Preston Trucking packs it in

Lenders stopped financing its losses, Shore company says

5,000 workers to lose jobs

`We had no warning

it's been a shock to everyone here'

Regional haulers

July 27, 1999|By Robert Little | Robert Little,SUN STAFF

Preston Trucking Co. Inc., a 67-year-old regional hauler based on the Eastern Shore that employs about 5,000 people nationwide, abruptly announced yesterday that it will shut down and lay off all its employees, after lenders said they would no longer finance the company's operating losses.

Employees were told yesterday that all of them will be laid off within three weeks, many of them immediately.

Preston plans to deliver the cargo still in its system, then permanently close its doors.

"We had no warning; it's been a shock to everyone here," said Ed Oldenburg, a 10-year employee working at the company's yard off Ordnance Road in Glen Burnie. "I planned on retiring here, and now I'm afraid to punch in because I don't know if I'll get paid."

Preston has struggled for several years to make a profit, and company officials learned Saturday that lenders would not advance them the cash they needed to stay in business. When efforts to find other financing failed, they decided that closing down was their only option.

Company officials did not return phone calls yesterday, but they released a statement announcing the closure. When employees arrived at work yesterday, they were given a seven-page memo from Chief Executive Officer David Letke.

"I would have obviously preferred to have given you more notice of the close-down, but we were optimistic that we would be successful in our attempts to secure additional credit, and the Saturday decision from our lenders was unexpected," read the memo, a copy of which was obtained by The Sun.

"My deepest disappointment in having to make this decision is the hardship it will most likely inflict on the lives of our 5,000 employees and their families."

Preston's closure comes just over a year after its current own- ers bought the company from Yellow Corp., a trucking company in Overland Park, Kan. Yellow bought Preston in 1993 for $23.9 million, and officials there said the division was never a moneymaker.

When Preston was sold last July, the company was producing about $450 million in annual revenue.

The memo to employees said Preston's revenue dropped 12 percent in 1998 -- more than $200,000 per day -- because of customer uncertainty surrounding Preston's sale and the subsequent negotiation of labor contracts.

Revenue grew over the past year, the memo said, but is still more than $100,000-per-day below 1997 levels.

Earnings figures for the privately held company were not available.

The memo to employees said the company expects to have enough money to meet all its payroll obligations, including unused vacation benefits. Its memo to employees asked them to help "secure and protect the assets of the company so there will be sufficient funds available."

Preston Trucking had been the 23rd-largest trucking company in the United States. Based in Preston, Caroline County, it operates 61 terminals throughout the Northeast.

Preston specializes in routes in the Northeast, mid-Atlantic and Midwest regions. It is primarily a "less-than-truckload" carrier, meaning that it packs shipments from different customers in the same truck.

About two-thirds of its employees are drivers and other workers represented by the International Brotherhood of Teamsters. Union officials would not comment yesterday on the shutdown.

Several workers said yesterday that the job market for drivers is healthy and that those who work behind the wheel expect to find other jobs soon. Tight competition within the trucking industry has driven down rates and created hardship for employers in recent years, but also has sparked competition among companies for experienced drivers.

As he sat inside a truck cab at the Preston yard yesterday, Oldenburg was filling out a job application form. At least five competing haulers had visited the site soliciting drivers, he said.

"The guys who are going to have trouble are the ones close to retirement age, probably," said Oldenburg, 45.

Yellow Corp. announced yesterday that it had signed an agreement to service Preston's 120,000 customers. Bill Zollars, president of Yellow's trucking division, said in a statement that his company expects to hire Preston employees "where we need them."

Letke, in his letter, expressed regret for Preston's closure and pledged to help employees find new jobs.

"I have looked back over the last year, searching for anything that we could have changed, something we could have done that would have avoided today's decision," he wrote. "And, except for some minor changes that hindsight always shows, we were consistently improving. We just ran out of time and funds to keep the comeback alive."

Pub Date: 7/27/99

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