The threat of a shutdown at North America's largest car hauler is diminishing, giving automakers and dealers relief about vehicle deliveries after months of uncertainty.
For the moment, Allied Holdings Inc. has addressed its two critical problems: a cash shortage and labor unrest.
Allied is giving workers a 2.5 percent raise and a cost-of-living increase and is restoring a 10 percent wage cut it enacted in May. The moves took effect July 1.
The hauler also has secured a $30 million loan to pay debts and invest in its equipment, which includes about 4,500 trucks with the signature lime-green-and-white colors. A final hearing is scheduled for Wednesday, July 12, in Atlanta.
Allied's future is crystallizing. What's unclear is the role a new investor, Yucaipa Cos. LLC, has played in snatching the hauler from the brink of collapse.
Allied has been in a messy Chapter 11 reorganization for almost a year, marked by union confrontations and warnings of possible liquidation. But since Yucaipa's investment came to light, Allied has backed off its demands from the union and ironed out its Chapter 11 financing.
Yucaipa, a Los Angeles firm, owns about two-thirds of Allied's debt. The firm is led by billionaire Ron Burkle, a close friend of former President Bill Clinton, and has a history of being friendly to unions. Yucaipa's spokesman, Frank Quintero, did not return a call seeking comment.
For the short term, Allied will operate under its existing agreement with the Teamsters, which runs through May 31, 2008.
The pact includes the wage increases and a no-strike clause.
The Decatur, Ga., hauler was seeking to work out a long-term cost-cutting deal, but the talks went nowhere, says Fred Zuckerman, director of the union's Carhaul Division. He said the company's 3,700 Teamsters workers were prepared to strike July 1.
Zuckerman says Allied has refused to turn over financial information and materials about possible expansion in New York and Mexico, slowing negotiations.
Weighed down by high fuel costs and lower production by domestic automakers, Allied filed for Chapter 11 reorganization in July 2005. Company management did not return a message last week.
Allied Holdings delivers finished vehicles from factories and rail heads to dealerships.
The second-largest car hauling company, Performance Transportation Services Inc., also is operating under Chapter 11 protection.
You may e-mail Greg Migliore at [email protected]