Do trucking companies really receive government grants?

[merrick4]

I keep hearing that these big companies get paid by the government for every student they put through their training. If it is true than it makes sense why they abuse people and could care less if they have a revolving door in their hiring department.

However, as wreckless as the government is with our tax dollars, I find it highly unbelievable that the government just writes these companies blank checks.

Does anyone know if this is true about the grants and could someone show me something or somewhere it is written. I was bored one day and was going through Swift's SEC filings and didn't see anything in the revenue section about money from the government.

Thanks.

[GMAN]

At one time the government had a program where they would pay employers to train people to work. The length of time they would pay depended on the training period. They basically paid half of the trainee's wages during the training phase. Once through training, the employer would assume all compensation. I have heard that some trucking companies were able to take advantage of this type of program, but have no direct personal knowledge. As far as Swift's government business is concerned, I am not sure they would be required to separate that figure from general revenue dollars.

[greg3564]

I don't know if they get money. But I'm sure they probably get tax breaks. Especially if you were on food stamps, unemployed, etc. Most businesses get some sort of tax break when they hire certain people.

[Sentinel]

At one time the government had a program where they would pay employers to train people to work. The length of time they would pay depended on the training period. They basically paid half of the trainee's wages during the training phase. Once through training, the employer would assume all compensation. I have heard that some trucking companies were able to take advantage of this type of program, but have no direct personal knowledge. As far as Swift's government business is concerned, I am not sure they would be required to separate that figure from general revenue dollars.

In general, blank checks are not written for these training programs. The applicant must apply and meet the requirements for entry. The programs do exist under such names as "Workforce Investment Act of 1998" ( http://www.doleta.gov/regs/statutes/wialaw.txt ) and others. Many states (Texas included) use this as the basis for their grant money to students. Some of these other programs might even provide various other stipends and payments for your other expenses while training. Many trucking companies run their own training programs and take advantage of these grant programs. Texas training opportunities can be found at the Texas Workforce Commission (TWC) WEB page http://www.twc.state.tx.us/customers...jsempsub5.html . For example in Texas the following trucking companies participate:

CENTRAL REFRIGERATED TRUCK DRIVING ACADEMY
MESILLA VALLEY TRAINING INSTITUTE
SCHNEIDER TRAINING ACADEMY, INCORPORATED
STEVENS DRIVING ACADEMY OF TEXAS, LIMITED PARTNERSHIP
VALLEY TRUCKING DRIVER TRAINING SCHOOL L.L.C.

The TWC (unemployment bureau who administers the funding for these programs) has a service called "DECIDE, Consumer Reporting System" (http://decide.cdr.state.tx.us/ASP/intro.asp) that is suppose to provide the consumer information regarding performance of these, and other post-secondary, educational institutions to allow consumers to make informed decisions. What's interesting to note is you will not find these institutions listed. It appears that Texas does not force any institution that receives public funds to participate. I find that a disturbing condition!

Is there money to be made by the trucking companies regardless of whether the student graduates and/or whether they are offered a job? So far, in my research I have been unable to find definitive information regarding that. There have been claims that some of these companies might be using their training schools to line their own coffers. If you are a new driver, or driver returning from a hiatus, and applying for a Texas based company, or one with a Texas based school, they might require you to fill out the TWC paperwork before they will even give you a drive test for a position there. Is there something unknown with that? Don't know.

Before you sign on with any company I would recommend that you perform a little research, whether it is a company school or a school used by the company you intend to sign with. Ask them if you will be signing any type of grant paperwork or government mandated paperwork connected with the school. Ask them to send you all of the required paperwork you will be signing, whether at the time of application or when arriving at the school. Some of this paperwork may have implications beyond just a simple contract of indentured servitude to pay the company back for training. It might possibly affect your ability to collect other benefits if you do not complete the school, follow-on OTR training with a company trainer or fail to pay back the loan. The grant money might also have repayment terms if you fail to complete the training and stay employed. Beside that, I'm sure it would not be a good experience to talk "The Dog" (Greyhound) 1000 miles to a training facility just to find out you are going to be presented with more contractual, or otherwise detrimental, paperwork before the company allows you to stay and complete your orientation or training.

[Sentinel]

I keep hearing that these big companies get paid by the government for every student they put through their training. If it is true than it makes sense why they abuse people and could care less if they have a revolving door in their hiring department.

However, as wreckless as the government is with our tax dollars, I find it highly unbelievable that the government just writes these companies blank checks.

Does anyone know if this is true about the grants and could someone show me something or somewhere it is written. I was bored one day and was going through Swift's SEC filings and didn't see anything in the revenue section about money from the government.

Thanks.

Sorry GMAN, I meant to quote merrick4 in my response.


In general, blank checks are not written for these training programs. The applicant must apply and meet the requirements for entry. The programs do exist under such names as "Workforce Investment Act of 1998" ( http://www.doleta.gov/regs/statutes/wialaw.txt ) and others. Many states (Texas included) use this as the basis for their grant money to students. Some of these other programs might even provide various other stipends and payments for your other expenses while training. Many trucking companies run their own training programs and take advantage of these grant programs. Texas training opportunities can be found at the Texas Workforce Commission (TWC) WEB page http://www.twc.state.tx.us/customers...jsempsub5.html . For example in Texas the following trucking companies participate:

CENTRAL REFRIGERATED TRUCK DRIVING ACADEMY
MESILLA VALLEY TRAINING INSTITUTE
SCHNEIDER TRAINING ACADEMY, INCORPORATED
STEVENS DRIVING ACADEMY OF TEXAS, LIMITED PARTNERSHIP
VALLEY TRUCKING DRIVER TRAINING SCHOOL L.L.C.

The TWC (unemployment bureau who administers the funding for these programs) has a service called "DECIDE, Consumer Reporting System" (http://decide.cdr.state.tx.us/ASP/intro.asp) that is suppose to provide the consumer information regarding performance of these, and other post-secondary, educational institutions to allow consumers to make informed decisions. What's interesting to note is you will not find these institutions listed. It appears that Texas does not force any institution that receives public funds to participate. I find that a disturbing condition!

Is there money to be made by the trucking companies regardless of whether the student graduates and/or whether they are offered a job? So far, in my research I have been unable to find definitive information regarding that. There have been claims that some of these companies might be using their training schools to line their own coffers. If you are a new driver, or driver returning from a hiatus, and applying for a Texas based company, or one with a Texas based school, they might require you to fill out the TWC paperwork before they will even give you a drive test for a position there. Is there something unknown with that? Don't know.

Before you sign on with any company I would recommend that you perform a little research, whether it is a company school or a school used by the company you intend to sign with. Ask them if you will be signing any type of grant paperwork or government mandated paperwork connected with the school. Ask them to send you all of the required paperwork you will be signing, whether at the time of application or when arriving at the school. Some of this paperwork may have implications beyond just a simple contract of indentured servitude to pay the company back for training. It might possibly affect your ability to collect other benefits if you do not complete the school, follow-on OTR training with a company trainer or fail to pay back the loan. The grant money might also have repayment terms if you fail to complete the training and stay employed. Beside that, I'm sure it would not be a good experience to talk "The Dog" (Greyhound) 1000 miles to a training facility just to find out you are going to be presented with more contractual, or otherwise detrimental, paperwork before the company allows you to stay and complete your orientation or training.

[merrick4]

Yes that makes sense about the Workforce programs. I got my CDL at a local technical school and I was the only one in the class that had to pay because I didn't meet the workforce guidlines.

A friend of mine is now in Covenant and going through the same exact experience that the guy in the other forum has been railing against these last few days. The kid told me that he heard that Covenant got like $7500 for every person that they put throught their training. He actually had his CDL before he was hired. I highly doubted that they get that money.

The really only reason I ask, is I'm only OTR for a couple of months now and while I love being out there driving I am shocked at how abusive this industry is to those just entering the field.

Thank you for your detailed post. I am going to dig further into this and this was a very good start. Thanks again.

[spencerian]

Sure they do!!!

At least CR England does.

In orientation they boast about how tight CRE is with Salt Lake City and Utah. They boast about the amount of pull CRE has, and that CRE gets government funding for EVERY student.

CRE really is the Home of Bottomfeeders.

[cdreid]

Thanks for the post Sentinel. I get tired of hearing the BS and rumors a lot of the more nutjob drivers spout. Course with those people mere facts never stand in the way.

[Sentinel]

Thanks for the post Sentinel. I get tired of hearing the BS and rumors a lot of the more nutjob drivers spout. Course with those people mere facts never stand in the way.

You're most welcome!

Human nature is such that we are all quicker to negatively criticize rather than provide constructive criticism or praise. However, regardless of what is said, whether good or bad, we should take with a grain of salt and verify if possible. Even those that criticize do provide useful input when we are researching career paths in the transportation industry (or any industry for that matter).

For example I have gleaned small bits of information from some of the more radical posters here. These are little tidbits that I could not obtain otherwise. I then perform further research to either prove or disprove it while looking into a company. It has helped me considerably to steer away from significant potential problems.

I will say it would be nice if the Feds stepped in and took a more active role. I truly feel that all transportation companies should be required to lay out their entire employment agendas to prospective new hires prior to them leaving their domiciles for orientations. This should include full background checks and all other pre-employment screening actions. If a person then accepts all these conditions, terms, etc. and is fully pre-screened then there would be considerably less to complain about after the fact.

[GMAN]

Sorry GMAN, I meant to quote merrick4 in my response.

Not a problem, Sentinel. That is interesting. I think this FREE government money is the main reason some of these carriers continue running their training schools. Carriers used to train drivers for FREE. I suppose there is no need for them to do that if the government is funding the programs. Perhaps we would have a higher caliber of driver if the carriers had to pay for the entire expense themselves. Perhaps one reason there is such a high turnover is because there is such a financial incentive to get people through the door and into one of these training programs. They probably could care less if a driver stayed or not. They will simply grab another individual and put him into their program. It is money in the bank for them. :evil:

[merrick4]

Sorry GMAN, I meant to quote merrick4 in my response.

Not a problem, Sentinel. That is interesting. I think this FREE government money is the main reason some of these carriers continue running their training schools. Carriers used to train drivers for FREE. I suppose there is no need for them to do that if the government is funding the programs. Perhaps we would have a higher caliber of driver if the carriers had to pay for the entire expense themselves. Perhaps one reason there is such a high turnover is because there is such a financial incentive to get people through the door and into one of these training programs. They probably could care less if a driver stayed or not. They will simply grab another individual and put him into their program. It is money in the bank for them. :evil:

While I tend to agree with you GMAN at first blush, I believe upon further thought that this can't be true that the companies don't care if drivers stay or not notwithstanding the seemingly financial incentive they have for new students. After these are trucking companies. They are in business to haul freight. It doesn't seem logical that they don't have the incentive to hire and train and RETAIN quality drivers. I know the way they operatate it seems that way but it really doesn't seem logical. Most of these big companies are publicly held companies and I can't image the shareholders would allow them to do poor business so they can make money off new recruits. Again it seems that's just what they do, but it really can't be as it's not a smart business move.

[GMAN]

Merrick, if these companies can reduce their labor costs, that is a direct reduction in overhead, which increases their bottom line. I agree that it should be best to keep a consistent work force, but the way these carriers turn people through the door, money gotten from the Feds has to help their bottom line. It is almost like they have FREE labor during the training period. :?

[BIG JEEP on 44's]

Here is what I do know for sure about Werner they get special government subsidy pricing on trucks for example an 85k freight liner only costs them 52k and some change brand new I do not know their pricing on Pete's an KW's , But I'm sure it's at a fair discount .


When a student becomes a "QUALIFIED" driver and is issued his truck that truck is covered for either 6 months or 1 yr can't remember which ,but if wrecked Werner don't pay for the truck UNCLE SAM does .

All trucks that are used to train students are also covered by Uncle Samantha if wrecked .

Werner receives government money for paying student salaries ,and receives a sum of money for every student that drives with them for 1 full yr ...I don't think they see that money very often :wink:


I'm sure there is other aid that I'm un-aware of as well ,but it is true that mega carriers get government money to put drivers on the road .

[merrick4]

Here is what I do know for sure about Werner they get special government subsidy pricing on trucks for example an 85k freight liner only costs them 52k and some change brand new I do not know their pricing on Pete's an KW's , But I'm sure it's at a fair discount .


When a student becomes a "QUALIFIED" driver and is issued his truck that truck is covered for either 6 months or 1 yr can't remember which ,but if wrecked Werner don't pay for the truck UNCLE SAM does .

All trucks that are used to train students are also covered by Uncle Samantha if wrecked .

Werner receives government money for paying student salaries ,and receives a sum of money for every student that drives with them for 1 full yr ...I don't think they see that money very often :wink:


I'm sure there is other aid that I'm un-aware of as well ,but it is true that mega carriers get government money to put drivers on the road .

Do you know what government pays the student salaries? By that I mean, as Sentinel has pointed out, they get money from state Workforce programs. If the Federal government is paying, I'd like to know what Agency and under what program.

[BIG JEEP on 44's]

Here is what I do know for sure about Werner they get special government subsidy pricing on trucks for example an 85k freight liner only costs them 52k and some change brand new I do not know their pricing on Pete's an KW's , But I'm sure it's at a fair discount .


When a student becomes a "QUALIFIED" driver and is issued his truck that truck is covered for either 6 months or 1 yr can't remember which ,but if wrecked Werner don't pay for the truck UNCLE SAM does .

All trucks that are used to train students are also covered by Uncle Samantha if wrecked .

Werner receives government money for paying student salaries ,and receives a sum of money for every student that drives with them for 1 full yr ...I don't think they see that money very often :wink:


I'm sure there is other aid that I'm un-aware of as well ,but it is true that mega carriers get government money to put drivers on the road .

Do you know what government pays the student salaries? By that I mean, as Sentinel has pointed out, they get money from state Workforce programs. If the Federal government is paying, I'd like to know what Agency and under what program.

It's not state money it's goverment funding what exact agency or program I have no idea ...

[Sentinel]

I stepped away and came back to finish this dissertation. I can see that others have already started answering some of the questions I posed.

There actually is money to be made from these OTR training schools in a number of different ways:

1. The school collects money from each student regardless of whether they finish and pass the course or not.

Let's take an example school in the Dallas area. The training cost is $4500 for each student. Each class is comprised of approximately 30 students and classes run monthly. So (30 X 4500) X 11 = $1,485,000 in direct tuition costs each year. This is based on only 11 classes a year with December having none to give faculty a break. Instructors are also utilized in other functions of the company when not teaching as are the other support staff. The classroom is an available large room in an already large facility that has sufficient space to do this. The tractors and trailers are "End Of Life" equipment useful for the class but not OTR driving. Students are placed 2 - 4 in and each vehicle and expected to learn with less practice than at a better institution which assigns a max of 2 per tractor. The resources used to teach the students, including faculty time, could easily be paid with the tuition charged. Possibly there could be significant excess funds?

The question is how many other "hidden" cost savings and benefits are there to the company? For example, if they are an institution accredited by Texas Workforce Commission to teach this then they might receive additional tax benefits for every student from the IRS and/or state taxation system. For every student they place in a tractor, on the road after graduation they might also qualify for additional tax credits. How many different tax credits do they receive for training minorities, persons of limited educational background, protected racial groups, etc.? All of the physical resources used for teaching have no doubt been marked as instructional assets for an accredited school. These assets enjoy better write-offs than normal assets used to generate revenue for the company. If the values of the assets are inflated properly, so as not to raise red flags with the IRS, then additional tax savings might be gained.

What other programs are they eligible for? Are there special state or federal grants for business' that train and employ people and thereby helping to lower unemployment rates? Are there other programs that offer grant monies for accredited schools? If the company has the intelligence to start a training program then they will be aware of the various programs that are available.


2. The company makes a considerable amount of money from placing a new driver in the seat of a tractor.

The average pay for new drivers appears to be approximately 28cpm after they have completed road training with a finisher. If only 75% of new drivers make it through their indentured servitude contract period then the savings the first six months are significant. For the purposes of this description we will place an average pay for the more to most experienced driver at 34cpm. That is a 6cpm difference for every mile the new driver hauls versus the more experienced ones. An example of savings is an average 2500 mile week. With this:

(30 Students/class X 11 months) X .75 = 248 (247.5 rounded up) new drivers running at 28cpm for 6 months
(248 X 2500) X 26 Weeks = 16,120,000 miles driven X .06cpm difference = $967,200 saved over just 6 months. That's a considerable savings!!

Every new driver has a learning curve and wants to make a positive impression on their employer. How many times will a new driver not argue with justifiable accessorial pays that they should have received but do not? That can be a considerable amount of money. How many times does the new driver either not know or forgets to claim these pays?

New drivers are generally trying to make money to pay their bills. As a result they may very well have to forgo the expensive insurance packages as they just can't afford them. If the company funds any of the premium or actually costs for treatments then they are saving significantly there.

The newer drivers are, rightly so, placed in the older and more undesirable tractors. Some of these tractors have already reached a useful lifespan for OTR driving and should have been retired. How much does the company save by not buying new tractors using this tactic of squeezing hundreds of thousands of miles more out of the tractors.

Two of the most disliked conditions by drivers today are miles/pay and home time. When the new driver first gets on the road they do not have a total grasp on these and are trying to adjust while trying to not only make an impression but also gain the 6-12 months experience the better driving positions demand for hiring. More experienced drivers already have the time and miles behind them to hand their keys in and go elsewhere when the company falls back on all of their promises. This is as it should be and in the military we called it RIP (Rank Has Its Privileges). However, companies all to well know of this condition and take advantage of it frequently.

I used a simple six month period for a reason. If you look at the actually costs of training a new person then it is realistic to believe that the company has already recouped the cost at six months and probably even made money on the new driver. If the new driver leaves at six months of a twelve month contract then the company makes a great deal of profit on them as they will now have to repay the training costs.

How accurate is the above?

About the only way to really answer that question is for a company to open all of its books for public viewing, or for a governmental agency to audit them with the intention of uncovering how lucrative it is for them to run these schools. I would certainly like to see either of these happen so we can all learn the actual facts. Of course I'm a realist when it comes to business so I certainly won't hold my breath for that to happen!

It would be very nice to hear others with vastly more experience in this industry to chime in and provide their insights and experiences with these schools. I only offer thought and conjecture here but it is a start.

[Sentinel]

Merrick, if these companies can reduce their labor costs, that is a direct reduction in overhead, which increases their bottom line. I agree that it should be best to keep a consistent work force, but the way these carriers turn people through the door, money gotten from the Feds has to help their bottom line. It is almost like they have FREE labor during the training period. :?

GMAN,

That's a good way to put it!

Another item to consider is the Return On Investment (ROI) period for training a new driver. How much money does the company actually use from their pocket? How much is through grants, tax rebates, other programs, etc.? How much in benefit costs does the company save when a driver is new? Looking at these factors, and possibly others, at what point does the company break even and start making money on new drivers?

Also, what is the ratio of new to experienced drivers in that company? A company with a huge ratio of new drivers might possibly be saving large amounts of money on pay alone. As long as the new drivers are not costing them huge amounts in insurance claims, goods claims as well as physical accident claims, then the accident rate may not be significantly impacting the company. That is in relation to having more experienced drivers with less accidents but costing more in driver pay and benefits.

There is one more item to consider. I'll throw this in to stir the pot a little. The OTR companies would like the appearance of high turnover rates and driver shortages. This gives them the facts and figures they need to better control from where they hire new drivers. I will say at least one very large carrier has already been pushing our Feds to relax the laws on both immigration visas for drivers and also the motor vehicle laws with regards to foreign drivers entering our country and running all contiguous 48 states. The worse the driver retention and shortage problem appears then the easier it will be for them to accomplish these objectives.

It really is a numbers game! Unfortunately it will be the hardworking drivers who will feel it in the end.

[BIG JEEP on 44's]

Sentinel


It's been my experience that it's the brand new drivers that usually receive the brand new trucks ,As the truck is covered if it gets wrecked by a driver with less than 1 yr driving experience...But if I were to wreck that same truck the company would eat it .


As I mentioned earlier a cpmpany like werner is able to buy new trucks that go for 85k for about 52 k ...they run these trucks up to 350-450k then turn around and sell the freightliners ...petes...and kw's to smaller outfits ...and lease the freghtliners to company drivers . The prices vary by milage on the truck and also from freightliner ..pete...kw ...But Werner usually sells the truck for not much less than what they actually paid for the truck ,So due to their special pricing on new trucks they make a fair profit selling trucks as well .

[Sentinel]

Sentinel


It's been my experience that it's the brand new drivers that usually receive the brand new trucks ,As the truck is covered if it gets wrecked by a driver with less than 1 yr driving experience...But if I were to wreck that same truck the company would eat it .


As I mentioned earlier a cpmpany like werner is able to buy new trucks that go for 85k for about 52 k ...they run these trucks up to 350-450k then turn around and sell the freightliners ...petes...and kw's to smaller outfits ...and lease the freghtliners to company drivers . The prices vary by milage on the truck and also from freightliner ..pete...kw ...But Werner usually sells the truck for not much less than what they actually paid for the truck ,So due to their special pricing on new trucks they make a fair profit selling trucks as well .

BIG JEEP on 44's,

Thank you for the information! This is how truth is uncovered through discovery, experience and opinions of those in the forefront. It would be nice to see many more add to the discussion and help dispel any inaccurate information that might be out there.

[merrick4]

Thank you Sentinel for your posts. I as well hope that someone out there who has some concrete knowledge on the topic will post. Really this needs to be put in the hands of a investigative journalist. But you truly have added much to the discusion and I look forward to reading more of your posts on this or any other topic.