EB-5 Risk Alert: Uncertainty Grows as Workforce Shrinks
As we reported last week, employees at American Logistics International Regional Center recently approached us to share their concerns about the company’s operations. New on-the-ground reports from these workers indicate that the number of truck driver jobs at American Logistics has shrunk in the first quarter of 2013. This seemingly lackluster performance in job creation is a far cry from the company’s own projections and should raise significant concerns for EB-5 investors.
The Sales Pitch: 4,000 jobs in 3 years – Last September, in a presentation to local businesses, American Logistics claimed its goal was to employ around 4,000 workers within 2-3 years. To reach such an ambitious goal, the company would have to hire 25 employees every week for three years. At that rate, the company would have hired at least 500 new employees by now. At the very least, to meet such projections, the company should at least be maintaining current job levels.
On-The-Ground Reality: Workforce Cutbacks – However, rather than seeing growth, truck drivers employed by American Logistics report a slow-down in business activity and a cutback in the workforce. Over the past few months, drivers report that American Logistics has drastically reduced its use of temporary drivers working through staffing agencies. In late 2012, over 20 agency drivers were receiving steady work at American Logistics. Now just three are being called in regularly by the company to work, an over 80% drop. Furthermore ,the number of drivers directly employed by the company has stagnated at around 60.
In all, reports from workers about job levels at American Logistics indicate that there has been about a 25% decline since the end of 2012 in the number of truck drivers regularly working for the company.
Implications for EB-5 Investors – These recent cutbacks at American Logistics come at a particularly sensitive time. None of the company’s EB-5 investors have yet received an I-829 approval, according to its latest annual filings. Their investments – and their green cards – depend on stable job creation. This raises serious questions for EB-5 stakeholders:
- Why does the company appear to be reducing its truck driver workforce?
- What impact will this have on investors when they apply for permanent resident status?
- Is American Logistics’ goal of hiring almost 4,000 workers within the next three years credible?