Allied Systems SOLD at auction

Yes sir, pretty much. Kind of like when Dick Simon went bankrupt, the previous owner bought the assets from the court and was running the next day as Central Refrigerated.

I can see why the other creditors would balk at the deal, though. They'd be getting screwed as bad as the Chrysler bond holders. But we know there isn't enough capacity for those trucks to disappear, someone is going to have buy them and put them to work.

 

Speedy, I don't know about elsewhere, but in my exposure to the union carriers, Allied's drivers were examples of the bad side of the unions. They felt they deserved top wages while insisting on minimum effort. I have several friends who related the pressure from senior drivers to "not make us look bad by working so hard!" I'm way old school on that topic, if you agreed to do the job for that wage, you give 100%. Did that exist at other Teamster outfits? Of course, but it never seemed to be at the extreme level it was at Allied. (This is just my upper midwest exposure, it may be different elsewhere.)

 

I spoke with one of their terminal managers a number of years ago. This was around the time they were planning on leasing on owner operators to haul their cars. He told me that they paid over $1,500/month in insurance and benefits to EACH driver and would be doing the same for the owner operators. Unions have gotten such control over these carriers, such as Allied, that they have literally choked them to death. Frankly, I am surprised that the other union carriers have also not gone bankrupt. Unions are non competitive. The prohibit a carrier from being able to be as competitive as they might with a non union carrier. Unions make it difficult to cut back on personnel when it is necessary for a company to survive, in some cases. In recent years, there have been more carriers getting into the car hauling business, many of them have been foreigners who have been cutting rates. As I recall, most of the union car hauler drivers are paid hourly. With most other car hauler carriers, drivers are paid percentage. This puts union carriers at a disadvantage since it makes it difficult for them to compete. I am sure the $1,500/month that Allied paid drivers went up since I spoke with that terminal manager. Before a driver lifted a finger, he received those benefits. As I recall, their union drivers were paid a flat rate to load and unload each car. With the union involved in the company, there was no incentive for drivers to be motivated to be productive. Many of their company drivers, at least back then, were making in excess of $120,000/year. I am sure that didn't include their benefits.

Allied had been struggling for years. Much of the problems were with the excessive union demands made on the company. In recent years, Allied had also lost several major contracts, which made it difficult for them to meet their obligations. Even when Allied was struggling, unions refused to work with them so that they could make the company more competitive. It is an old story when unions get involved in a company. They eventually kill most of them. We used to have several major industries in my home town. All of them are now gone and either relocated or shut down. The same thing happened to the steel industry. Unions are bad for business and bad for the long term. They may work in the short term, but members eventually become lazy and unproductive, yet want higher wages and benefits. This is what happened to Allied and has happened to companies all over the country. Companies don't need unions in their business. They are a jobs killer. Had Allied not had the unions involved in their business, they may have found a way to survive. Drivers who pull cars usually earn a good wage without the unions. At a minimum they should be making in the $70,000+ range. That is more than most company drivers make pulling other types of freight.

 

Obviously I am not a union guy, nor have I ever been, (at least for the last 30 years) but I really believe the biggest issue RIGHT NOW, is this #### economy.

You are simply working twice as hard for half as much, and whenever that happens, as a business owner, you have no choice but to cut frivolous expenses to the bone, hoping that you can survive, keep your people employed, and in the long run prosper.

If you are in a market that dictates that said freight only pays X cpm to haul, you have to figure backwards from that number and see if it is worth your while.

I just had an interesting conversation with a company that is working on a contract to build a large number of stinger units, he told me point blank, these companies are not buying equipment just to upgrade, they are buying because they have to, the equipment they are running is simply worn out, and maintenance is costing them as much as a trailer payment.

They are banking on this industry picking up, or at least not contacting any further, this is one hell of a gamble, and I think it is the same play that was made by some of the companies that went out of business in 2008/2009.

This is a part of the business where a LOT of drivers, union or not, just never see, it is truly a balancing act between running old equipment with high maintenance costs and down time, (pay as you go), OR to buy new equipment and be heavily leveraged (pay in the future) just hoping like all hell that the economy holds up.

In some cases, there really is NOT a good answer, the "market" of moving cars may not be contracting, BUT the prices to move cars sure as hell has, it is simply NOT keeping up with the inflated prices of fuel,tires,wages,equipment, and on the road expense.

Unfortunately, auto haul, to a large degree has been downgraded to the same cut throat tactics that is rampant throughout the rest of this industry, and I really don't see it getting better any time soon.

JMHO.

 

You're dead on, Stan. The extent to which the fly-by-nighters have driven down rates on the boards is ridiculous. And it's not much better out of the auctions. We're higher than the other carriers by a bit, and service allows that to happen, but getting the rates to where they belong won't happen. A dealer will pay a little more for good service, but it's amazing what they'll put up with to save 25%. And what some of these guys are hauling out of the railheads for is nuts, it's no wonder they can't get any decent carhaulers! Not that it's been a bad thing for us, we've made a killing on spot buys over the last couple years.

And glad to hear someone is building stingers besides Cottrell, they need some competition.

 

as an allied unionized car hauler, we were payed piece work, not hourly. There was a hourly rate for delays and breakdowns, but it wasn't near the money piece work would generate.
The union did coddle some deadbeats, and baby seniority, but thats the whole attractive package it paints while the fat cats gut your pension fund, and claw back you benefits.
Before I start ranting on another topic..... I just wanted to say we were payed to hustle, and most of the guys I knew did.

 

Don't forget about Delavan.