Daily Labor Report: GM, Chrysler Use Cheap Haulers

December 3, 2009: LANSING, Mich.—General Motors Co. and Chrysler Group LLC are cutting costs by using cheap, nonunion trucking companies to haul vehicles from factories to dealer lots, putting people out of work and endangering consumers and motorists in the process, according to a report issued Dec. 2 by the International Brotherhood of Teamsters and consumer groups.

The report, which includes photographs of allegedly damaged vehicles and unsafe procedures, was sent to the companies and to every member of Congress, said Fred Zuckerman, director of the Teamsters' automobile transporters industry division.

The report was accompanied by letters, signed by 160 GM and Chrysler dealers, urging the companies to reconsider their trucking policies. “Many of these replacement drivers come with little experience, inadequate training, no accountability and inadequate equipment,” the letters say. “Some of them are hauling new cars with flat-bed trucks or other equipment that is not designed to protect new cars over long distances.” In addition, the dealers said, protesters giving out handbills outside of showrooms are resulting in a “PR hit.”

“GM and Fiat-Chrysler are trying to transform how automobiles are delivered to showrooms,” Zuckerman told reporters on a conference call. By giving hauling contracts to the lowest bidder, he said, the companies are creating a “race to the bottom” in which “other carmakers are threatening to follow GM's and Chrysler's lead,” he said.

The low-cost haulers, the report says, use inexperienced drivers and improper equipment, resulting in damage to vehicles and increasing the likelihood of accidents on the road.

“It is outrageous that after taking billions of dollars from U.S. taxpayers, GM and Fiat-Chrysler would try to destroy good-paying American jobs that offer a living wage and decent benefits,” said Rep. William Clay (D-Mo.), who joined Zuckerman and the consumer representatives on the conference call. “We did not invest in these companies to subsidize nonunion car haulers who have little training and even less concern for safety.”

Rosemary Shahan, founder and president of Consumers for Auto Reliability and Safety, said consumers may have no recourse if they buy cars that have been damaged in transport. “Safe harbor” provisions in 37 states relieve dealers of liability for such damages, she said. “It's particularly offensive that GM and Fiat-Chrysler are taking the lead in cutting corners, threatening the safety and economic security of the taxpayers and car buyers who have footed the bill — tens of billions of dollars — to bail them out,” she said.

Zuckerman said the Teamsters made concessions in recent contracts with GM and Chrysler, allowing cost cuts and work rule changes to accommodate the companies' reduced circumstances. “We are very sympathetic to their problems,” he said. While the contracts cover 8,000 to 9,000 workers, only about 4,700 are currently working because of the economic slump, he said. “The way that it's going, as the industry takes jobs away, they actually put the companies that our members work for in a very bad financial position,” he said.

More than 400 jobs have been lost since Oct. 1, when GM and Chrysler moved to their new business model, Zuckerman said. About 100 of those are in the Detroit area, where unemployment is already higher than the national average, he said.

“We believe the model is unsafe,” said Zuckerman, adding that the union will release “in the near future” a report showing a link between higher trucker pay and reduced accidents.

GM, Chrysler Say Carriers Meet Standards

GM, asked to respond to the report, said there were “no significant changes” to recently negotiated contracts with two union-represented car hauling companies.

“GM's competitive bidding process includes evaluating carrier safety performance, technical review of capabilities, and equipment validation,” the company said in a statement e-mailed to BNA Dec. 2. “All GM suppliers—represented and non-represented—are awarded business based on quality, service, technology and price.”

Chrysler said it began “re-sourcing” a portion of its distribution on Oct. 1, when Teamsters contracts with workers at Cassens Transport and Allied Automotive Group expired, in order to save $31 million over three years.

“Chrysler Group has re-sourced some of its finished vehicle haulaway carrier business to reduce costs and transit time and improve customer satisfaction,” the company said in a Dec. 2 statement. “This action was taken after Chrysler worked with two suppliers, Allied and Cassens, for nearly a year in an effort to improve their competitiveness.” The company said its new carriers are “experienced,” and it requires them to adhere to company shipping and quality rules.

Zuckerman said he was recently notified that Cassens will lay off 100 workers Jan. 1, when Ford Motor Co. gives their jobs to “non-traditional carriers.” Officials at Ford and Cassens were not available to comment Dec. 2.

“It's a shame our economy's in the place where it's at right now,” said Zuckerman. “Everybody's willing to do things for barely nothing, just to put food on the table,” he said, and “manufacturers are trying to take advantage of it.”

By Nora Macaluso

The Teamsters' report is available here.