Former Falcon Transport employees, drivers saw red flags before abrupt closure

Photo: Falcon Transport of Youngstown, Ohio

FreightWaves has published a follow-up to this story here.

Previously, FreightWaves broke this story here.

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Former truck drivers and employees of Falcon Transport of Youngtown, Ohio, admit there were warning signs that the company was experiencing financial problems, but few said they expected the company to cease operations abruptly on Saturday, April 27, stranding truckers hauling loads without working fuel cards or further instructions.

In the weeks leading up to Falcon’s abrupt closure, drivers reported fuel cards weren’t working at various times, repair work wasn’t being done on their trucks and their paychecks weren’t being deposited on time. Drivers also said their E-ZPasses, or electronic tolling devices, weren’t working at different times.

Falcon had more than 600 employees, including 485 truckers, who received messages around 8:00 p.m. on April 27 instructing them to stop any work for the company immediately.

Jayson Calhoun, Falcon’s director of operations, confirmed he sent the message to the company’s drivers via Falcon’s PeopleNet devices, but said he had little advance notice of the company’s abrupt closure.

“We found out late Saturday morning from our ownership group [CounterPoint Capital Partners LLC] and I was just as surprised and disappointed as anyone else,” he told FreightWaves.

Falcon was purchased in a leveraged buyout by CounterPoint, a California-based private equity group, for $27 million in September 2017, with an additional $33 million in debt-financing.

Calls and emails to CounterPoint were not returned on April 29. The company’s website and LinkedIn account were not working either.  

Police were there as former Falcon employees and truck drivers were allowed onsite early today to gather their belongings and empty out their trucks, one former employee said.

On Sunday, April 28, Calhoun said he had no idea how many trucks were still out on the road because he had “little access to the company’s systems” on the day of the closure.

“I was instructed to notify everyone of the closure and go home,” he said.

Calhoun admitted Falcon Transport was experiencing “internal issues with transferring funds between banks,” but said he didn’t expect its abrupt closure.

He said the company’s “top priority remains making sure all employees get paid.”

Calhoun also stated, “Obviously, there are a lot of legal stipulations about making sure our drivers get paid and we want to make sure they get paid for the work they’ve done.”

One driver, who was under a load headed to General Motors’ Arlington, Texas, plant, delivered his load on April 28, even after he was instructed to cease working because he couldn’t confirm the news with Falcon executives.

“People doing the work inevitably care far more about what they are doing than the corporate managers, who get paid a lot more money,” Dan Getman, a labor attorney and founder of the law firm Getman, Sweeney and Dunn of Kingston, New York, told FreightWaves.

According to the Ohio Department of Job and Family Services website, Falcon Transport had not filed a notice of its impending closure prior to its announcement on April 27. Employers with more than 100 employees are required to notify workers as part of the federal Worker Adjustment and Retraining Notification (WARN) Act. WARN requires employers to provide their employees with a 60-day notice of a massive layoff.

The company’s operating authority was still active as of today, according to the Federal Motor Carrier Safety Administration’s SAFER system.

On April 27, Mary Petrozzino said she had completed her shift as a weekend dispatcher, working from 6:00 a.m. to 6:00 p.m., when she found out later on that the company was closing its doors. She found out when she arrived at Falcon’s headquarters at 6:00 a.m. on April 28 and her key card didn’t work.

Petrozzino said that based on conversations with drivers she dispatched, there were red flags in the weeks prior to the closure.

“Drivers were calling in with complaints about their fuel cards, EZPass devices not working and they couldn’t get cash advances,” Petrozzino told FreightWaves. “I knew there were problems, but we were told that everything was going to be okay.”

She said that the dispatcher who relieved her on April 27 was instructed “not to answer the telephones” at the company’s headquarters after the closure message was sent out.  

Some Falcon drivers and employees found out via social media or texts that the company was shutting down.

Rashad Saunders said he was at home for the weekend when he received a text from a fellow driver alerting him that the company had shut its doors.

However, he said signs were there that Falcon Transport was in trouble.

Saunders told FreightWaves that his truck broke down in Kalamazoo, Michigan, last week while hauling a load for The Home Depot. The company refused to approve his truck repairs when a Ryder System, Inc. mechanic called Falcon, he said.

Falcon Transport outsourced some of its mechanical work to Ryder, Saunders said. As many as 60 Falcon trucks in need of repairs were parked at various Ryder lots in the days before the company’s closure, he said.

“The mechanic said it usually takes about 10 to 15 minutes to get approval for a fix, but that Falcon had yet to approve the repairs five hours later, even though they knew I was running out of hours to deliver my load,” Saunders said.

Out of hours, Saunders said he eventually left his truck at the Ryder lot and took a Lyft to his home nearly two hours away.

He also experienced payroll delays in recent weeks. His direct deposit didn’t go through on April 26, but said he was paid earlier today. However, he said that he is still owed for two weeks’ of work.

Calhoun said Falcon’s shutdown was largely driven by General Motors’ decisions not to produce the Chevy Cruze at its plant in Lordstown, Ohio. Production halted on the vehicle in March. General Motors was one of Falcon’s primary accounts, he said.

“A lot of this decision to close was driven by GM’s behavior, but we were told for months not to worry about it,” Calhoun said. “We received all of these projections saying the company was going to be good for awhile.”

On social media late on April 27, people commented on the similarities between Falcon and the abrupt shutdown of another flatbed carrier, Arrow Trucking of Tulsa, Oklahoma, which ceased operations a few days before Christmas in 2009. In that case, nearly 1,400 drivers were left stranded without fuel or money to get back home. Arrow’s former chief executive officer, Doug Pielsticker, is serving a 7.5-year sentence in prison in a $25 million embezzlement and tax evasion scheme.

Craig Fuller, chief executive of FreightWaves, said the “automotive sector has slowed down in recent months and domestic auto manufacturers have shifted from making sedans to large trucks.”

Former Falcon drivers said they had been moved from dedicated General Motors accounts to hauling general commodities for the company prior to its closure. They surmised that this was an effort by the company to stay afloat.

“I heard things were going to pick up for Falcon, but I guess I was wrong,” Saunders said.