Tuesday, February 11, 1997
75-year-old company lays off 125 locally, 1,400
systemwide
By DOUG WILLIAMSON / Business Editor
Merchants Fast Motor Lines Inc., a 75-year stalwart of the
Abilene business community, is shutting down.
Company officials Monday said no additional shipments are being
accepted, and they hope to have all the freight in the system
delivered this week.
About 125 people will be laid off here and more than 1,400
systemwide, said Joe Chandler, who became Merchants Fast Motor
Lines president less than a year ago.
Merchants was the second largest intrastate freight carrier
in Texas.
The shutdown was forced when the company's five lending institutions
refused to provide additional financing to fund Merchants' ongoing
losses, Chandler said.
"It came as a total surprise," Chandler said. "We
were negotiating for continued financing to continue our operations
under a restructuring scenario to reduce cash drain."
Funding will continue during the winding down of operations.
Payroll will be covered, he said. Other negotiations with the
financial institutions were continuing Monday morning.
Deregulation of the trucking industry and the devaluation of
the Mexican peso cut deeply in the company's revenues, Chandler
said. Revenues fell from $120 million in 1994, the year before
deregulation, to $97 million in 1996.
The devaluation of the peso depressed key freight markets to
south Texas and Mexico. Deregulation resulted in MFML hauling
less fright at significantly lower rates, Chandler said.
Before 1995, Texas had a tightly regulated freight market.
"When the industry was deregulated, new entrants to the
market 'cherry-picked' the better accounts and traffic lanes,
while touching off a rate war which has caused the industry to
set prices below costs," the company stated in a press release
Monday.
Chandler said Merchants' losses have been substantially less
than those of Viking Freight System - its biggest competitor.
"We continued to do better than a company (Viking) with
better capital structure," he said.
Merchants could not hold out long enough to survive. The debt
load was too much for the highly leveraged company.
Another contributing factor in the last year was increased
fuel prices. Chandler said $1.2 million in the losses are directly
attributable to diesel costs.
The shutdown decision came so quickly company officials have
not developed plans to help the employees find work, Chandler
said.
"We have the best people in the industry, and they have
served our customers well. Hard-working, skilled people are always
in demand, and I am confident they will make their next employers
very proud to have them."
In Abilene, Merchants employed 46 people at the pick-up and
delivery terminal and 150 in the corporate headquarters. Chandler
said about half of the workers at the headquarters will remain
to run the company's five other subsidiaries.
Merchants footprint stretches from Memphis to Colorado. It
employed 1,184 full-time workers and 241 part-timers.
The shutdown of the company's 29 terminals and 17 commissioned
agent locations should take a week to 10 days in the delivery
area, he said. The equipment will be assembled after that. Chandler
said he did not know if the equipment would be distributed to
the company's other operating units or sold. The real estate holdings
will take a longer time to divest, he said.
The other companies that make up Merchants Inc. - Merchants
Transportation of California, Merchants Truckload Co., Gypsum
Transport Inc., Oil Transport Co. and Thunderbird Pacific Freight
Lines - will continue operations.
Merchants was founded by D.B. Merchant in 1921 in Fort Worth.
The next year service began in Abilene. The company began with
two pickup trucks that ran between Fort Worth and Dallas. The
corporate headquarters was moved here in 1954.
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Copyright ©1997,
Abilene Reporter-News / Texnews / E.W. Scripps Publications
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