On Friday, Sean M. O'Brien, who runs Teamsters Joint Council 10 in the New England region, advised ABF members to vote down the proposed agreement because it calls for changes to the pension funding mechanism that could result in significant cuts for ABF workers. In a communique yesterday, the Fort Smith, Ark.-based carrier said that no such scenario is forthcoming, noting that all Teamsters would be provided for in the event the union's New England pension fund refuses to accept the pension contributions that have been negotiated in the tentative agreement.
The company also disputed O'Brien's claim that the New England fund would cut benefits of covered workers and would impose a very costly "default schedule" of contribution increases on ABF unless the carrier agrees to the fund's escalating financial demands. Because Congress eliminated the so-called default treatment option in 2015, the fund cannot act in the manner that O'Brien has warned about, ABF said.
According to ABF, O'Brien is speaking only for a small number of potentially affected union workers, and not the vast majority of employees covered under other pension funds. The Joint Council represents about 200 of the 8,600 or so unionized ABF workers, according to the company. The Council covers 22 Teamsters locals in six states.
Pension funding is perhaps the key issue in the ABF-Teamsters negotiations, which are aimed at replacing a five-year compact ratified in 2013. ABF contends that its pension obligations, which are well above those of its one main unionized LTL rival, YRC Worldwide Inc., put it at a competitive disadvantage. Without an acceptable compromise on the pension front, ABF will need to find labor savings elsewhere, the company has said. In 2009, YRC's union workers agreed to draconian pension cuts to keep the company solvent.
Union officials are expected to meet with ABF's rank and file tomorrow and Thursday to discuss the language in the tentative proposal. The current compact, which was set to expire April 1, has been extended until a final agreement is reached. ABF is a unit of ArcBest Corp.
ABF said it contributes about $12.27 an hour per employee to the New England fund. That would be well above the $7.83 an hour a Teamsters official said the company pays in to cover ABF employees systemwide. The company said overall contributions to the fund have been steadily declining, and the fund will become insolvent should the trend continue.
In what is evolving into one of the company's core messages, it said only about 38 percent of the New England fund's contributions accrue to ABF workers. The balance goes to subsidize the retirement benefits of employees at other companies, both still in business and defunct, the company said. Even workers at YRC are accruing pension benefits at the expense of ABF, it said.
The current pension obligation structure is an unintended consequence of a long-ago era when unionized freight labor was riding high, with membership of around 400,000 or so. Back then, union and management negotiators agreed to a multi-employer pension model, where companies would contribute to pensions of all workers, regardless of where they worked or would work. However, even as union ranks were decimated in the subsequent decades by bankruptcies, buyouts, and the rise of non-union truckers, existing employers were obligated to fund pensions of workers whose employers may have gone out of business, or who may never have worked for a company that was funding their pensions.
In its communique, ABF said O'Brien is "not suggesting an increase in your pension benefit as an ABF employee; rather his focus is only on increasing what ABF contributes, which as we stated above will not benefit ABF Teamsters but will only benefit individuals outside of our company."
Gartner, Inc.
