Jevic Transportation Fails – ABF Freight Enjoys Profitability
Jevic Transportation closed the doors, declared bankruptcy, told employees to go home, don't try to use health insurance and wished them well. It was abrupt, cold and final. About 1700 former employees are now looking for work.
One the other hand, ABF Freight announced in April that their profits in the first quarter of 2008 had increased 78% from the first quarter of 2007. ABF is admittedly a much larger company that employs almost 13,000, but both companies had to face the same economic conditions. One increases their profits and the other goes broke. One could surmise that one had better management and therefor was successful – or one could surmise that there was more happening in the background at Jevic Transportation.
The New Jersey, Courier Post Online reports that, "In 1999, the family [that owned Jevic] sold Jevic to Yellow Corp. (now known as YRC Worldwide Inc.) for $200 million in an all-cash deal. In 2006, a Yellow spinoff sold Jevic to Sun Capital Partners Inc., an investment fund in Boca Raton, Fla., for $40 million, plus $12 million in tax benefits." I'm not a financial expert, but I've been around long enough to at least wonder if there is more to the story than the public or the former employees of Jevic will ever know.
I visited the Sun Capital Partners Inc website just to get an idea of what this company does. Essentially they have billions of dollars to invest and they acquire businesses and then sell them off. With all the successes and managerial experiences that Sun touts, one would be hard pressed to explain how they managed to go broke in a little over 24 months with their investment in Jevic. In fact it doesn't appear as if Jevic really fit their investment criteria. However, if one was acquainted with tax write-offs and the other tools available to companies such as Sun, perhaps the real picture would come clear. Certainly Sun has the resources to have remained in business and they certainly have the resources to have been kinder to the employees that were summarily dismissed.
I wish I was an investigative reporter – I could be wrong, but I think there's an interesting story here – one that might reveal just how cruel the investment world can be.
This report is a little outside the general scope of theTruckerToTrucker blog, but our hearts go out to those that have suffered as a result of the shutdown of Jevic Transportation. I thought that there might be a bit of insight available to the small trucking businesses that are facing economic uncertainty. The lesson I learned was much different.