Trucking company Yellow, which has operated for nearly 100 years and is one of the largest freight companies in the United States and the world, shuttered its doors on Friday after it failed to reach a new labor deal with the Teamsters. The decision means that around 30,000 workers have been laid off, and further ripple effects are expected across the US economy.
Yellow Transit Freight Lines was founded in 1929 by the same brothers who formed the Yellow cab company. Through growth and acquisitions, the company became one of the largest carriers of freight in the world; however, in recent years it has been beset by a series of financial hardships. The company received a $730 million loan from the government during the pandemic in exchange for a 30% equity stake in the company that is now owned by the federal government. The company is expected to enter bankruptcy and taxpayers will likely receive pennies on the dollar for the loan given to the company, less than half of which has been repaid.
Critical to the company’s failure was its inability to reach a new labor deal with the Teamsters, which represents its employees. The company had called a restructured deal with the union vital to its continued operations, but the union responded to this announcement and a proposed change to benefits package for employees by threatening to strike, which depressed stock prices, caused customers to transfer business to other companies, and further imperiled the financial stability of the company. The Teamsters withdrew their strike threat last week, but the damage was already done, and the union warned employees this week that the company would likely not survive.
For its part, the union blamed the company for its failure, claiming that the company had “failed its workers” by failing to make a pension fund contribution on time and caused an “affront to the livelihoods and well-being of 22,000 Teamsters nationwide.” The union did not comment on what effect the closure of the company due to union demands would have on the livelihood and well-being of its own members.