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Published November 22, 2023
In the midst of a contentious financial dispute with the U.S. Postal Service, Matheson Flight Extenders (MFE), a key player in mail processing, transportation, and logistics, is grappling with significant challenges. The company recently declared plans to lay off more than 450 employees by December 15 and shutter its mail sorting facilities in California.
Background of the Financial Dispute
The saga unfolded in mid-September, marked by MFE’s filing of three Worker Adjustment and Retraining Notification (WARN) Act notices with the California Employment Development Department. These notices, signaling permanent layoffs, are indicative of the deep-rooted financial issues the company faces with the U.S. Postal Service.
Details of Layoffs and Facility Closures
The repercussions are substantial, with 72 employees facing permanent layoffs in San Leandro, 124 workers affected by the closure of two Surface Transfer Centers in Sacramento, and an additional 257 workers initially scheduled for permanent layoffs at the Long Beach facility.
Legal Implications and Chapter 11 Bankruptcy
Navigating the legal landscape, MFE and Matheson Postal Services find themselves in the fold of Matheson Trucking, filing for Chapter 11 bankruptcy in May 2022. This move, often a strategic financial maneuver, allows the entities to reorganize debts while continuing operations.
Previous Job Cuts and Facility Closures
This isn’t the first time MFE has made headlines for downsizing. In August 2022, the company announced the elimination of nearly 1,000 jobs and the closure of sorting facilities in Chicopee, Massachusetts, Atlanta, and Brandywine, Maryland, further highlighting the tumultuous nature of its recent history.
Sticking Points with the U.S. Postal Service
At the heart of the dispute are the Surface Transfer Centers in Atlanta and Brandywine. When MFE assumed control in November 2021, operational challenges emerged, with claims of non-functional high-speed sorting equipment, malfunctioning loading docks, and inadequately trained staff from the previous operator.
Court Filings and Financial Details
Court documents reveal a sequence of events where the Postal Service directed normal peak volumes of mail to newly acquired but non-operational facilities, leading MFE to incur substantial costs for immediate repairs. The dispute further intensified, resulting in a $15 million payment advance from the Postal Service to address operational hurdles.
Mediation Attempts and Continued Issues
Despite ongoing mediation efforts since May, MFE contends that the Postal Service has continued terminating or transferring contracts, adding layers of complexity to an already intricate situation.
The financial intricacies are accentuated by nearly $24 million in reimbursable costs incurred by MFE, particularly associated with the Atlanta and Maryland mail sorting facilities. While the Postal Service agreed to a $15 million payment advance, disagreements loom over reimbursing MFE for the “ramp-up” costs essential for making the mail sites operational.
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