Teamsters Warn FirstGroup Over US Buy-Out

By PAUL ROGERSON

THE International Brotherhood of Teamsters fired a shot across the bows of FirstGroup yesterday, after the Scottish company confirmed its planned takeover of New York-listed Laidlaw, the largest operator of yellow school buses in the US and owner of iconic coachline Greyhound.

General president Jim Hoffa, leader of the “world’s most powerful union”, warned that FirstGroup’s allegedly “chequered” service record could “negatively affect the long-term profitability of a combined company”.

Hoffa, son of legendary US labour leader Jimmy Hoffa, was commenting in the context of the wellpublicised union problems FirstGroup has experienced in respect of its US school bus operations.

A delegation from the much-smaller Service Employees’ International Union went so far as to attend FirstGroup’s annual meeting in Aberdeen to publicise their opposition to subsidiary First Student’s allegedly anti-union employment policies.

“This buy-out means that FirstGroup becomes a more highly- unionised company, with an additional 7000 Laidlaw teamsters who have served their company and their communities for decades, ” Hoffa told Laidlaw’s annual conference in Illinois.

“We are determined to drive up standards in the school bus and passenger transport industries and we stand prepared to protect our members’ interests as this buy-out progresses.”

Last year FirstGroup pledged to stamp out management anti-union activities in its North American operation, amid claims that its staff there were toiling under poor working conditions.

Hoffa said: “We intend to hold the company to this commitment and call on FirstGroup to demand that its US management team enforce that policy wherever FirstGroup operates.”

Hoffa also questioned whether the buy-out could lead the combined firm to lose business, because many US school districts are required to work with multiple providers, including First Student.

FirstGroup will pay dollars-35.25 for each Laidlaw share in a dollars-2.8bn (GBP1.4bn) deal that will make it the largest school bus operator in the US, taking its fleet from 20,000 to 60,000 buses.

The deal will be paid for partly through a GBP221m placing of 10- per cent of its shares at 260p a-piece.

The buy-out is symbolic in that it will see FirstGroup generate more than 50-per cent of its income in North America, up from the current 30-per cent, just eight years after the company first invested there.

Speaking earlier in the day, FirstGroup chief executive Moir Lockhead appeared unfazed at the prospect of dealing with the teamsters, but stressed that the company remains committed to the principle of secret membership ballots.

“We deal with trade unions every day in the US and get on fine with them, ” he said. “We say that it is our staff who choose whether to join a union – not us, but not the trade union either.”

Lockhead also moved to reassure Investors who may be sceptical about the deal following disappointment over Stagecoach’s overhyped acquisition of Coach USA – painstakingly dismantled by founder Brian Souter.

He stressed that the school bus businesses, which already post healthy margins, are not affected by economic cycles.

Greyhound, which accounts for 40-per cent of the value of the deal, is far more subject to variations in demand. Lockhead intimated that the coachline could be sold on if it does not accord with FirstGroup’s business strategy.

“Greyhound is not a contracted business, it’s a retail shop, ” he observed.

“We need to take time to see how it fits and decide if we can see growth and add value. Right now we think it’s going to be OK.”

FirstGroup shares closed 34.5p, or 6.15-per cent, higher last night at 595.5p.

(c) 2007 Herald, The; Glasgow (UK). Provided by ProQuest Information and Learning. All rights Reserved.