Car Hauler Jack Cooper Ventures has filed for chapter 11 bankruptcy citing difficulty competing with its mostly non-unionized competition.
According to a Wall Street Journal report, Solus Alternative Asset Management has agreed to buy Jack Cooper’s assets and allow the company to operate normally through the bankruptcy process.
Jack Cooper pre-negotiated the company’s restructuring to 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 is one of only two unionized car hauling fleets along with Cassens Transport, operating a fleet of over 1,600 vehicles and a network of 39 terminals across the U.S. and Canada.
Jack Cooper was operating at a 10% to 30% cost disadvantage relative to its non-union competitors, the company stated in the bankruptcy filing. Coupled with difficult overall industry dynamics, from 2016 to 2018, the company’s revenue declined by 12.3% and unit volumes it shipped dropped by 16.9%. The company expected further declines in 2019.
Some examples of the difficult industry dynamics included a major decline in the number of vehicles that Jack Cooper shipped for Toyota, which was its third largest customer. Over the two year span, the company lost 80% of Toyota’s business as the car company moved to non-union competitors.
General Motors, which makes up 48% of Jack Cooper’s revenue and is the car hauler’s largest customer, received a 5% price concession under a new three-year contract that was executed in 2019 and includes no annual price increases. Ford received a 1% price concession this year.
Jack Cooper also cited unsustainable collective bargaining agreements with its workers unions, with requirements to contribute to multiple pension funds.
Another drain on revenues was increased maintenance costs from Jack Cooper’s aging fleet. The truck fleet’s average age was over 14 years as the company was unable to invest in new equipment and refurbishments.
The lost business resulted in the closing of 17 terminals and cost around 250 drivers and mechanics their jobs.