Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 28, 1994 TAG: 9404280207
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Journal of Commerce
DATELINE: WASHINGTON LENGTH: Medium
Standard & Poor's Corp. placed the parent companies of two struck carriers on its CreditWatch listing with negative implications.
S&P put Arkansas Best Corp. and Yellow Corp. on CreditWatch, the first step toward downgrading the credit ratings of both companies, and revised its outlook for two others, a sign that the strike is beginning to inflict permanent financial damage on the carriers. Credit ratings are used to determine a company's cost of borrowing money: With strong financial ratings, a company can borrow at cheaper rates.
The negotiations between the union and Trucking Management Inc., representing nine carriers, are being held under the direction of the Federal Mediation and Conciliation Service. Both sides exchanged new proposals Wednesday.
The new management proposal was believed to increase slightly a long-standing offer of $3 an hour over a four-year contract. The proposal included paying new-hire casual workers at the same rate as current employees. The gap also was being narrowed on use of intermodal, with the carriers backing off from their original 35 percent figure to the 25 percent range, according to sources close to the talks.
A carrier official, who asked that his name not be used, said both sides had exchanged proposals ``that considerably closed'' their monetary differences. One source said the talks Wednesday resembled more traditional labor-management bargaining for the first time.
Meanwhile, S&P also said it was revising the outlook on Consolidated Freightways Inc. and TNT Freightways because of the strike.
The rating company said it took the actions because the protracted length of the strike makes it likely that there will a permanent diversion of freight to nonstriking competitors. The strike affects eight less-than-truckload carriers and Sea-Land Service Inc.
Perry Boyle, stock analyst for Alex Brown & Sons of Baltimore, said that the carriers were clearly losing money but said they could all ``last through a very long strike.''
``The companies have all cut their costs precipitously since the strike and reduced their fixed costs,'' Boyle said. ``Does it make sense for them to settle with the Teamsters at whatever the Teamsters demand just to stop the strike immediately? I don't think so.'' Boyle said, however, that the longer the strike lasts the more probable it is that the carriers will have to change in the future, either going nonunion, getting smaller or by no longer operating coast to coast.
Ron Carey, Teamsters president, meantime, is facing not only a fight from management: An internal union power struggle is also under way. One union source, who opposed Carey's attempt to dissolve the union's four regional conferences, said Carey had given up his attempt to force through the conference dismantling until after the strike.
by CNB