Car hauling woes
A Teamsters strike would snarl deliveries of new vehicles to dealerships, possibly force the liquidation of Allied and jeopardize Yucaipa's investment. The firm purchased $100 million of Allied's pre-bankruptcy $150 million debt, according to court documents filed this month in Atlanta.
Allied has rankled the Teamsters by cutting wages 10 percent through June, and the union says Allied isn't taking negotiations for a long-term deal seriously. The hauler declined to comment.
With the Teamsters in the midst of a strike vote, Yucaipa asked Allied to extend its emergency wage-cut order through September. Yucaipa also urged the trucker to keep negotiating with the union, rather than ask the court to let it tear up union contracts and risk a strike. A hearing is scheduled for Friday, June 23, in U.S. Bankruptcy Court in Atlanta.
Union talks broke off May 25 in Washington, and no meetings are scheduled. The Teamsters thinks Allied is making money again and is seeking financial documents that it says the hauler has yet to turn over.
Fred Zuckerman, director of the Teamsters Carhaul Division, called the extension request a "scam." Zuckerman says the union has not been in contact with Yucaipa as of Wednesday, June 14. He says the union would welcome a shake-up at Allied triggered by Yucaipa.
"We are determined that Allied's going to have to have new management to survive," he says.
Yucaipa, of Los Angeles, is a curious fit for Allied, a trucking company that dates from the 1930s and is still heavily reliant on Big 3 business.
While Allied's relationship with the Teamsters has been chilly, Yucaipa is led by a reportedly pro-union management team headed by Burkle, a heavy hitter in the Democratic Party. His investment empire includes grocery chains and part of rapper Sean "Diddy" Combs' clothing line.
Burkle ranks No. 112 on Forbes' 2005 list of the 400 richest Americans, with a net worth of $2.3 billion.
Yucaipa didn't return three telephone messages from Automotive News last week.
It's unclear what the firm's plans are for Allied, but Yucaipa could be looking to add to its automotive portfolio. A subsidiary of the company, TDS Logistics Inc. in Atlanta, ships materials for the Big 3, import automakers, Delphi Corp., Visteon Corp. and other manufacturers. Yucaipa bought TDS in 2004.
Clinton's press office didn't comment immediately, and TDS Logistics and a spokesman for Jackson did not return messages.
Yucaipa has put its considerable clout on the line for Allied. Along with Morgan Stanley Senior Funding Inc., it's made a draft commitment to the hauler for a $30 million loan. But the cash comes with a caveat: Allied must consult with its lenders before seeking to cancel union contracts.
Says Robert Farrell, executive director of the Automobile Carriers Conference in Alexandria, Va.: "Somebody out there believes they're worth something."
You may e-mail Greg Migliore at [email protected]