A Victim of the Deregulated Road

The St. Johnsbury Trucking Company, a leader in the Northeast trucking market, said yesterday that it would close after years of struggling with problems that included nonunionized competitors and a soft Northeast economy.

The fate of the company, founded 72 years ago as a milk hauler in St. Johnsbury, Vt., mirrors that of many trucking companies that have fallen since the industry was deregulated in 1980. Of the top 50 trucking companies operating in 1978, by last year all but 9 had closed or merged.

"It certainly follows a long, unhappy history of carriers not being able to get their cost structure down from what it was in the 1970's, when carriers were quite well protected," said Kenneth Simonson, chief economist of the American Trucking Associations. "There is nothing unusual about this."

St. Johnsbury, which has 4,000 workers, has restructured its finances twice since 1991 to lighten the debt incurred in a 1986 leveraged buyout.

"It just goes to show that market leadership doesn't necessarily confer profitability," said Paul R. Schlesinger, a trucking industry analyst at Donaldson, Lufkin & Jenrette.

As of last night, St. Johnsbury had not released details of its decision, although it indicated that it did not plan a restructuring.

The move followed several attempts in recent years to ease pressures on the company's finances. Earlier this month, the Teamsters union, which represents roughly 3,000 drivers and dock workers, agreed to a 9 percent wage cut, with a promise that workers would share the company's profits.

The company had asked workers in April to approve a 12 percent wage cut in return for a profit-sharing plan, but the rank-and-file members balked at the proposal.

Industry analysts were aware that St. Johnsbury, based in Holliston, Mass., was having difficulties, but assumed that the wage concession had given it breathing room.

Teamster’s officials said they met with St. Johnsbury executives on Thursday, when the company outlined its bleak finances and relayed an order from its bank to liquidate the company. At the time, the company proposed a broad range of concessions, including cutting the work force by half, closing 24 of its 54 terminals and replacing the union's health and pension plans with less expensive St. Johnsbury plans.

The teamsters determined, based on a recent audit of the company's finances, that the company clearly had no chance of surviving. Last year, St. Johnsbury lost $13.4 million on revenue of $88.1 million, far more than the 1991 loss of $2.2 million on revenue of $93.6 million.

"Its another case where workers cannot save a company from management's mistakes and 12 years of deregulation," said Ron Carey, general president of the International Brotherhood of Teamsters. Rivals Have Cut Back

The impact of St. Johnsbury's liquidation plans on other companies that require transportation of so-called less-than-truckload shipments is unclear. But Walter Riley, president of G.O.D. Inc., a less-than-truckload carrier based in Kearny, N.J., said his company and other competitors of St. Johnsbury would have capacity to pick up only about half of the company's roughly 12,000 daily shipments.

St. Johnsbury was believed to have held about 17 percent of the market.

Companies like St. Johnsbury, which ship smaller loads, have seen increasing competition at both ends of their market niche. Many shippers have restructured their operations to take advantage of the lower cost of full truckload transportation. And companies that have used St. Johnsbury in the past for small but highly profitable loads have been turning increasingly to shippers like Federal Express and United Parcel Service.