Picking up on an ad put together by Ohio Democrats, Barack Obama is airing a radio commercial blaming John McCain (and campaign manager Rick Davis) for the potential loss of about 8,000 jobs in Wilmington, Ohio. Basically, Davis lobbied in support of DHL’s bid to acquire Airborne Express of Seattle, which had an important hub in Wilmington, Ohio. McCain backed the acquisition and thwarted the efforts of several colleagues to block it. Five years down the line, DHL wants to send some of its cargo on UPS planes, which would likely eliminate the need for its Wilmington facility. But at the time of the merger, being acquired by DHL seemed a great way to ensure Airborne’s future growth. Analysts in Seattle (which lost Airborne’s corporate headquarters) foresaw great potential for the new DHL to expand market share and jobs in the U.S. Even the Cincinnati Enquirer seemed to think that Airborne would do extremely well by hitching itself to DHL’s far deeper pockets:
DHL Worldwide Express’ purchase of Airborne Express’ ground assets Tuesday for an estimated $1.05 billion immediately makes DHL a serious player in the U.S. freight market, and it could make the Tristate a major hub for both ground and air shipments… The agreement immediately would create a major competitor to Federal Express and United Parcel Service for the American overnight express market. Those two companies combine to control about 79 percent of the market; FedEx has 46 percent of U.S. overnight business, and UPS has 33 percent.
Independent analysts anticipated that both DHL’s existing facility at the Cincinnati airport and the newly acquired one in Wilmington, Ohio would get plenty of business:
Several industry analysts say the two hubs probably wouldn’t serve the same functions as they do now under the new company. But they said it would make sense to keep both open. “They got a major asset with that airport in Wilmington, where they have two runways, and they can run flights 24 hours a day with no neighbors complaining,” said Peter Jacobs, freight analyst with Seattle stock brokerage Ragan MacKenzie. “And they just bought 8 percent of the entire U.S. small freight market. They’ll need some more capacity to grow that, so maybe the new building at the Cincinnati airport could become a mega-hub for the region. The real key here is the ground network, which is what DHL has been missing.”
And those analysts proved right. In the 5 years since the merger went through, DHL moved its freight operation from Kentucky to Wilmington, and added jobs at Wilmington:
The move boosted the economy in Clinton County, which is between Columbus and Cincinnati. Bob Gray, an executive at the air park, estimates the net gain was about 1,000 jobs.
Adding to the deal’s promise was the ‘historic agreement’ secured by the Teamsters to protect the jobs:
Last year, DHL bought Airborne Express for more than $1 billion. The agreement reached earlier this week states that DHL fully anticipates growth, which will mean more Teamster jobs as a result of the merger. The agreement also provides a no-layoff protection. Also, regular full-time employees are guaranteed at least 40 hours of work each week. “The agreement also protects premium weekend and holiday pay,” added Tyson Johnson, Director of the Teamsters Freight Division. The 6,000 DHL workers are covered under the Teamsters National Master Freight Agreement. More than 3,000 other Teamsters at DHL are covered under separate contracts. “During this time of economic uncertainty, these workers will know they have a written agreement that protects their jobs and their futures,” Johnson said.
The analysts weren’t wrong, and the Teamsters weren’t dupes. The problem was that ultimately, DHL couldn’t beat UPS and FedEx in the U.S. market. If Airborne Express had remained independent, was it likely to fare any better?
