Tuesday, June 29, 2004

DHL wanted Ohio all along, Ky. says

Official: We never even got to bid

By James Pilcher
Enquirer staff writer

Kentucky never even got a chance to bid for the DHL hub operation at Greater Cincinnati's airport in Hebron, the state's top economic development official said Monday.

The shipping company was leaning toward Ohio from the beginning, said Gene Strong Jr., secretary of the Cabinet for Economic Development.

And Kentucky probably could not have matched Ohio's $422.4 million incentive package to create a consolidated hub in Wilmington, Strong said.

"It never got to the point where (DHL) got to look at an official financial package from Kentucky," Strong said. "But anytime you look at a $400 million-plus package, that's pretty aggressive. In fairness to Ohio, you also have to look at the economic impact of a potential loss to that community and to the state up there."

DHL late last week announced its intention of consolidating its hub operations in Wilmington, where it owns the airport and where it employs nearly 7,000 workers through an affiliate.

The decision means that the hub at DHL's Cincinnati/Northern Kentucky International Airport operation will essentially close next September. It had been the Brussels-based air express company's primary domestic transfer point until it bought Airborne Express for $1.05 billion last spring.

DHL, a subsidiary of the German company Deutsche Post, said about 800 of nearly 1,800 local jobs will be eliminated, with 300 full-time workers staying put to run an operations center out of the company's new $220 million building.

As many as 700 jobs are affiliated with Astar Air Cargo, the domestic airline that flies DHL freight. Those jobs will be transferred to Wilmington, about 50 miles northeast of Cincinnati.

In return for the Ohio incentives, including a $300 million bond guarantee from the state, DHL has pledged to create 900 new jobs and invest $295 million in the Clinton County operation.

Ohio officials say they did not overpay with the incentive package, which included the accelerated construction of a new bypass highway around Wilmington.

"The governor has been aggressive in working with DHL and other companies to keep as many good jobs as we can and bring in as many good jobs as we can," said Orest Holubec, spokesman for Ohio Gov. Bob Taft, who was personally involved in the DHL deal, meeting with the company several times.

DHL officials said they chose Wilmington primarily because it could handle seven times the volume, three times the total weight and three times the number of aircraft operations of Erlanger. They added that noise on surrounding communities wasn't as much of an issue in Wilmington, where DHL owns much of the land surrounding its airport.

"Incentives offered by the state of Ohio were an issue as well, but I will leave to each state any comments they wish to make about what they were offering," DHL spokesman Jonathan Baker said Monday, adding that he would not characterize the talks with either state.

Strong said that DHL made it fairly clear that Wilmington was the preferred choice early in the process, which began soon after the Airborne purchase in April 2003. He said that Kentucky officials pressed several times to visit the company's U.S. headquarters in Plantation, Fla., but never were able to get an appointment to make a formal presentation.

"It really wasn't a serious bidding situation," Strong said. "They let it be known early on that they were trying to do this quickly, and we were still trying to work through environmental and noise issues here that they just didn't have to deal with up there."

He added that he was satisfied that DHL had met the requirements of a previous deal that called for the construction of $17 million in ramp space at the local airport.


E-mail jpilcher@enquirer.com

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