Wednesday, March 23, 2011

Allied transport holding cars hostage? Or is Yucaipa folding this hand?

GM, Chrysler sue Allied over "hostage" vehicles - CNBC
DETROIT (Reuters) - General Motors Co and Chrysler Group LLC have sued Allied Systems Holding Inc , accusing the auto hauler of "holding hostage" more than 2,400 new cars and trucks.

GM, in a lawsuit filed on Tuesday in U.S. District Court in Detroit, charged that Allied had breached a contract under which it provides car-hauling services for the U.S. automaker.

"Defendant is holding hostage 1,704 new GM vehicles, with an estimated value of $46.6 million," according to the lawsuit. "It simply has no claim to the vehicles; they are GM's property."

In a separate suit, Chrysler said Allied was holding about 700 of its vehicles.

Allied, which calls itself the largest auto transporter in North America, could not immediately be reached for comment.

If this was a poker game, looks like both the union and the automakers are saying: "Call!"  So is Yucaipa going to fold, or do they have an ace up their sleeve?

I'm wondering if the recent spikes in fuel cost precipitated Allied's demand for increased load price, and if GM and Chrysler's refusal caused Allied to unilaterally offer their employees 20% less. Switch of metaphors... Are the chickens finally coming home to roost, viz, unsustainable load pricing vs. increased fuel cost?  Or has Yucaipa, the company that owns Allied,  looked at assets and liabilities and concluded that now is the best time to exit the auto transport industry?   To crib a line I read recently in The Economist.  "If something can't go on forever, it will stop."

Tuesday, March 22, 2011

Allied labor trouble isn't going away soon.

According to Automotive News, the trouble at Allied stems from Chrysler refusing a fee increase to haul cars.  Representatives say the problem isn't going to be resolved any time soon.  See video here from Automotive News here.