Wednesday, June 30, 2004

DHL's loss may be huge to N.Ky.

But FedEx, other new jobs could offset it some

By James Pilcher
Enquirer staff writer

The pullout of DHL could drain $250.9 million a year from the Northern Kentucky economy, according to an analysis released Tuesday by the Northern Kentucky Chamber of Commerce.

In addition, Kentucky could lose out on nearly $3.5 million in sales-tax revenue annually once the air cargo company consolidates its hub in Wilmington in September 2005, said the study, prepared by Tom Zinn, a University of Cincinnati economist and consultant to the chamber.

"As we were working with Dr. Zinn on these numbers, we realized just how significant this loss of jobs was to the community over the course of a year and half as DHL phases out the jobs," Northern Kentucky chamber president Gary Toebben said.

DHL announced Friday it was leaving the Cincinnati/Northern Kentucky International Airport to consolicate its hubs in Clinton County, about 50 miles northeast of Cincinnati. That decision had been pending since the Brussels-based air cargo company bought most of Airborne Express for $1.05 billion in April 2003.

DHL, a subsidiary of the German postal service Deutsche Post, said it was losing $160 million a year by operating the two hubs. It said it was eliminating 800 jobs with the move, but promised Ohio it would create 900 more jobs in Wilmington and invest $295 million there in return for $422 million in incentives. DHL also said 300 full-time employees would stay at its Erlanger building.

In addition, about 700 local jobs with Astar Air Cargo, the separate airline that carries DHL freight, will probably be transferred to Wilmington, although Astar officials have not yet confirmed such a move.

"We haven't gotten final word," said James Bonney, chairman of Astar's branch of the Air Line Pilots Association. The union represents the company's approximately 500 pilots.

"But we are under the impression that the vast majority of our flights will be in and out of Wilmington," Bonney said.

The chamber study included the Astar jobs as being lost to the area, even though many of those workers could still live in Greater Cincinnati and commute. A DHL DC-8 captain with 10 years seniority makes about $156,000, and Bonney said the majority of DHL pilots have about 10 to 11 years experience.

"No one is looking to sell their houses over this," Bonney said. "We are hoping to work with the company on transportation issues."

Said Toebben: "We would hope that to be the case, and that could lessen the impact somewhat."

The analysis also used 580 as the figure of full-time equivalent jobs being lost, since some of the local positions DHL is cutting are part-time.

But Toebben said he hoped some of those workers could find a new home at the FedEx Ground truck hub set to open in April 2005 in unincorporated Boone County off Mount Zion Road.

That operation is scheduled to be fully operating by next July, with 380 workers needed initially. Some projections call for the truck hub to eventually employ upwards of 1,500, with company officials saying they would welcome experienced hub and sort workers.

"We definitely won't turn them away," said FedEx Ground spokesman David Westrick.

"An experienced workforce is something we are very interested in."

With 700 direct and indirect workers to start, the positive impact would be $52.6 million from the $65 million facility, the chamber said.

Kentucky and Boone County offered FedEx a tax-abatement incentive package worth about $3 million over a 20-year period. In addition, the state pledged to complete an already scheduled new railroad overpass nearby.

The chamber also said that if FedEx fills out to a possible 1,500 workers, the impact could be $212.4 million, with $3.82 million in sales tax revenue being generated.

Toebben said that could eventually help soften the blow from the loss of DHL.

"FedEx is no longer just the icing on the cake," he said.

"It's a necessity."


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