Don’t worry, Corvette enthusiasts. You should still be able to get your C8 Corvette delivered just fine.
At least that’s the way it looks now despite one of the leading car haulers for General Motors being forced to file for bankruptcy last week.
Georgia-based Jack Cooper Ventures, Inc., insists it will be “business as usual” despite its current rocky financial picture.
To try to recover, the nation’s second-largest car hauler will shed more than $300 million in debt after selling virtually all of its assets to one of its longtime lenders, New York hedge fund Solus Alternative Asset Management, which will allow normal operations through the Chapter 11 bankruptcy process. The purchase is subject to a court-approved competitive bidding process.
Pre-negotiation of the company’s restructuring will minimize any impacts from the bankruptcy on workers, unions, and lenders, according to the bankruptcy filing with the Northern District of Georgia Atlanta Division court.
Jack Cooper, which ranks No. 60 on the Transport Topics Top 100 list of largest for-hire carriers in North America with revenue of $581 million last year, operates a fleet of more than 1,600 vehicles with a network of 39 terminals in the United States and Canada.
The company, one of just two unionized car hauling fleets in the nation – along with Cassens Transport, maintains its costs are 10% to 30% higher than its non-union competitors and points out its revenue dropped by 12.3% and unit volumes shipped fell by 16.9% from 2016 to 2018, with further declines expected in 2019.
Jack Cooper’s biggest customer, General Motors, provides 48% of its revenue and fortunately is sticking with the company, as is another key customer, Ford. We wonder just how much relief that will deliver to Jack Cooper, though, as GM negotiated a 5% price concession under a new three-year deal reached in 2019, with no annual price increases, and Ford settled for a 1% price concession.
A big factor in the company’s financial problems has been an 80% decline in the number of vehicles shipped for Toyota, which switched to non-union competitors. In response, Jack Cooper has had to close 17 terminals and eliminate 250 drivers and mechanics.
The resulting revenue decreases have also forced the company to delay replacements for its aging fleet of trucks, which now average 14 years old. At the same time, that has meant increasing maintenance costs to keep the old trucks going.
But there is hope for the future.
In a news release, Jack Cooper says the comprehensive, court-supervised restructuring will reduce its debt by more than $300 million and preserve jobs for nearly 2,000 union workers.
In addition, company officials have reached an agreement with the Teamsters National Automobile Transporters Industry Negotiating Committee that modifies the collective bargaining agreement that will be presented to members for ratification. The company believes the modifications will ensure Jack Cooper’s financial viability and avoid reductions in employee wages or health care benefits.
Jack Cooper says it could face $2 billion in liabilities if it attempted to withdraw from the Central States Pension Fund for its employees. Under a plan worked out before the bankruptcy filing, Jack Cooper would move to a part of Central States that doesn’t have steep withdrawal fees and would be allowed to reduce its weekly per-employee contributions to Central States by more than half.
The pension savings should allow the company to reinvest significant funds in the business, allowing replacement of 80% of its fleet with new equipment over the next five years, Jack Cooper officials believe. Meanwhile, employees would still receive all the retirement benefits already accrued and would be in a more stable pension, but going forward, they would earn new retirement benefits at a much slower rate, the Atlanta Journal-Constitution reported.
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