Car Haulers, Teamsters Union Set Deal

The Teamsters union last week agreed to a new labor contract with 10 auto transporters, six days after Performance Transportation Services Inc., the sector’s second-largest fleet, closed its doors.

PTS shut down June 13 during a strike by the union and moves by creditors to liquidate the company; the Teamsters announced the tentative three-year deal on June 19.

Allied Systems Holdings, which ranks No. 28 on the Transport Topics list of the 100 largest U.S. and Canadian for-hire carriers, and nine smaller companies negotiate together through the National Automobile Transporters Labor Division.

The union announced the agreement without giving details. Contract talks have been conducted on and off since May 31, when the prior agreement expired. The latest round began on June 18.

“The economic conditions facing the auto industry and nation as a whole made negotiations very difficult, but the national committee remained focused on the members’ priorities — maintaining their benefits with no additional costs to members and protecting job security,” Fred Zuckerman, Teamsters Carhaul Division director, stated on the union’s Web site.

Since 1999, the ranks of Teamsters workers in the car-haul industry have been cut nearly in half. More than 12,000 workers were covered when a four-year contract was ratified that year. When that pact expired in 2003, the number of workers covered had fallen to 9,000. The union represented about 8,000 car-haul workers before PTS, which employed about 1,300 Teamsters, pulled out of the talks.

Unionized car haulers have faced depressed demand as auto sales hit a 10-year low in May, strikes slowed production of new vehicles and competition from nonunion rivals intensified.

The Teamsters went on strike June 9 after PTS pulled out of the multi-employer talks on May 29 and sought a temporary 15% wage cut, which a bankruptcy court approved in a June 4 ruling.

PTS announced the shutdown one day after last-ditch contract talks, which included a proposal to make the wage cuts permanent, failed. Creditors then moved to convert PTS’ bankruptcy from a reorganization to a liquidation.

“In my mind, it [the shutdown] was something that should not have happened,” PTS Chief Executive Officer Jeff Cornish told TT on June 17. “There was a way to make this work.”

In a letter to employees, Cornish said “the company’s proposal was supported by its lender, who agreed to waive principal and interest on its debt for the next several years and to put an additional $10 million into the company. The Teamsters concluded it was not in their best interest to accept our offer.”

PTS and the union sparred over who was at fault for the company’s closing.

Cornish’s letter said that “management and many of our Teamster members were willing to make the requested sacrifices to save the company. But the leadership of the union had a different agenda.”

In response, Zuckerman said: “In its announcement, PTS suggested that our failure to accept its most recent proposal led to the closure, but nothing could be further from the truth.”

The union said in a statement the shutdown actually was the result of a decision by its main lender, Black Diamond Capital Management, to shut off its access to cash.

Cornish said that PTS’ lenders had the ability under the terms of their agreement with the company to cut all access to funds in the event of a strike.

Cornish told TT the company will be liquidated and that assets such as real estate will be sold.

Yucaipa Cos., a California investment firm, bought PTS, which included Leaseway Auto Transport, E&L Transport and Hadley Auto Transport, in December 2006.

Yucaipa also owns Allied. Together, Allied and PTS controlled at least 60% of the market for new-vehicle deliveries. Yucaipa last year negotiated a 15% wage cut with the union for workers at Allied, and the bankruptcy court granted PTS that cut until July 31.

PTS’ revenue, which was $350 million in 2004, fell to about $250 million last year, when the company delivered an estimated 2.7 million vehicles.

PTS is the second company from the TT 100 list of for-hire carriers to shut down in less than a month. Jevic Transportation, No. 71, closed on May 19, blaming a weak economy and high fuel prices. PTS was No. 73.