I'm the author of five books, a contributing writer for Cincinnati Magazine, and an award-winning newspaper reporter and columnist who retired in 2018 from teaching journalism at Miami University in Oxford, Ohio. I'm the former Project Editor of Ohio Civics Essential, a monthly series of stories aimed at educating voters in civics knowledge and engagement. As part of my commitment to social justice, I write for "Voices," a news publication of The Cincinnati Interfaith Workers Center, and I co-founded a news website devoted to workplace fairness and equal opportunity, "Cincinnatians for the American Dream." I live in Cincinnati's historic Over-the-Rhine neighborhood, where I volunteer as a tutor at Rothenberg Academy.
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Photo courtesy of Steve Bennish
By Jim DeBrosse
Ken Oaks and friends have built TQL into a multibillion-dollar company, but thousands of ex-employees are suing the company for their fair share of the success.
By Jim DeBrosse
In late June, when a prototype of Lordstown Motors’ new Endurance electric pickup truck rolled on stage at the old General Motors plant in Lordstown, Ohio, the cab’s passenger doors popped open and out stepped Cincinnati entrepreneur Steve Burns, the company’s CEO, and Vice President Mike Pence, dressed in a perfectly-tailored dark suit.
Pence took the podium in front of a giant American flag to become the truck’s unofficial pitchman. “It really is an honor to be here, to be able to drive up and help unveil what will soon be the first fully electric pickup truck on the market in the United States of America,” he said. “Ladies and gentlemen, I give you the Lordstown Endurance.” The announcement was met with wild applause from a small but enthusiastic audience of company executives, government leaders, and investors.
In the run-up to November’s presidential election, Lordstown has become as much a political issue as an economic one. During the Republican National Convention in August, a prerecorded video featured Youngstown trucker Geno DiFabio standing with Pence in front of Abraham Lincoln’s childhood home in Indiana, thanking Trump for his handling of GM’s shutdown of the Lordstown plant. DiFabio says GM wouldn’t have sold the plant to Lordstown Motors without Trump in office. “There’s no other president that could have done it,” he said. “There’s no one that has even tried to do it. President Trump’s a doer. He appreciates every one of us, and I know he does. I’ve seen it.”
But Democrats beg to differ. Lordstown Motors’s plan to hire 600 workers is hardly compensation for an assembly plant that once employed thousands. Senator Sherrod Brown says Trump ignored his repeated calls asking the president to intervene when GM closed the plant. In a statement released just prior to Pence’s unveiling of the Endurance, Brown said, “When GM pulled out of Lordstown, President Trump didn’t lift a finger to help, while his tax bill gave GM a 50 percent coupon to ship jobs overseas. The people of Lordstown…don’t need a photo op, they need action.”
Even if Lordstown Motors begins production next year as promised, motorists aren’t likely to see an Endurance zipping past them on the highway with a gun rack in the back window or a tongue-lolling dog in the truck bed. With a price tag of $52,500 and a range of 250 miles per charge, the Endurance is being aimed at the full-sized commercial fleet market whose business owners covet the truck’s fuel economy—the equivalent of a 75-mile-per-gallon gas-powered vehicle.
Known more as a high-tech innovator with strong sales skills than a manager who can bring a successful product to market, Steve Burns has brokered a complex deal to turn his 17-month-old private venture into a publicly traded company with an expected infusion of $675 million in cash. If the deal is finalized, Lordstown Motors will merge later this year with DiamondPeak Holdings, a company formed specifically to purchase Lordstown Motors and raise money for it on the Nasdaq stock market under the trading symbol RIDE. DiamondPeak’s investors have already agreed to pump $500 million into the new company.
Shell companies like DiamondPeak, known as special purpose acquisition companies, or SPACs, are an increasingly popular shortcut to turn private startups into public companies and, critics say, to avoid more serious scrutiny from investors. DiamondPeak was the brainchild of David Hamamoto, an East Coast real estate whiz who’s been at the helm of a dozen different companies. Hamamoto, 59, will remain chief executive of DiamondPeak while Burns will continue as CEO of Lordstown Motors. Burns and Hamamoto did not respond to requests to be interviewed for this story.
Hamamoto and another principal investor in DiamondPeak, Mark Walsh, are well known on Wall Street as real estate dealmakers. Both have had dramatic upturns and downturns in their careers. Walsh was flying high as head of Lehman Brothers’s real estate division, specializing in high-risk subprime and commercial mortgages, until the bubble burst on the housing market and the investment bank went belly-up in September 2008. Even so, Walsh was paid $70 million in the three years before the nation’s economic collapse.
Like other young people fresh out of college in the Cincinnati area, Michelle Yenser was looking for a job that would help pay off her burdensome student loan debt. It was 2009, and she’d just graduated from Miami University’s business school.
Sales work immediately came to mind because, she remembers thinking, The harder you work, the more money you make. With help from Miami’s recruitment office, she found Total Quality Logistics, a freight brokerage firm whose ads promised “endless opportunities for those who are self-motivated and dedicated to success.”
Headquartered in Clermont County’s Union Township, TQL is now the largest privately owned company in Greater Cincinnati. How? “It’s plain and simple—we work harder than anyone else in the business,” its website says. TQL’s founder and CEO, Anderson Township native Ken Oaks, is a near-billionaire and the wealthiest person in Cincinnati. TQL has consistently been named one of the best places to work in the region and in the country by dozens of business publications, including Forbes and Fortune magazines.
But it didn’t work out that way for Yenser and thousands of other former TQL employees. She lasted longer than most TQL recruits: a year and half, first as a sales trainee at $33,000 per year and then as a junior account executive/broker who was paid a salary plus commission. The salary, however, has to be covered by the sales revenue a broker brings into the company. Many former TQL employees say that’s difficult, if not impossible, for all but a tiny percentage of new recruits, no matter how many hours they work.
Some 4,500 former employees are now part of a class action suit against TQL in what local attorneys say could be the largest wage settlement case in Cincinnati history, claiming the group was collectively cheated out of tens of millions of dollars of overtime pay while struggling to make it under the company’s boiler room conditions. After 10 years of filings and motions on both sides, the lawsuit is scheduled to go to trial in July.
“If you want to make it there, you have to work really, really hard,” says Yenser, 32, who now sells for a pharmaceutical company. She isn’t part of the class action suit against TQL. “I was going in at 7 [a.m.] and leaving at 7 [p.m.],” she recalls, as well as taking phone calls from customers any hour of the day or night, including weekends and holidays. “I would get calls on Christmas Day or New Year’s Day. Say a refrigerated truck with a load of chicken breaks down, and it’s a holiday and you’re with your family. You still have to fix it. You’re glued to your phone—it could take minutes or it could be hours.”
On top of managing freight shipments, brokers at TQL typically make 75 to 100 sales calls a day trying to drum up new customers, many of them first-time “cold calls” to shipping agents who hear daily from other brokers, including other brokers within TQL, Yenser says. “If you’re trying to make the most money, you’re going to go for the biggest companies, and everybody tries to get the same big customers. The people who make it have to be kind of cutthroat and kind of lucky.” For Yenser, the luck ran out when her biggest customer canceled the account over an incident she prefers not to discuss publicly.
Fueled by hard work and what critics call unrealistic sales pressures, TQL has had a remarkable run since Oaks launched it in 1997. And then came COVID-19, working from home, and a new economic model. Analysts say it’s still too early to predict the pandemic’s full impact on the logistics industry, but it’s certain that a slowdown in the trucking industry that began in 2018 will continue. “Given the largely uncharted waters we are in, it is likely to be a slow, drawn-out process in order to return to ‘normal,’ or even a semblance of that,” Jeff Berman, group news editor of Supply Chain Management Review magazine, wrote in a March column.
Transportation logistics is one of the fastest growing U.S. industries, quadrupling in revenues from $57 billion in 2000 to more than $213.5 billion in 2018, the latest figures available from Armstrong & Associates, a market research and consulting firm. The modern transportation logistics industry was launched in the 1980s with the deregulation of the trucking industry, then exploded in the 1990s and onward with the growth of the internet, GPS tracking, and mobile technologies transforming every other part of our lives.
Total Quality Logistics, the largest privately owned company in Cincinnati, is doubling its headquarters footprint in Union Township.