BNA Daily Labor Report: Allied Systems Agrees to Pay 20 Percent Wage ‘Snap Back' for 3,300 IBT Workers

June 16, 2010: Allied Systems Holdings Inc. notified the International Brotherhood of Teamsters June 14 that it will “snap back” wages for about 3,300 truck drivers who had accepted wage cuts in 2007 as part of an agreement to save jobs at the company, the union announced in a June 15 letter to IBT-represented workers.

The company informed the Teamsters National Automobile Transporters Industry Committee (TNATINC), which represents the workers, that it would pay the full rate of the National Master Automobile Transporters Agreement, retroactive to May 30, as agreed to in the agreement reached in April 2007 (74 DLR A-10, 4/18/07). Retroactive checks, which are equal to a 20 percent wage increase, will be issued June 21, according to the letter.

“While we expected Allied to meet their obligations and wish they had chosen to pay the full NMATA rate when the Term Sheet expired, doing so now meets Allied's obligations to pay established wages under the National Agreement,” TNATINC Co-Chairman and IBT National Carhaul Division Director Fred Zuckerman said in the letter.

Allied filed for Chapter 11 bankruptcy protection in July 2005. Teamsters members in 2007 approved a 15 percent wage concession, which was part of a plan advanced by investment firm Yucaipa Cos., a major creditor of the company, to assume control of the company and return it to financial stability (43 DLR A-6, 3/6/07).

A federal bankruptcy judge June 11 denied the company's motion to interpret and enforce the “snap back” provision in the reorganization plan; Allied argued the provision required negotiation rather than an automatic 20 percent wage increase (113 DLR A-7, 6/15/10). The company said it was not in a position to transition immediately to the wage rates set forth in the current NMATA.

In its motion, the company said “it seeks the benefit of good faith negotiations among Allied, Yucaipa and TNATINC for terms which will keep Allied in operation and its employees employed.”

The union has maintained its position that Allied was required to pay the established wages at the expiration of the term sheet, Zuckerman said.

“We made it clear to the company that our members were prepared to enforce that obligation by whatever legal means necessary under our contract, including issuing a 72-hour strike notice,” Zuckerman said, adding that during a June 10 phone call union leaders representing union members at Allied unanimously agreed to issue the strike notice by June 14 if Allied had not yet indicated it would pay the full NMATA rate.

IBT Has Agreed to Meet With Allied

While employees will receive the full NMATA for hours worked since May 30, the union said in the letter it had agreed to meet with Allied to determine what the business needs in order to be sustainable and if issues such as wages “can and should be addressed to meet those needs.”

“To be clear, we are not sure there is a workable solution here but rest assured the full resources of the Teamsters Union will be deployed to find a solution and the ultimate decision will be in your hands,” Zuckerman said. “Any negotiated solution will be subject to member ratification.”

Citing unprecedented economic turmoil in the past five years, the letter said unionized carhaulers suffered the effects of total car sales plummeting from a height of 17 million vehicles in 2005 to 10.4 million in 2009. As Allied is two-thirds the size it was in 2005, the industry is beginning to rebound, and the union will be faced with some tough questions.

“Do we continue to help Allied so it can better position itself as business and volumes increase? Or, do we maintain industry standards with the implication that doing so could lead to Allied's failure? We are prepared to engage in that discussion with Allied to determine the facts and if possible find an acceptable solution,” Zuckerman wrote.

Allied June 15 did not immediately return a call seeking comment.

By Alicia Biggs