Sean O’Brien just might be the worst labor leader in America. If you don’t believe me, just consider his horrible performance last week culminating in the unemployment of thousands of his working-class members, and a sweet payday for Wall Street fat cats.
As the president of the International Brotherhood of Teamsters, O’Brien styles himself as a fighter, an in-your-face kind of guy in public and on social media, daring big corporations to mess with him and his members under the handle @TeamsterSOB. He recently negotiated a deal with UPS that averted a strike and won some concessions, so he must be doing good, right?
A closer look at O’Brien’s oeuvre as a labor leader is more complicated: he’s buddies with Bernie Sanders, the socialist Vermont senator who has a habit of praising dictators like Fidel Castro. Nice. He’s a big name-caller during public confrontations. Childish. He also effectively laid off 30,000 people last week because of an idiotically pointless negotiating strategy that put a trucking company called Yellow out of business. Really dumb.
When you think of the Teamsters, you often think of Jimmy Hoffa Sr., its iconic and flawed former leader. Hoffa spent time in jail because he was said to engage with mobsters while conducting union business. But no one doubted his intelligence or his commitment to the rank-and-file.
He built the modern Teamsters from disjointed groups of local truckers into a national powerhouse and the largest union in the country. He knew when to strike and when not to. Something called the National Master Freight Agreement, a set of rules between truckers and employers, was a Hoffa brainchild and it remains in effect to this day.
It’s widely believed Hoffa was killed by the mob because he put his members’ interests over theirs. After he was released from prison, Hoffa sought to regain leadership of the union and wrest control of it from the mob, until he disappeared in 1975.
Yeah, Hoffa was a loyal, tough and, above all, pretty shrewd guy. His son James P. Hoffa would later run the union in much the same way. You can’t say the same for O’Brien in the shrewd department following his dealings with Yellow, a company that engages in a niche and difficult business known as “Less Than Truckload” freight shipping.
Yellow has been around for nearly a century. In recent years, its management certainly made mistakes — lots of debt for acquisitions. It nearly folded during COVID and needed a loan from the Trump administration to stay in business.
It’s been limping along ever since. Earlier this year, management came up with what it billed as a long-term solution to its woes: A restructuring that consolidated operations without layoffs. It also asked its drivers for some trivial concessions like unloading trucks.
Enter Mr. Tough Guy Sean O’Brien. The Teamsters union chief said no — his members have been giving too much back to the jackasses who have been running Yellow into the ground for too long. Yellow said that if the union didn’t compromise, it would go out of business.
O’Brien’s response: A photo on Twitter of a gravestone, with the epitaph: “Yellow 1924-2023.”
Was it a bluff? Yeah probably, but it was a pretty dopey one. Maybe O’Brien wanted to squeeze a few more bucks out of Yellow in labor concessions, even though Yellow isn’t exactly rolling in cash and wasn’t bluffing about bankruptcy.
Sean’s tactic backfires
In any event, O’Brien’s brinkmanship (if you can call it that) backfired. Yellow filed last week and, yes, 30,000 people, 22,000 of them Teamsters, lost their jobs.
When asked by Fox Business’s Cheryl Casone if he felt any responsibility, O’Brien’s response was “No, not at all,” and that it was all Yellow’s fault. Pretty laughable stuff for anyone with half a brain, including his members, whom I hear put pressure on O’Brien to launch last-minute negotiations with the company.
O’Brien says the company called him first. Either way, it was too late: Company officials told me they told O’Brien his intransigence caused all customers to bolt to other carriers.
A lose-lose, right? Nope. Wall Street is making bundles off Yellow’s carcass. The company filed what’s known as a Chapter 11 liquidation. That means it needs to pay back its creditors and make good on $1.5 billion in secured debt. A chunk of that will go to pay off the federal-government loan, and another, bigger piece will be to make the hedge fund Apollo Global whole.
Apollo is sitting pretty in the aftermath of Yellow’s demise, and so is a restructuring firm named Ducera, which has been hired to liquidate the company and pay back the secured creditors.
Ducera is raking in the cash because Yellow actually owns its assets — trucks and the land beneath its offices and terminals — and bankers there see big interest from buyers with bids that could exceed debt levels as they sell Yellow’s assets. One reason: They will be sold to competitors that aren’t union shops and thus can afford to expand without having to deal with O’Brien and the Teamsters.
That’s why savvy traders are betting that stockholders, who usually get wiped out in liquidation, will now get some money back in this one because of the strong demand for assets that Ducera is bidding out.
Shares of Yellow, which fell to below $1 and were heading to zero during the Teamsters standoff, closed Friday at $1.86 and at one point spiked above $4. Hedge funds are jumping in and out of the stock making tons of cash while all those Teamsters are staring at unemployment.
All because of the “brilliance” of @TeamsterSOB.
