My dad worked for Yellow on the loading docks from the day he returned from Vietnam to the late-90s. He earned a good wage for a guy who only graduated high school; provided a solid middle-class life for his family. And it was all because of the union. The Teamsters was like religion to my dad.
I always respected the union for what it provided for my dad and his family. I can't stress that enough. However, I can't forget the stories he would tell about new guys who got beat up because they did too much work (made the veteran guys look bad) or didn't follow the unwritten rules (drivers used to carry cash to bribe the dock workers to unload their trucks. without the bribes your truck would just sit there, untouched. however, sometimes a rookie would unload a truck that hadn't made a payment, and that earned him a beatdown). And the stories about pallets that would go missing and end up in my house. One year, for Christmas, everyone got brand new color TVs (a big deal back then); they were all the exact same make/model. My dad must've given away a dozen of them to friends/family. This happened all the time. So yeah, while I respect the union and what it provided, I have a difficult time overlooking the corruption and inefficiencies.
100%, lots of people steal from their employers and lots of corporations are super corrupt. In fact there are lots of corrupt cops, plenty of openly corrupt politicians (who take money from corporations and interest group to support their causes - against the interests of their constituents).
Why is it that "unions are corrupt" is basically the only thing people say about unions in the USA. That's some next level propaganda.
"The closing is bad news not only for its employees and its customers, who generally used Yellow because it offered some of the cheapest rates in the trucking sector."
Perhaps they shouldn't have offered the cheapest rates in the trucking sector while failing their obligations.
Taxpayers ended up holding 30% of this company's stock and they still couldn't figure out how to become profitable after a $700 million infusion?
This race-to-the-bottom stuff is not the answer. The answer is to charge what it costs you to deliver plus a profit. If you can't compete directly on price make up for it in service and reputation.
People will blame unions because the company had to fund pensions and health insurance. It likely will come back as a private company with lower pay, worse benefits, and maybe if people are lucky a 401k.
> People will blame unions because the company had to fund pensions and health insurance. It likely will come back as a private company with lower pay, worse benefits, and maybe if people are lucky a 401k.
You can never compete if you have a pension liability from workers no longer there. A competitor can always come in without that liability and out compete you. It's not good for the business or the employees who will get screwed 30 years later. Why is this such a hard lesson to learn?
"Experts in the field said it was primarily an unaffordable amount of debt, more than the cost of the union contract, that did in Yellow.
'The Teamsters had made a series of painful concessions that brought them close to wage parity with nonunion carriers,' said Tom Nightingale, CEO of AFS Logistics, a third-party logistics firm that places about $11 billion worth of freight annually with different trucking companies on behalf of shippers. He said the company began taking on significant amount of debt 20 years ago in order to acquire other trucking companies."
You can easily compete if you have a pension liability from workers no longer there by making provision for it at the time that the liability is created.
You can't really provision a defined benefit 30 years from now. And i def wouldn't trust you to. Not only that you have to ensure that no one else comes along in the next thirty years and messes with it, or the company tanks or a million other things that could go wrong
If you provision it you might as well give me a 401k where I have discretion over the funds. Or give me money I can use for my own healthcare in the future.
The only people defined pension benefits is shady business managers that don't care and want to get away with cheaper labor costs at the expense of the future which he won't be around to see anyway
Can you? A defined benefit plan is ultimately involving someone taking a risk. One either makes the risk very small, and therefore being a very expensive benefit from the very beginning, or be aggressive, and risk being an underfunded benefit.
Either way you slice it, someone providing defined contributions instead is far safer, and can safely outcompete the defined benefit company, as they aren't taking on either side of the risk: The employee is.
Note that the costs of trucking are the same either way: Paying for the contribution later is precisely a way to be very competitive now, as the idea of a safe, defined pension that you self fund is much nicer until you see what it takes out of your paycheck.
> Can you? A defined benefit plan is ultimately involving someone taking a risk.
Yup. No less than Warren Buffett, who spent literally his entire career performing risk analyses, could figure out a way to manage defined benefit plan risk, and stated as such in a (now famous) memo in the late 60s or early 70s.
Couple that with the number of pension defaults and pension haircuts that have occurred and are likely to continue to occur and 401(k) plans look a lot more attractive, both to the employer and to the employee.
In theory it's possible to make defined benefit pension programs work. In practice they almost always eventually fall apart. The risk is large as to make them essentially financial malpractice.
Defined contribution plans such as 401(k) are much safer for workers and taxpayers.
Pensions seem like an outdated concept, when 401Ks and IRAs are options. Pensions are essentially a tradeoff of lower pay now in exchange for benefits in the future, with a sprinkle of an incentive for increased retention added in, but with the critical downside (to the employer) of it basically being an unbounded, undefined financial downside for them at the tail end.
Employers should pay people, contribute to their retirement funds if further tax-advantaged incentives are needed (and society can and should have further discussions on how complicated these tax laws are), but people should own and be in charge of their own retirement funds.
Pension/retirement arrangements where the contributions are defined but the benefits are not are a risk to the individual -- you have to figure out "how much do I want to invest, what do I think the market will do, where should I put the money?", and if you get it wrong you don't have enough money in retirement. For the company, on the other hand, they're very low risk, because the amount of the company's liability is clearly defined and limited up front.
Arrangements where the benefits are defined are not a risk to the individual (who knows how much they will get, and will get it regardless of market conditions over the next few decades); instead they're a risk to the company/government/etc that provides them (if they set the defined final pension too high and investments don't go so well then it costs the company more than they expected).
In general my preference is that (as a society) we should prefer to impose risks not on individuals but on large organizations who can afford to employ people who take the time to assess those risks and make the necessary decisions, and who have the resources and timescales to be able to weather unexpected downturns. So I think defined-benefit is better than defined-contribution.
(This is of course entirely not the way the pension setup has gone, at least in the UK -- defined-benefit is getting rarer and rarer, and defined-contribution is pretty much the standard for the private sector these days. But I think it's an unfortunate trend.)
> Pension/retirement arrangements where the contributions are defined but the benefits are not are a risk to the individual ... and if you get it wrong you don't have enough money in retirement.
I think this is slightly overstated. The most common outcome in this situation is that you work more, the amount of extra work being determined by the size of the error.
> In general my preference is that (as a society) we should prefer to impose risks not on individuals but on large organizations who can afford to employ people who take the time to assess those risks and make the necessary decisions, and who have the resources and timescales to be able to weather unexpected downturns. So I think defined-benefit is better than defined-contribution.
This isn’t a bad point, and is strengthened by the observation that pensions benefit from pooled risk. E.g. those that live longer are subsidized by those who unluckily die younger, so everyone on average gets away with slightly lesser contributions (or earlier retirements).
But it misses out on incentive mismatches with pensions. A pension administrator is probably not going to work at the company in question for their whole career, and their incentive career wise is probably not the long term maximization of risk adjusted return for this pension, but instead perhaps taking risky bets hoping they pay off for notoriety, or avoiding risk at all costs to avoid complaints.
And this dovetails into some really hairy aspects of pensions that aren’t often brought up.
For one, they generally punish people for alternative lifestyles. Imagine trying to be a childless person retiring early with a pension that doesn’t kick in until 65 because the typical person has kids and works that long.
Also, pensions can be discriminatory. Imagine having a disease that shortens your lifespan, like MS, or a higher risk factor for something like early onset dementia. It’s entirely possible you’re forced to contribute to a pension program you have every likelihood of not being able to benefit from in your natural lifespan.
For a more common example, women live longer than men. Should men have to contribute less for the same benefits then?
> if they set the defined final pension too high and investments don't go so well then it costs the company more than they expected
Like the whole company? Only a government that can print money can really offer such a defined benefit, and even then it is just a mirage since the actual value can be inflated away. The real issue is that it is actually impossible to make such guarantees since conditions can always change, but some people don't want to accept that reality.
Regardless of how you feel about pensions, tying them to the employer is silly because it limits employee mobility and is a liability most businesses don't want to deal with. What's ironic is the people promoting them tend to be the same as the ones promoting nationalized healthcare (or vice versa).
In some industries low worker mobility is very desirable for the company. Offering long time horizon benefits is a good way to reduce turnover. I would prefer my local nuclear plant operator to have employees that stick around and get to know the equipment very well.
401k and IRA were created in a system that included pensions. Now without them, we have a huge shift towards a volatile market with a lot less guarantees, and lower limits. This isn’t a good system we have. Most are ill prepared.
The guarantees provided by the PBGC are very limited and create a terrible moral hazard. Defined contribution plans such as 401(k) are much safer because the assets are in individual named accounts which aren't at risk if the employer or plan sponsor goes bankrupt. Most such plans allow employees to invest in risk-free assets such as Treasuries if they desire.
Exactly. Pensions might have been practical back in the day when people worked for "the company" for their whole career. But when so many change jobs every 5 years or less, they make no sense.
Not every company is a tech company and not every worker is in their 20's. If you're a truck driver there's a good chance you do work for the same company for your entire career.
You've got to be kidding. Trucking has very high employee turnover. Drivers will jump quickly to a competitor that offers slightly higher wages or better scheduling.
The new loyalty relationship is immensely asymmetric: "the company" holds you by the heart plug (health plan, visa, vesting) while at the same time will boot out a substantial fraction of its workforce, regardless of merit, the moment a quarter turns yellow in some spreadsheet or the M+A pendulum comes around again.
There are very few places anyone can spend their whole career at one company even if they wanted to. I've been at this 30 years and I think I've had 10 jobs but only quit once.
Union pensions are typically paid into by companies, but the pension is maintained by the union. Teamsters, IBEWs, etc pensions operate in this manner. You won't work for the same company your entire career, but you're likely to remain in the same field for it.
Pensions work just the same as 401ks, but better when properly funded and governed, because your average worker is unsophisticated as it relates to investing. 401ks were a scam foisted on the public as pension replacements, with corporations instead juicing shareholder returns with what was previously pension contributions. If you're a high earner without any life events that would cause you to liquidate your 401k (extended job loss, medical event), congrats! You have won the lottery.
You can require pension operators to be fiduciaries and act in the best interest of their members, with penalties if they don't (this exists today, current state). If individuals fuck up their retirement (or could not save enough because of their lifetime wage trajectory), oh well, you're going to die in poverty because the socioeconomic system pulled a fast one on you.
I think if you join a Union and demand unreasonable benefits for the skill required for a profession, then you’re responsible for the company’s collapse too.
I don’t think I could drive a big rig, it is a skilled labor profession; so what I’m not saying is ‘anyone could do that job’, but it is a job that can be trained for in a shorter amount of time than say an xray tech in a hospital.
What blows my mind is Unions in the USA often bite hard on the hand that feeds them, when it doesn’t need to be this way. The Union should work with the board to improve profits. Why there isn’ta symbiotic relationship is so strange.
You know this is market right? They can't just charge whatever they want. If their service is worse than competitors and they are unable to make it better they need to undercut the competition. Sometimes businesses fail, that doesn't necessarily mean the strategy was bad, could've just been bad execution.
> Taxpayers ended up holding 30% of this company's stock
Is that really surprising though? Getting a government buy-in like this generally happens after private sector investment falls through. If large swathes of the private sector didn't believe that the company would become profitable after infusion (they would have bought low and sold high if they did), why would public sector capital have any different outcome?
"Lo barato sale caro" which translates to the "the cheap becomes expensive". If you see something that is cheaper then everything else, just assume they're cutting corners in places that matter. It will be interesting to see how many millions of dollars they use to keep the executive team in place during the bankruptcy despite the fact it's their decisions that lead to failure. I also wonder how much student debt we could have cancelled for 700M, it would have been a better investment.
> "Lo barato sale caro" which translates to the "the cheap becomes expensive"
99% true with some very few exceptions. I remember Evan Davis' on a BBC podcast called "The Bottom Line". In said podcast he was interviewing various business people.
One of them was the CEO of Primark.
Over 'here' (in Europe - in multiple countries) you can see MASSIVE stores (I haven't yet been on a Primark store that was smaller than a football pit (per floor - typically two floors - lower for women, upper for men and kids), and they have shockingly low prices. I haven't visited a Primark outside Europe yet, so I have no opinion about other regions.
So.. back to the CEO.. he was responding that their low prices is not because of low quality, but because they never spend a dime on marketing, and thus they can use these savings to improve quality and lower prices, and then went on to challenge the journalist to remember/find one (paid) advertisement.
At that point (5? 6? 7? years ago) I also tried and for the life of me I could not remember ever seeing ads on the Tube (London underground), newspapers, bus stops, internet (but I block 99.9% of them).. anywhere.
So yes, 99% true but then I have a black long-sleeve t-shirt Cedarwood (Primark product) that 5 years on is still in great shape and I do wear it a lot, while the respective H&M don't go past the 2 year mark.
> The answer is to charge what it costs you to deliver plus a profit. If you can't compete directly on price make up for it in service and reputation.
I'm guessing the cause is more complicated than them just not knowing they should make a profit. If I'm wrong, write them a letter with this advice, there may still be time to save the company.
This works in a vacuum, but in many industries you get undercharging and living off investments, be it Uber or a gajillion startups, many of them mentioned here on HN.
That's why we have "financial innovation". Which in this case boiled down to using investment money to buy up competitors, with the benefit of scale (and monopoly pricing) to come later. And then the benefit doesn't come ...
Ok, in the case of Uber it's undercharging and living off investments (from investors who hopefully know what they're doing), in the case of this 99-year old company it's undercharging and living off federal bailout packages (paid by the taxpayer). I would say that's a bit different...
Why are industries dominated by large unprofitable companies? I was told the way to succeed was to offer goods and services that people want, make a profit and grow the company; this was a key benefit of the free market and ensured consumers had access to many good choices and it was all stable and sustainable. Instead unprofitable companies dominate, not because they succeeded in the market, but because they received favor from the wealthy.
I'd like an economic system where the companies that offer the best goods and service at the right price grow and succeed. I've heard this is how capitalism is supposed to work, but more and more it seems the key to success is currying favor with the wealthy and capturing a market through external means.
>Why are industries dominated by large unprofitable companies?
The logic is quite simple: by undercutting your competition, you aim to quickly drive others out of business and secure a monopoly. Once in such a position, making a profit becomes much easier.
Every time I think about this I keep coming back to anti-trust enforcement, we need more of it. And perhaps a single entity having enough money to essentially buy an entire industry isn't a good thing.
The problem is, that the thing that's happening is shirt-term good for the users, and people don't want any government action until it's too late.
If i start offering $5 oil changes (oil included, price difference covered by VC money), that's good for the consumer... then all the other shops close down, but consumers still get the $5 oil changes... then I hike the price, and only then people start to complain. And if you close me then, who will change your oil?
Imagine government banning google for offering free email and killing most of the competition back then... people would complain, a gigabyte was a HUGE amount of space for then, and all that for free!
Funny how this is being framed by the article writer in terms in unionization. Are they suggesting that the workers should just give up their pensions and wages so that a clearly broken and mismanaged company should just lurch onwards?
Why is it when a company succeeds everyone praises the management and heaps huge bonuses on the C suite but when they fail they try and blame the workers.
Though the article did hit the nail on the head with this statement from the Teamster's head: “Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government."
The workers conceded quite a bit over the years, but despite that and the bailout, the management of Yellow still couldn't make it work.
To be fair, the workers made concessions, but they remained higher-cost than non-union competitors. Unfortunately for them, trucking is a highly-competitive industry with little brand loyalty where lowest cost usually wins.
"Socializing the losses". It will happen anyway. Perhaps not in the USA, but in Europe, the 30,000 unemployed would get an unemployment benefit for X amount of months, their formetly-private-provided healthcare wouldn't be paid for (thus covered by the state), and so on.
So, doing the math.. does it make sense to 'inject $€ X million to keep the company afloat, get the 30,000 and their families fed, the money would come back to the state via taxes, in the hope that the company will go back to the green?
If one (not me) can crunch the numbers, it could (or not?) point to the direction that it was money well spent - and net-net it wasn't "$€ X million" wasted but a fraction of that(?)
The company was an unmitigated shitshow for a long time, and didn't perform its basic duties as a shipper. I've had LTL shipments lost for weeks at a time with nothing but a shrug and an "It'll (maybe) get there when it gets there".
So it doesn't surprise me at all that they couldn't reach an agreement with their labor.
This mirrors my experience. Not once did I have a Yellow LTL shipment arrive on time, and typical delays ranged from 2 days to 2 weeks or longer. Shipments would get lost in a terminal, down to staff insisting it never arrived on the trailer, and then spontaneously reappear after a loss claim was filed.
I would've loved to avoid them but vendors would often choose them due to their cost.
The problem isn't the unions. If you've interacted with Yellow you'd know that. It's that the company is disorganized and management is nowhere to be found.
Look at UPS - union shop, going strong. Management is organized. Company is doing fine.
It's amazing to me that in 2023 when the small-package industry (USPS, UPS, FedEx) is SO SO SO highly optimized that I have a choice of 3 carriers to get a box across the country in 1-2 days and by and large it works pretty darn well, and yet if a company wants to ship a pallet the same place, the logistics fall apart into garbage "it'll get there when it gets there."
I know FedEx and UPS offer freight services, but it doesn't sound like they're dominant or close to it in the industry.
Why didn't they put Yellow and the likes in the ground years ago?
There is a very big difference in price. Slow unreliable shipping is something that established companies know how to deal with, while many of them don’t know how to get a positive ROI out of paying more for freight.
Of course, the fact that Yellow has shut down suggests that may not be as true as it once was.
Where it is may be where it's supposed to be. Not knowing that doesn't make it lost.
Ex: If I send a ship to sea before we had radio/telegraph, I may not know where it is at any given point, but it's not lost and I don't need to go find it.
It's lost when it misses a check-in, and what constitutes a check-in is really company/org dependent.
So 30000 people lose their job and the US taxpayer is out more than $700 million in loan guarantees. The only question remaining is how much money do the owners of the company walk away with?
Yes, government bailouts of private companies really need to stop. It just prolongs the problem and doesn't allow the market to properly respond to risks and rewards.
I believe they are referencing executives not stock owners. I imagine a company like this going out of business is pretty profitable for execs... but thats just me guessing. Its entirely possible that this company was run by the few executives with souls and a sense of actual responsibility
Not defending how our stuff is set up, but it would be interesting to know how much taxes Yellow paid over it's lifetime. Excluding taxes paid by employees.
It would be interesting to see the net benefit a company had. Obviously putting money in employee pockets is a net benefit, but it stops being so great if tax dollars are just subsidizing bad business leading to a net drain on tax payers
"In April 2022, Democrats on the Congressional Select Subcommittee on the Coronavirus released a report claiming the loan violated the terms of the CARES Act, and that it resulted from lobbying and close connections with former US president Donald Trump. YRC reportedly got the loan on national security grounds, over the objections of the Defense Department that the company's services could be replaced by better providers, and that the company was in the middle of a False Claims Act in which it was accused of overbilling the government and making false statements."
I’m not making any statement on whether that CEO did a good job or not, but I’d like to point out that if you had a failing company, it might make a lot of sense to hire an expensive hotshot CEO to turn it around (and to get the best you would also offer benefits like golden parachutes). So it’s not necessarily a case of “the CEO is getting paid exorbitantly to do a bad job”.
Total comp was over $2m/yr for the past several years, and the C-suite execs were each earning $1m-$6m the past several years, even the CTO. It’s another case of public losses, private profits.
They have filed for bankruptcy, so leadership will still likely get their compensation packages.
I'm not going to waste time doing the research, but I would assume leadership had been receiving all of their usual comp and bonuses right up until the end as well.
Yellow is a publicly traded company. Their stock is up on the news of the shutdown, which should give you an idea of how broken the situation was: https://www.google.com/finance/quote/YELL:NASDAQ
US Taxpayers own 30% of the outstanding stock in exchange for a $700 million pandemic loan in 2020.
> Higher prices will hit Yellow customers, Jindel said.
> “The reason they were using Yellow was because they were cheap,” he said. “They’re finding out that price was below the cost of supporting a good operation.”
What happened that made them decide to shut the company down instead of raising their prices?
I would presume it was because the union contract did not allow them to lay-off or furlough any workers, and they'd lose less money by being 'cheap' than by being more expensive and having workers sitting around.
Put another way, their labor was probably their largest cost center, and a fixed cost, which means that their marginal cost to provide the service was actually low, but the company was unprofitable due to their fixed costs.
They also claimed that the union wouldn't meet them at the bargaining table. I guess if you're contractually obligated to burn through money, you do that until you're insolvent and go to bankruptcy court to sort it out.
Maybe, but at least a couple of quarters of demonstrable uncompetitiveness would be solid evidence to take to the negotiating table with the unions to get the labor cost down (if that really was the primary cost problem).
They shut down because they lost customers after the union threatened to strike. The hit to their stock price, even after the union withdrew the threat, meant they couldn't get more funds to continue operations.
Perhaps they could have raised prices earlier and gone out of business faster, but it's pretty clear that the writing was on the wall for Yellow for quite awhile.
Labor unions which have members at multiple companies in one sector are often reluctant to make concessions at any one company, lest it erode their bargaining positions at the others.
I don't think it is a tolerable outcome for the employees; perhaps they were hoping for another bailout? We should also remember that unions suffer the principal agent problem just as badly (and perhaps worse) than corporations and governments.
I don't know their specific numbers, so this might not be true in their case, but raising prices will drive away customers. Depending on where you're at on the curve, this can reduce your revenue because the adding higher price didn't make up for the lower volume.
I hope there will be a HBR or some other case study done on Yellow, because the interplay between bad loans + union demands + poor management seems like something US businesses need to be more prepared for.
The electrical union that taught me all my fundamental understanding of electrons was created back in the day because the fatality rate among electricians at that time was 1/2 lol.. For every two electricians working to electrify America, one of them wouldn’t make it home to their families.
Ironically, the guy who created the IBEW, Henry Miller, was himself killed on the job after making contact with a live wire and falling off the pole and hitting his head.
In the early days of electricity, the workers had no understanding of the thing they were working with, and they certainly weren’t given proper tools.
The voltage tester of the day was licking the wire to see if it was live. A method thought to save people after electrocution back then was to stick your fingers in their rear to give them a sudden jolt lol.
From the sounds of it, its mostly the bad loans + poor management part that killed Yellow. Management of the company have been asleep at the wheel for some time now, union demands are not likely the precipitating factor here.
EDIT: All I'm pointing out here is that I don't think this can land squarely on union demands, which is what I think some of the press are making it out to be. The actual financial mismanagement of the company precedes anything the union was asking for (which in part, was for Yellow to live up to their previously agreed obligations)
It doesn't seem like the "union demands" killed the company narrative tracks here, since the union demands were things like "You should actually make the contributions to our retirement accounts that you're obligated to make."
The threat of a strike was the final blow, causing them to lose customers and dropped their stock price such that they didn't have anything to borrow with.
All of the bad decisions they'd previously made out them in this position, but the union threatening to strike was the straw that broke their back- despite the union withdrawing the threat.
That last tidbit probably tells you all you need to know about how little chance the company had at surviving.
The company entered into questionable acquisitions though largely to try to become more competitive in the LTL market with their non-unionized competitors. Now they executed the mergers poorly and failed to integrate for too long, but even some of those integration challenges were due to union considerations. So yes management was incompetent but I think being unionized did play a large role in their demise as well.
The union was planning a strike but canceled and gave some leeway on late pension payments due to Yellow's financial hardships.
I often hear that it's good for companies to fail if they can't meet a minimum threshold of compensation. If that's the case the unions should have gone on strike.
What would be the legality of using stock shorts to fund a labour strike?
I'd imagine having all workers walk out would be pretty effective in tanking the stock price, and letting those workers know that they'd be fully funded for any time on the picket line would be huge for solidarity.
One could imagine that timing a strike around predetermined stock based compensation executive payouts might provide a bit more incentive to get to the negotiation table.
You are describing insider trading, I'm pretty sure.
Either the strike is announced before you make the shorts, and public knowledge, or it's not, and it's information you only know by connection to insider information.
I could see myself calling that color a dark yellow. Doesn't look red enough for it to really be orange; but of course color is in the eye of the beholder. ;-)
big corporation = big regulation + big unions (add more items) = no flexibility
Looks like all big enterprises have no option but to end up in bankruptcy court, given that they're too big to make drastic changes, have to deal with strong arming unions and only when it's too late things have to be decided in court
Just another reminder that capital's eventual state is consolidation in the hands of monopolies.
When companies of this size fail, the consolidation happens at breakneck pace that the legal system of the US obviously cannot keep up with, and we all end up losing, because of reduced competition and worse service as a result.
And this is a perfect time to talk about worker owned corporations.
The employees should be able to buy the company. Not only that, but they should also be given first rights to do that. And if government was serious about keeping businesses in operation through bankruptices, they would also issue a loan to the employees to complete this.
That would keep the company running, under employee control, and save a whole pile of jobs.
The problem with Yellow is that it was a terribly-run company on its way to doom…some companies should just be let to die and should have never received a government loan to postpone the death.
Let’s assume employees take over operations, whom among them will step up to run the company? How are you sure they’ll turn it around successfully?
Running a company is hard enough with the typical model. It’s much harder if you try to run it as a democracy where clueless people get to vote on management decisions..
Worker owned corporations don't work for the same reason communism doesn't work.
"Bad" actors (in this case people who are bad with money) will simply sell their share of the company for short term household needs, which will begin the process of consolidating company ownership in the hands of more frugal/savvy owners.
Then in the end you simply end up with the same ownership distribution as it exists today.
> The $2.2 trillion pandemic relief package that Congress passed in 2020 included a $17 billion pot of money set up by Congress and controlled by the Treasury Department to assist companies that were considered critical to national security. In July 2020, the Treasury Department announced it was giving a $700 million loan to the trucking company YRC Worldwide, which has since changed its name to Yellow.
...
> The loan raised immediate questions from watchdog groups because of the company’s close ties to the Trump administration and because it had faced years of financial and legal turmoil. The firm had lost more than $100 million in 2019 and was being sued by the Justice Department over claims that it had defrauded the federal government for a seven-year period. It recently agreed to pay $6.85 million to resolve allegations “that they knowingly presented false claims to the U.S. Department of Defense by systematically overcharging for freight carrier services and making false statements to hide their misconduct.”
> To qualify for a national security loan, a company needed certification by the Defense Department.
> According to the report, defense officials had recommended against certification because of the accusations that the company had overcharged the government. They also noted that the work that the company had been doing for the federal government — which included shipping meal kits, protective equipment and other supplies to military bases — could be replaced by other trucking firms.
..
> Yellow had many connections to the Trump administration. The company had financial backing from Apollo Global Management, a private equity firm with close ties to administration officials. Mr. Trump had selected the company’s chief executive, Darren D. Hawkins, to serve on a coronavirus economic task force. And he had nominated the company’s former chief executive, William D. Zollars, to the U.S. Postal Service’s board of governors.
..
> A law firm representing Yellow sent a letter to Mr. Clyburn before the release of the report defending the company’s actions and describing many of the allegations as “baseless.” The company stood by the trucking services data that it provided when applying for the loan and said that Yellow has paid more than $25 million in interest on the loan. The letter also noted that company had settled its dispute with the government last month.
> The letter, which was written by Marc E. Kasowitz, who was previously Mr. Trump’s personal lawyer, was provided to The New York Times by Heather Nauert, an adviser to Yellow who was previously a spokeswoman for Mike Pompeo, Mr. Trump’s secretary of state.
> The company received a $700 million loan from the federal government in 2020, a loan that resulted in taxpayers holding 30% of its outstanding stock. And the company still owed the Treasury department more than $700 million according to its most recently quarterly report, nearly half of the long-term debt on its books.
Let's see what people who routinely rant about government bailouts have to say about this. I predict silence, because the dollars went to the right kind of people.
It's always amusing that they frame this as the lowly taxpayer holding stock in a company after the government bails a company out. I've never received the stock certificates, and I certainly don't see any dividends or have the ability to sell my commensurate portion of the stock holdings. The taxpayer pays for the bailouts but does not see any benefit for doing so.
Not a fan of government bailouts or funding any company at all nor an American, but this framing is weird.
Citizens don’t get dividends from government property. They get their tax benefits from government services, e.g, infrastructure, healthcare, police, etc.
Not only are you not an American, you have no idea how our government works apparently. States can pay out financial benefits to citizens in the form of checks to residents, for example see Alaska. During my life time there have been multiple instances of the federal government refunding taxes collected for one reason or another.
You don't get to walk into a base and fly military jets either, but it's not wrong to describe them as being owned by the citizens of the country. The government owns the stock, and its performance either way impacted you (us) in some quantifiable way.
I always respected the union for what it provided for my dad and his family. I can't stress that enough. However, I can't forget the stories he would tell about new guys who got beat up because they did too much work (made the veteran guys look bad) or didn't follow the unwritten rules (drivers used to carry cash to bribe the dock workers to unload their trucks. without the bribes your truck would just sit there, untouched. however, sometimes a rookie would unload a truck that hadn't made a payment, and that earned him a beatdown). And the stories about pallets that would go missing and end up in my house. One year, for Christmas, everyone got brand new color TVs (a big deal back then); they were all the exact same make/model. My dad must've given away a dozen of them to friends/family. This happened all the time. So yeah, while I respect the union and what it provided, I have a difficult time overlooking the corruption and inefficiencies.