Auto Parts Deal Triggers Dispute Some Former Employees Regret The Sale Of Skaggs Automotive

Squeezed by competition and flat sales growth, the employees of Skaggs Automotive last year thought they were making a critical choice - sell the company and keep their jobs, or keep the company and lose their jobs.

Nine months later, many who worked for the 50-year-old company have learned that the only choice was to lose their jobs.

General Parts Inc., once considered a white knight because it rescued Spokane-based Skaggs and merged it into the Carquest Auto Parts marketing chain, has closed a downtown parts warehouse and shed about half of the 70 employees who agreed to sell the company.

Former employees say they have yet to be paid thousands of dollars for the stock they held in the Skaggs Automotive Inc. and Skaggs O.E.M Parts Center Inc. employee stock ownership plan. The ESOP owned 25 percent of Skaggs and 36 percent of Skaggs O.E.M., company documents showed.

But company officials have a different point of view. They say inventory in the 18,000-square-foot parts warehouse was consolidated temporarily into the back of Skaggs’ store at W1110 Second Ave. A regional, standalone distribution warehouse will be built in Spokane as sales grow to an undisclosed level.

In addition, company officials said, the majority of employees who left the company had failed a drug test, or refused to take it. A few were laid off, but others were given new jobs that report to General Parts’ Seattle office.

“We did have some fat, there’s no doubt about that,” said Ken Dunlap, retired president of Skaggs. “But we lost several people right out the shoot from the drug testing. I’m sorry that they were laid off.”

As for the stock held by former employees, General Parts division President Chris Winters said workers who left in 1994 will be paid for the stock at the end of 1995, the latest date permitted by Internal Revenue Service rules. Those who left prior to 1994 will receive their check in the next few weeks.

“Business is picking up over there,” Winters said from his Portland office. “We intend to expand with more stores.”

General Parts recently acquired a 50 percent interest in Empire Auto Parts in Colville, Winters said. It also is negotiating with auto parts owners in Sandpoint, Othello, Wash., and many other Inland Northwest cities.

General Parts, a Raleigh, N.C.based chain of 3,000 auto parts stores, operates four former Skaggs stores in Spokane and one in Moses Lake. The Skaggs chain, now called Carquest, was bought last April.

Documents given to Skaggs employees before the sale showed that General Parts would pay $3.7 million for Skaggs and rent the parts warehouse for nine months to two years.

General Parts did not guarantee jobs, but Skaggs management hinted in the documents that the deal would improve the workers’ chances for employment.

General Parts is expected “to extend job offers to a substantial percentage of Skaggs and OEM employees,” the documents said.

Skaggs’ employees felt they had little choice but to agree to the sale. Company sales were flat and expenses rising, cutting into the bottom line of their ESOP returns. The largest share of Skaggs stock was tied up in the estate of the late Charles Skaggs, making it difficult for management to invest the millions needed for capital improvements.

“How long can you hang on in this market without the buying power of the big corporations?” Dunlap said. “We were losing customers.”

To win back some of those customers, General Parts may have sacrificed some employees. Paul Inc, who claimed he was a model employee for Skaggs, said General Parts used a faulty drug test to keep him off the payroll.

Inc said he failed the test two days after having his wisdom teeth pulled on April 29, 1994, a date confirmed by his dentist. Concerned that anesthetics and antibiotics may have influenced the results, Inc asked for a retest. General Parts refused.

“I feel very badly about this,” he said. “It’s been quite a deal.”

Other former employees tell similar stories. But some support General Parts.

Mike Eckel, a veteran Skaggs employee who claims to be owed $11,000, said he believes General Parts is doing what’s right.

“They’re on the up-and-up,” he said. “I don’t think anybody is going to get gypped.”