INDEPENDENT TRUCKERS SEARCH FOR DIRECTIONS TO SURVIVAL

INDEPENDENT TRUCKERS SEARCH FOR DIRECTIONS TO SURVIVAL

Since the advent of deregulation here two years ago, Canada's estimated 60,000 truck owner-operators have probably felt the pinch more than any other segment of the industry.

Pay freezes or rollbacks dictated by carriers caught in rampant discounting wars have led many independent truckers to work for substandard wages.Earlier this year in British Columbia, the discontent came to a head. Nick Williams, Western Owner Operator Association president, asked his associates for a strike mandate to wrest a minimum wage of C$45 an hour from carriers, in sharp contrast to the going rate of about C$26 an hour for owner-drivers. The measure fizzled, Mr. Williams resigned and the association remains divided.

Sporadic wildcat action may yet - and probably will - occur, reflecting the growing frustration of brokers (the Canadian term for an independent truck operator). But owner-operator associations are not recognized under Cana- dian law as a bargaining unit and therefore cannot legally strike.

Indeed, it's the resolute independence of brokers that's probably valued above anything else. Motor carriers see the associations as an alternative to organized labor. For many companies, it's a cheaper and more flexible alternative.

These days, independent truckers are coming under increasing legal scrutiny and the ramifications are significant for the whole industry. Various federal and provincial agencies are examining the status of owner-operators: Are they independent contractors or actual employees?

"We are sitting on top of a volcano on the issue of owner-operators," said Ken Maclaren, executive vice president for government relations of the Ottawa-based Canadian Trucking Association. "Workers compensation, federal tax, or the labor code - a bad decision in the courts in any one of these areas would sink it for everybody."

The cost implications for the industry would be extraordinary if independent operators were deemed to be employees. A retroactive assessment on income tax and payroll deductions could amount to millions of dollars. As well, many companies rely on their brokers to provide power units and thus free up capital costs for carriers.

Said Mr. Maclaren: "There are 60,000 guys out there with rigs worth $100,000 each. You're talking about 6 million bucks - give or take depreciation."

According to Mr. Maclaren, the labor unrest in British Columbia indicates the desperation percolating throughout the for-hire industry. "It's right up and down the spectrum. There are some big carriers in the country who are in trouble. But you can't raise rates because competition is so fierce," he said.

Despite the economic maelstrom, Mr. Maclaren pointed out that the number of owner-operator associations has increased 5 percent to 6 percent, based on the latest statistics from the National Transportation Agency in Ottawa.

He, for one, is not convinced the associations will decline, a trend that's becoming more apparent south of the border.

When former President Jimmy Carter introduced the U.S. Motor Carrier Act of 1980 to deregulate the trucking industry, he effectively brought the powerful Teamsters to their knees. Recruitment drives withered across the United States as union drivers were hit with layoffs or wage rollbacks.

During the past decade, many U.S. fleets returned to company drivers.

"For sure, more motor carriers are moving away from owner-operators," noted G. Terry Turner, executive director of the Interstate Truckload Carriers Conference of Alexandria, Va.

Even in full-load trucking, where owner-operators still prevail, a growing number of carriers are saying it's cheaper to run company equipment than independent equipment. J.B. Hunt Transport Inc., of Lowell, Ark., the largest truckload carrier in the United States, for instance, has moved from owner- operators to all company drivers.

"It seems carriers have more control with company drivers and many claim to be more productive with company personnel. Remember, an owner-operator may shut down on a moment's notice, or he'll take off for a couple of days, or he won't take a load," said Mr. Turner, who estimated there are still between 100,000 and 300,000 owner-operators running in the United States.

Then, too, the population of owner-operators is shrinking because independents are not getting adequate compensation.

"The situation is not likely to get better soon," said Mr. Turner. "So if you break your back and only take home pennies, it doesn't take long to figure out this isn't what you want to do."

The U.S. industry is embroiled in a longstanding fight with the Internal Revenue Service over what constitutes an independent contractor.

Some 17 criteria are considered by the IRS when examining the classification of a driver. Despite some recent court victories by carriers, Mr. Turner believes the agency is determined to continue its drive against brokers.