Teamsters Strike May Arise for Companies that Haul Vehicles to Dealerships

Source: The Atlanta Journal and Constitution
Publication date: 2003-05-30
Arrival time: 2003-05-29

May 30--Contract talks between the Teamsters union and companies that haul cars, trucks and SUVs to dealerships could run out of time this weekend, raising the possibility of a strike.
At best, a strike would disrupt deliveries to car lots. At worst, it could stop auto production.

Much depends on the length of any strike and the number of auto-hauling companies hit.

If the talks fail, one reason could be executive compensation at Allied Holdings, a Decatur company that is the biggest car hauler in the industry. It's the same issue that sabotaged a concessions agreement at American Airlines and that struggling Delta Air Lines faces in seeking financial help from its pilots.

The 9,000 Teamsters employed at Allied Holdings and 14 other companies have authorized a strike, should talks fail to produce a labor agreement by midnight Saturday night.

The union accuses Allied of "pulling an American Airlines" by paying bonuses and granting salary increases to executives while asking for benefit and wage concessions from Teamsters who ferry cars from manufacturers to dealers.

"While certainly (executive pay) was a factor for our members as they considered the strike vote, it was not the only factor," said Rob Black, a Teamsters spokesman in Washington.

Allied Holdings declined to comment because the bargaining continues in Arlington, Va.

Hugh Sawyer, the company's chief executive, was paid $539,388 in 2002, his first full year in that job, and got a bonus of $825,000. A third of the bonus was a reward for refinancing company debt. He also was granted options on 100,000 shares of Allied Holdings stock.

Under Sawyer, Allied Holdings cut its full-year loss to $3.7 million last year from $39.5 million in 2001.

The Teamsters acknowledge that Allied Holdings and other car haulers need help because of the economy and increasing competition from nonunion companies. But bonuses and pay increases for executives at Allied, as well as a direct appeal by the company to employees, have the Teamsters balking at giving anything back.

On April 23, six days before Allied Holdings filed its proxy statement with executive pay numbers, the company sent a letter to union employees, asking them to voluntarily defer payment for unused sick and personal days, give up two vacation days this year, and not submit miscellaneous pay claims in May, June or July.

The letter laid out concessions that management and other nonunion employees had made, including an agreement by Sawyer to work four weeks this year without pay.

The voluntary concessions Allied wants would come on top of other sacrifices sought at the bargaining table, according to the Teamsters. The car-hauling companies have asked for breaks on health care, which currently doesn't cost Teamsters anything unless they have to pick up part of a bill for drugs. The companies also want concessions on pay rates for beginning drivers, according to the Teamsters.

The union is not disclosing specific proposals made by the companies.

Allied, which has about 6,600 employees, including 4,300 drivers, is negotiating simultaneously but separately from the association that represents other unionized car haulers.

For their part, the Teamsters at Allied and the other hauling companies want job security and "some wage increase," said Bret Caldwell, another Teamster spokesman. Currently, the average driver makes about $20.54 a hour.

Those drivers move four out of every five new cars sold in the United States, said Black, of the Teamsters. Allied's drivers hauled 9.4 million vehicles last year, including cars and vans from the Ford Hapeville and General Motors Doraville plants.

"Any job action would have an impact nationwide," Black said.

"Before long, it would pretty much shut down the industry," offered auto analyst David Healy of Burnham Securities.

Not necessarily, according to Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich. As they have in the past, dealers could drive vehicles from assembly plants or terminals to keep cars on their lots. Therefore, production could continue, he said.

Even so, a strike lasting more than 15 days would start to hurt dealers because the selection on car lots would thin, said Paul Taylor, chief economist for the National Automobile Dealers Association.

A shorter strike, perhaps five days, "would probably be a blessing" for some companies that are struggling to sell cars, Taylor said.

Longer term, a dwindling assortment of cars at dealerships could turn off some would-be buyers, he said. With neither auto sales nor the economy robust, a strike is "not good timing now," Taylor said.

But with assembly lines already slowed because of weaker sales, auto workers don't have much to worry about "unless it is a very prolonged strike, more than a month," he said.

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