Business teams lose jobs – Sean O’Brien is to blame

Charles Gasparino

a job

by Charles Gasparino

August 12, 2023 | 10:14 p.m

Sean O’Brien may be the worst labor leader in America. If you don’t believe me, just consider his terrible performance last week culminating in thousands of working class people being unemployed, and paying a nice day for the fat cats of Wall Street.

As the head of the International Brotherhood of Steel, O’Brien styles himself a fighter, the in-your-face kind of guy in public and on social media, who dares big corporations to mess with him and his members under the name TeamsterSOB. He recently negotiated a deal with UPS that averted a strike and won some concessions, so he must be doing a good job, right?

A closer look at O’Brien’s work as a labor leader is more complicated: He’s friends with Bernie Sanders, the socialist Vermont senator who used to praise dictators like Fidel Castro. Nice – good. It is a big club during public confrontations. childish. And he already laid off 30,000 people last week over a 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 famous and flawed ex-commander. Hoffa spent time in prison because he was said to have had dealings with gangsters while running union businesses. But no one doubted his intelligence or adherence to the rules.

He built the modern Teamsters from loose bands of local truckers into a national force 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 truck drivers and employers, was Hoffa’s brainchild and is still in effect to this day.

It is widely believed that Hoffa was murdered by the mob because he put his members’ interests above their own. After his release from prison, Hoffa sought to regain leadership of the union and wrest control of it from the mob, until he disappeared in 1975.

Yes, Hoffa was a loyal, strong man and above all very smart. His son, James B. Hoffa later unionized in the same way. You can’t say the same for O’Brien in the smart department after his dealings with Yellow, a company in a specialized and challenging field known as “less-than-truck” cargo shipping.

Yellow has been around for nearly a century. In recent years, its management has certainly made mistakes – a lot of debt for acquisitions. It nearly folded during COVID and needed a loan from the Trump administration to stay in business.

He’s been limping ever since. Earlier this year, management came up with what it described as a long-term solution to its problems: a restructuring that ramped up operations without laying off workers. It also demanded frivolous concessions from its drivers, such as unloading the trucks.

enter mr. Tough guy Sean O’Brien. The Teamsters’ guild chief said no — its members had been giving too much back to the idiots who had been running yellow on the ground for far too long. Yellow said that if the union did not concede the business.

O’Brien’s response: Twitter photo of a grave, with epitaph: “Yellow 1924-2023.”

Was it a hoax? Probably yes, but it was very stupid. O’Brien may have wanted to get a few extra dollars from Yellow in business concessions, even though Yellow doesn’t exactly trade in cash and hasn’t been bluffing about bankruptcy.

Sean’s tactic backfires

In any case, O’Brien’s brinkmanship (if you can call it that) backfired. Yellow filed last week, yeah, 30,000 people, 22,000 of them Teamsters, lost their jobs.

When asked by Fox Business’s Cheryl Casson if he felt any responsibility, O’Brien’s response was “No, not at all,” and that it was all Yellow’s fault. Pretty funny stuff for anyone with half a brain, including their own, that I hear pressure O’Brien to start last-minute negotiations with the company.

O’Brien says the company contacted him first. Either way, it was too late: Company officials tell me they told O’Brien that his obstinacy made all customers drop out to other carriers.

Losing, right? no. Wall Street makes bundles of Yellow’s corpse. The company has filed what is known as a Chapter 11 liquidation. This means it needs to pay off its creditors and make $1.5 billion in secured debt. A big chunk of that would go towards repaying the federal government loan, and another, bigger piece would be making the Apollo Global hedge fund whole.

Apollo is sitting pretty in the wake of Yellow’s demise, as is a restructuring firm called Ducera, which was hired to wind up the company and pay off secured creditors.

Ducera makes money because Yellow physically owns its assets — the trucks and the land below its offices and stations — and bankers there see a lot of interest from buyers with bids that could exceed debt levels when they sell Yellow’s assets. One reason: It would be sold to competitors who weren’t syndicated stores and so could afford to expand without having to do business with O’Brien and the Teamsters.

That’s why savvy traders are betting that equity holders, who would normally be wiped out in liquidations, will now get some cash in this due to the strong demand for the assets that Ducera is putting up.

Shares of Yellow, which fell below $1 and were headed for zero during the Teamsters showdown, closed Friday at $1.86 and at one point rose above $4. Hedge funds are jumping in and out of stocks and making tons of cash while all these drivers are staring at unemployment.

All because of TeamsterSOB’s “shine”.