Greed led to trucking company's downfall

In 2003 after 75 years in the trucking business and with merger mania taking hold in many industrial and service fields, YRC Worldwide bit the bullet and purchased Roadway, it's largest less-than-truckload competitor based in Akron, Ohio. Why would it be any different for two companies, each with $3 billion annual revenue, providing a similar nationwide freight business? Other companies in computers, banks, pharmaceuticals, telecomms all merged or acquired competitors -- all in the name of "improving shareholder wealth." Think HP buying Compaq, or Glaxo Wellcome acquiring SmithKlineBeecham. Anyone who's been employed by a company that was acquired knows they are at risk of losing their job, no matter what executives say to dispel rumors or low morale. The bottomline is that to improve the bottomline means reducing "redundant systems" like payroll departments, accounting applications, data centers, you name it.

In 2005 when Yellow-Roadway bought regional carrier USF, I remember one hyperventilating technology and former Sprint executive convey a business strategy: "6 in 2006, 8 in 2008, and 10 in 2010," referring to the increase in billion dollar revenues. This blind passion for increased growth, however was possible given the meteroic growth of large multinational companies. Why couldn't an "old school" trucking company join the big boys? Revenues increased to $9.6 billion in 2007, but dropped to $5.3 billion in 2009, following the economic catastrophe. Employees dropped from 68,000 in 2005 to 36,000 in 2009. And as an article in the Kansas City Star points out the company is seeking further concessions from union drivers and dockworkers under threat of bankruptcy.

The combined compensation for the top 8 executives of the company in 2007 was $20 million, whereas the net income for 2007 (after a special charge) was $143 million, which means 8 employees received 14% of the profits of the company while the other 63,000 received smaller bonuses and pay increases. Top executives at the company received 37 times more compensation than average paid employees.

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