Ford Ends Decades-Long Partnership with Auto Hauler Jack Cooper

In a surprising move, Ford Motor Co. has ended its longstanding contract with Jack Cooper, an auto hauler that has been handling Ford’s vehicle transport for over 40 years. The decision comes as a significant setback for Jack Cooper, a unionized carrier known for its reliable service.

A Sudden Termination

An internal memo sent to Jack Cooper employees highlighted the unexpected nature of this decision. Although the contract was still valid, it included an “out” clause, which Ford utilized to make this sudden termination possible. The notification arrived on January 2, catching Jack Cooper off guard.

According to the memo, the news constituted an “unforeseen business and operational emergency,” especially significant for a company heavily reliant on Ford, reportedly its second-largest customer after General Motors.

Repercussions for Jack Cooper Employees

The severance of ties with Ford affects numerous Jack Cooper employees, specifically those working at the Claycomo Road facility in Liberty, Missouri. The company’s notification was stark, informing staff that their positions would cease, effective February 2, 2025. This termination is expected to be permanent.

An internal document also indicated that Worker Adjustment and Retraining Notification Act (WARN) notices have been listed for employees in several locations, including:

• Avon Lake, Ohio
• Liberty, Missouri
• Cottage Grove, Minnesota
• Dearborn, Michigan
• Louisville, Kentucky
• Wayne, Michigan

Reasons Behind Ford’s Decision

The reasons for Ford’s decision remain somewhat enigmatic. Ford has assured that the status of Jack Cooper’s drivers as Teamsters union members did not influence the decision. Despite this assurance, speculation persists due to the abruptness of the cancellation, especially since Jack Cooper had consistently met its performance metrics as per the contract terms.

A New Era in Auto Transport

Ford has already lined up alternative haulers to replace Jack Cooper. Sources suggest a mixed strategy involving asset-based carriers and brokered transport, though the precise strategy might vary. How this change will affect the current drivers at Jack Cooper remains uncertain. There is potential for some drivers to transition to the new carriers, although details are yet to emerge fully.

Teamsters Union’s Response

Teamsters General President Sean M. O’Brien criticized Ford’s decision, labeling it “shameful and un-American.” O’Brien emphasized the broader economic impact on over 1,400 Teamsters-represented car haul workers whose jobs now hang in the balance. He accused Ford of forsaking a family-owned enterprise for alternatives that provide lower wages and benefits, negatively impacting communities and the middle class.

Impact on the Industry

The nascent industry repercussions of this decision are notable. For instance, Proficient Auto Logistics (NASDAQ: PAL), a non-union hauler, witnessed a surge in its stock price following the announcement. Jack Cooper’s removal could represent significant growth opportunities for competitors like Proficient Auto, showcasing the fluctuating dynamics within the auto transport sector.

Despite its challenging situation, Jack Cooper remains a family-owned entity following its emergence from bankruptcy in 2020. Its Women-Owned Business Enterprise (WBE) status underlines a resilient history, even as it faces this current crisis.

Moving Forward

While Jack Cooper anticipates changes and challenges, the path forward for its approximately 2,500 employees, and Ford’s vehicle transport logistics is still unfolding. Potential transitions for Jack Cooper drivers to alternative employment remain unclear and will depend on the direction Ford takes with its new haulers and the composition of their workforce.

Ford’s attempts to reassure stakeholders through official statements suggest a strategic realignment to optimize logistics and cost efficiency. However, the reverberations for those affected are immediate and significant, raising questions about corporation responsibilities and ethical labor practices.

The broader implications for unionized auto haulers, like Jack Cooper, in maintaining contracts with high-profile clients like Ford, point to a competitive landscape where union and non-union statuses could play critical roles in future contract negotiations.

Freight industry watchers and affected communities will need to observe how these changes impact employment and industry practices. Both Jack Cooper and Ford have indicated discreet plans, but only time will reveal the full scope of this surprising industrial upheaval.

Source: https://finance.yahoo.com/news/ford-drops-auto-hauler-jack-175022540.html