Shares of Arkansas Best sank Tuesday after one of the trucking company's unions said it may strike.
THE SPARK: Arkansas Best said that the International Brotherhood of Teamsters is mailing ballots to its members Tuesday asking them to authorize a strike. The ballots are being mailed only to employees in its central regional union. Votes will be counted on Oct. 29.
THE BIG PICTURE: Arkansas Best has already reached a contract agreement with the majority of its Teamster employees. Since that contract was ratified in June, 25 of the company's 27 supplemental agreements have also been ratified, according to the company.
The company still needs to reach agreements with two: Western Office Part 5 and Central Region Local Cartage.
Arkansas Best said that concerns in the Western Office have been addressed and that it is hopeful a new contract will be ratified soon. The company said it has provided its "last, best and final offer" for Central Region Local Cartage employees.
In such situations, the company said the negotiating committee conducts a strike authorization vote only in order to establish whether it has the authority from its membership to conduct a strike.
Arkansas Best is encouraging these employees to vote "No" on the strike authorization.
The union declined to comment.
THE ANALYSIS: Cowen and Co. analyst Jason Seidl said that a "yes" vote could cost the company dearly through lost business and costs associated with re-routing freight.
Seidl said that a vote for strike would be a "serious blow" to a company that has long fought to get their employee costs more in line with other carriers. He expects freight in and out of the central region would grind to a halt in the event of a strike as other Teamster workers from other regions honor picket lines.
SHARE ACTION: Arkansas Best Corp. fell $1.61, nearly 7 percent, to $22.20 by late afternoon Tuesday. That far outpaced the broader market's decline. Its stock, however, remains at the upper-end of its 52-week trading range of $6.43 to $28.10.
- Labor Issues