Dhl Not Having A Good Year
07-30-2008, 02:43 PM
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Dhl Not Having A Good Year
DHL HUB CLOSURE?
German Post Office Lands in US Presidential Campaign
By Marc Pitzke in New York
The German express mail company DHL is not having a good year. Losses are mounting and now a planned cooperation with US competitor UPS has become a campaign issue. An Ohio senator accuses Deutsche Post of "not playing it straight with us."
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The plan sounds reasonable enough at first glance. DHL, the express mail service of Deutsche Post in the US, is not doing well, with slow business already having led the company to torpedo its US expansion plans in May. Now, facing losses of up to $1 billion this year, the company is negotiating with competitor UPS in the hopes of cooperating on air cargo.
The German-owned express delivery company DHL is looking to partner with UPS -- which would mean the closure of its hub in Wilmington, Ohio.
Yet what may seem like a sound business move has the state of Ohio, where DHL is based, up in arms. The entire Congressional delegation from the state has said it would resist any UPS-DHL deal and Ohio Lieutenant Governor Lee Fisher told SPIEGEL ONLINE that he would "do everything we can" to prevent the trans-Atlantic marriage.
And now, even Republican presidential candidate John McCain and his Democratic counterpart Barack Obama have gotten into the act, each voicing concerns about possible violations of US anti-trust laws.
The potential deal is especially sensitive as it could result in the loss of thousands of US jobs. Were DHL to fob off its air delivery to UPS, it would mean the closure of its cargo hub in Wilmington, Ohio, the biggest such hub operated by DHL worldwide. The move would hit the town hard -- the German express mail company has long been Wilmington's largest employer.
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"Upwards of 10,000 jobs" would be lost, Wilmington mayor David Raizk told SPIEGEL ONLINE on Tuesday. "This would be the largest single job loss in Ohio's history and certainly the largest employment crisis in the US."
By now, though, US protests against the DHL plan have expanded far beyond the local level. Having reached Washington D.C., the deal now threatens to affect US-Germany relations. Numerous lawmakers in the House of Representatives have become involved, many of them sending letters to the US Department of Justice. And US President George W. Bush has named Karl Zinsmeister, his chief domestic policy advisor, to monitor the talks between DHL and UPS. Ohio's Congressional delegation also wrote a letter of protest to German Ambassador Klaus Scharioth last month.
A DHL-UPS deal "is deeply problematic for a number of reasons," the letter said. "We are deeply concerned about the potential for anticompetitive conduct to occur."
The issue is particularly explosive this election year, with job losses and the state of the US economy tops on everyone's list of concerns. The embattled swing state of Ohio has been particularly hard hit by the economic crisis.
"What started as a typical business transaction has become a big political issue in a very valuable swing state," a person familiar with the DHL negotiations told SPIEGEL ONLINE.
In a statement issued by the Obama campaign on Tuesday evening, the candidate called on the White House and the Department of Justice to "carefully examine the merger of DHL and UPS." He said that "at least 8,000 jobs will likely be eliminated throughout the state of Ohio" and the deal must be examined to make sure "it is not in violation of anti-trust laws."
Republican candidate John McCain also supported a "review" of the transaction "by several federal and state agencies for any potential violations of applicable law."
State and federal assistance efforts, McCain's chief economic advisor Doug Holtz-Eakin said on Tuesday evening, "should be mustered in preparation for the potential job loss of thousands of working Americans." He also said that planning should proceed for the provision of emergency funding to help those in danger of losing their jobs.
Only recently, a tearful woman asked McCain about the pending DHL deal at a town meeting. The Republican candidate called the situation a "terrible blow," though he said he wasn't sure if it could be prevented or not.
Lieutenant Governor Fisher said he and Governor Ted Strickland, both of whom are Democrats, were "extremely disappointed" by DHL's "very abrupt decision to enter into a transaction with one of their major competitors." DHL "has been an important employer and business in Ohio for a number of years, and we have valued their presence and contribution," he told SPIEGEL ONLINE. The closure of the hub in Wilmington would be "a devastating loss to one of Ohio's most important communities."
Fisher also said that the authorities are already "gathering information and evidence" for a possible anti-trust investigation, so "we can hit the ground running" once the deal is sealed. However, he went on, "we would very much like to work with them in a cooperative, positive spirit."
DHL only consolidated its North American operations in Wilmington, population 13,000, in 2004, a year after it bought out the Wilmington-based express delivery company Airborne Express, and then expanded the airport there. The new hub was opened in 2005.
Ohio Senator Sherrod Brown told SPIEGEL ONLINE, referring to Wilmington: "They laid out the welcome mat for DHL by providing more than $400 million in incentives." He went on to say, "workers and their families rightfully feel betrayed by the callous decision made by Deutsche Post. This is a foreign company that frankly hasn't played it straight with us."
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Brown said he was working together with his Congressional colleagues to encourage the federal government to "do everything in its power to prevent the loss of thousands of jobs in Ohio."
DHL employees also are doing what they can to spike the DHL-UPS deal. The Air Line Pilots Association (ALPA) on Tuesday filed a lawsuit in Ohio against DHL, taking the company to task for "breach of contract and fraudulent inducement." ALPA alleges that, by proposing to shift its North American flying work to UPS, "DHL is breaching job security commitments it agreed to provide."
Mayor Raizk met with Obama in person two weeks ago to convey his concerns about the DHL situation. The candidate told him "he would do everything he can to try to stop the transaction," Raizk told SPIEGEL ONLINE. He called the DHL plans "unbelievable."
If DHL moved out, Raizk said, it would also hit other areas of the community -- hospitals, schools, the police, the fire department. "All would be adversely affected," he said.
When DHL made the announcement to discuss cooperating with UPS, Raizk happened to be in Germany -- as a guest of honor of DHL. "Wasn't that ironic," he said.
German Post Office Lands in US Presidential Campaign
By Marc Pitzke in New York
The German express mail company DHL is not having a good year. Losses are mounting and now a planned cooperation with US competitor UPS has become a campaign issue. An Ohio senator accuses Deutsche Post of "not playing it straight with us."
type=text/javascript> (!-- OAS_RICH('Middle2'); // --> >
The plan sounds reasonable enough at first glance. DHL, the express mail service of Deutsche Post in the US, is not doing well, with slow business already having led the company to torpedo its US expansion plans in May. Now, facing losses of up to $1 billion this year, the company is negotiating with competitor UPS in the hopes of cooperating on air cargo.
DPA
The German-owned express delivery company DHL is looking to partner with UPS -- which would mean the closure of its hub in Wilmington, Ohio.
Yet what may seem like a sound business move has the state of Ohio, where DHL is based, up in arms. The entire Congressional delegation from the state has said it would resist any UPS-DHL deal and Ohio Lieutenant Governor Lee Fisher told SPIEGEL ONLINE that he would "do everything we can" to prevent the trans-Atlantic marriage.
And now, even Republican presidential candidate John McCain and his Democratic counterpart Barack Obama have gotten into the act, each voicing concerns about possible violations of US anti-trust laws.
The potential deal is especially sensitive as it could result in the loss of thousands of US jobs. Were DHL to fob off its air delivery to UPS, it would mean the closure of its cargo hub in Wilmington, Ohio, the biggest such hub operated by DHL worldwide. The move would hit the town hard -- the German express mail company has long been Wilmington's largest employer.
REPRINTS
Find out how you can reprint this SPIEGEL ONLINE article in your publication.
"Upwards of 10,000 jobs" would be lost, Wilmington mayor David Raizk told SPIEGEL ONLINE on Tuesday. "This would be the largest single job loss in Ohio's history and certainly the largest employment crisis in the US."
By now, though, US protests against the DHL plan have expanded far beyond the local level. Having reached Washington D.C., the deal now threatens to affect US-Germany relations. Numerous lawmakers in the House of Representatives have become involved, many of them sending letters to the US Department of Justice. And US President George W. Bush has named Karl Zinsmeister, his chief domestic policy advisor, to monitor the talks between DHL and UPS. Ohio's Congressional delegation also wrote a letter of protest to German Ambassador Klaus Scharioth last month.
A DHL-UPS deal "is deeply problematic for a number of reasons," the letter said. "We are deeply concerned about the potential for anticompetitive conduct to occur."
The issue is particularly explosive this election year, with job losses and the state of the US economy tops on everyone's list of concerns. The embattled swing state of Ohio has been particularly hard hit by the economic crisis.
"What started as a typical business transaction has become a big political issue in a very valuable swing state," a person familiar with the DHL negotiations told SPIEGEL ONLINE.
In a statement issued by the Obama campaign on Tuesday evening, the candidate called on the White House and the Department of Justice to "carefully examine the merger of DHL and UPS." He said that "at least 8,000 jobs will likely be eliminated throughout the state of Ohio" and the deal must be examined to make sure "it is not in violation of anti-trust laws."
Republican candidate John McCain also supported a "review" of the transaction "by several federal and state agencies for any potential violations of applicable law."
State and federal assistance efforts, McCain's chief economic advisor Doug Holtz-Eakin said on Tuesday evening, "should be mustered in preparation for the potential job loss of thousands of working Americans." He also said that planning should proceed for the provision of emergency funding to help those in danger of losing their jobs.
Only recently, a tearful woman asked McCain about the pending DHL deal at a town meeting. The Republican candidate called the situation a "terrible blow," though he said he wasn't sure if it could be prevented or not.
Lieutenant Governor Fisher said he and Governor Ted Strickland, both of whom are Democrats, were "extremely disappointed" by DHL's "very abrupt decision to enter into a transaction with one of their major competitors." DHL "has been an important employer and business in Ohio for a number of years, and we have valued their presence and contribution," he told SPIEGEL ONLINE. The closure of the hub in Wilmington would be "a devastating loss to one of Ohio's most important communities."
Fisher also said that the authorities are already "gathering information and evidence" for a possible anti-trust investigation, so "we can hit the ground running" once the deal is sealed. However, he went on, "we would very much like to work with them in a cooperative, positive spirit."
DHL only consolidated its North American operations in Wilmington, population 13,000, in 2004, a year after it bought out the Wilmington-based express delivery company Airborne Express, and then expanded the airport there. The new hub was opened in 2005.
Ohio Senator Sherrod Brown told SPIEGEL ONLINE, referring to Wilmington: "They laid out the welcome mat for DHL by providing more than $400 million in incentives." He went on to say, "workers and their families rightfully feel betrayed by the callous decision made by Deutsche Post. This is a foreign company that frankly hasn't played it straight with us."
NEWSLETTER
Sign up for Spiegel Online's daily newsletter and get the best of Der Spiegel's and Spiegel Online's international coverage in your In-Box everyday.
Brown said he was working together with his Congressional colleagues to encourage the federal government to "do everything in its power to prevent the loss of thousands of jobs in Ohio."
DHL employees also are doing what they can to spike the DHL-UPS deal. The Air Line Pilots Association (ALPA) on Tuesday filed a lawsuit in Ohio against DHL, taking the company to task for "breach of contract and fraudulent inducement." ALPA alleges that, by proposing to shift its North American flying work to UPS, "DHL is breaching job security commitments it agreed to provide."
Mayor Raizk met with Obama in person two weeks ago to convey his concerns about the DHL situation. The candidate told him "he would do everything he can to try to stop the transaction," Raizk told SPIEGEL ONLINE. He called the DHL plans "unbelievable."
If DHL moved out, Raizk said, it would also hit other areas of the community -- hospitals, schools, the police, the fire department. "All would be adversely affected," he said.
When DHL made the announcement to discuss cooperating with UPS, Raizk happened to be in Germany -- as a guest of honor of DHL. "Wasn't that ironic," he said.
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