(The article has been amended from its original publication to add a comment from the Teamsters and from Ford).
Auto hauler Jack Cooper has lost its contract to transport vehicles for Ford Motor Co., a major blow to the unionized carrier.
Ford is believed to be Jack Cooper’s second-largest customer behind General Motors.
In an internal memo sent to Jack Cooper employees Tuesday morning and obtained by FreightWaves, Ford notified Jack Cooper of the ending of its contract on Jan. 2, with a 30-day notice.
The contract was not expiring at that date, according to sources close to the company, but it did contain an “out” clause that allowed Ford to take the action it did.
“This notice from Ford was unexpected and constitutes an unforeseen business and operational emergency,” the memo to Jack Cooper employees at its Claycomo Road facility in Liberty, Missouri, said.
The Jan. 2 notice by Ford to Jack Cooper was described by the auto hauler as “the first notice Jack Cooper received that any of the work provided at [Liberty] would not continue.”
And then the words that no worker wants to hear: “You are hereby notified as an ‘affected employee’ that the position of employment you have held with Jack Cooper shall be terminated in connection with the closure of the facility, effective as of February 2, 2025.” The loss of employment, the memo said, “is expected to be permanent.”
The relationship between Ford and Jack Cooper was said to have lasted more than 40 years.
According to sources close to Jack Cooper, Ford did not suggest it was dropping the auto hauler for performance reasons and the carrier had regularly met all its required performance standards under the terms of the contract.
The cancellation came without warning or explanation, leading to some speculation that the status of the Jack Cooper drivers as members of the Teamsters union is a key reason for the termination of the company’s contract with Ford. But Ford is pushing back on that suggestion, confirming with FreightWaves that the unionization status of the Jack Cooper workers was not a factor in its decision.
Jack Cooper has approximately 2,500 employees. About 1,700 of them are members of the Teamsters.
The company’s unionized status has been subtly criticized in numerous statements by newly public company Proficient Auto Logistics (NASDAQ: PAL). PAL has regularly referred to itself as a nonunion hauler. It went public in May, but in the past three months its stock is down more than 37%.
(However, news of the Jack Cooper contract cancellation which first was reported by FreightWaves about 1 p.m. Eastern was greeted with a surge in Proficient’s stock price.)
An internal document obtained by FreightWaves said Worker Adjustment and Retraining Notification Act notices of pending layoffs have been listed for Jack Cooper employees at Avon Lake, Ohio; the Claycomo road facility in Liberty; Cottage Grove, Minnesota; Dearborn, Michigan; Louisville, Kentucky; and Wayne, Michigan.
Ford has already lined up alternative haulers, according to sources.Most of the work performed by Jack Cooper is undertaken by company drivers, with some brokered freight in the mix. Sources close to Jack Cooper and Ford have different views of what comes next: Jack Cooper believes it is being replaced to a large degree by companies that will heavily use brokered transport while Ford is suggesting that it is mostly asset-based carriers that will get the business.
What is not known is how many drivers from Jack Cooper could get picked up by the companies that are displacing the auto hauler, a possibilty raised by several sources. Another unknown factor: how much of the new capacity will be provided by independent owner operators and whether their role could be a hindrance to a Jack Cooper company driver that has been driving a power unit and trailer owned by Jack Cooper and not by themselves and who might be looking to hook on to one of the carriers picking up the Jack Cooper business.
A spokeswoman for Ford issued a statement to FreightWaves. “We do not comment on our contracts or relationships with individual suppliers,” she said. “We manage supplier relationships in line with our sourcing strategy, designed to enable us to best serve our customers.”
Teamsters criticize move
In a prepared statement, Teamsters General President Sean M. O’Brien ripped into Ford.
“By taking steps to end its relationship with Jack Cooper, the Ford Motor Company has officially threatened the livelihoods of more than 1,400 Teamsters-represented carhaul workers and their families,” O’Brien said.”Ford, a once iconic American brand, wants to boost its own bottom line by walking away from a family-owned company and into the arms of second-rate third parties that will pay workers less money and far fewer benefits to haul Ford vehicles.”
O’Brien called the move “shameful and un-American.”
“Corporate executives refuse to look past the short-term, setting their sights on an extra bonus as they race to the bottom to ruin lives, hollow out communities, and decimate the middle class,” he said. “It must stop.”
O’Brien’s comments about 1,400 Teamsters appears to assume all of the Jack Cooper drivers are threatened by the move taken by Ford. The precise number is not clear but may be more visible as WARN notices are posted with specific figures.
Jack Cooper is once again a family-owned business after going through bankruptcy in 2020 and hedge fund ownership. Its current executive chair, Sarah Amico, is from the family that owns the company, and her ownership stake makes it a certified Women-Owned Business Enterprise (WBE).
More articles by John Kingston
Trac Intermodal’s outlook at Moody’s now negative, but debt rating affirmed
Benesch 2024: Pent-up dollars could be big factor in logistics M&A next year