Distorting the DHL Deal

Excerpt:

An AFL-CIO flier and Obama campaign ads say that McCain cost Ohioans 8,000 jobs. We say that's a distortion of the record

Summary

Ads from the AFL-CIO and the Obama campaign claim that McCain is partly to blame for the loss of more than 8,000 jobs in Ohio. They paint a false picture.

There's at least some truth in both ads: German-based DHL announced a deal that could result in 8,200 lost jobs in Wilmington, Ohio. And McCain did in fact oppose an amendment that would have kept DHL from buying Wilmington-based Airborne Express. McCain's campaign manager, Rick Davis, was also a DHL lobbyist charged with easing the merger through the Senate.

But the ads go too far. Some statements about McCain are misleading and some of the inferences the ads invite are unsubstantiated:

* The ads charge that McCain opposition to a 2003 amendment helped DHL and amounted to turning his back on workers. That's misleading. McCain said he opposed a version of the amendment because it was a special project inserted into an unrelated bill, not to help DHL. And the Teamsters union praised the merger at the time, saying that it would lead to more jobs. And at first, more jobs indeed followed.

* The ads also imply that the DHL merger is a direct cause of the job losses in Ohio, which we find to be both unlikely and unsubstantiated. Airborne Express had laid off 2,000 employees before the merger, and analysts at the time said that the struggling carrier would need to make expensive investments in its international infrastructure to remain competitive.

Analysis

The AFL-CIO and presumptive Democratic presidential nominee Barack Obama are blaming John McCain for the loss of more than 8,000 jobs in southwestern Ohio. The AFL-CIO mailer is the most explicit, saying that "McCain helped cut a deal that sent over 8,000 jobs to a foreign-owned company." Obama's television ad, which began airing on Aug. 14, charges that "John McCain helped pave the way for foreign-owned DHL to take over an American shipping company." An Obama radio ad, which began airing in Ohio over the weekend, repeats the message that McCain "used his influence in the Senate to help foreign-owned DHL buy a U.S. company and gain control over the jobs that are now on the chopping block in Ohio."

The Backstory

In 2003, DHL, a company owned by Deutsche Post (the German equivalent of the U.S. Postal Service) announced that it would purchase the ground fleet of Seattle-based Airborne Express. The merger gave DHL a fleet of more than 15,000 trucks, as well as ownership of Airborne's Wilmington, Ohio, hub, which consisted of a sorting facility and the world's largest privately owned airport.

Legal challenges from United Parcel Services and FedEx prevented DHL from purchasing Airborne's air freight service. That's because federal law prohibits foreign ownership of any U.S. airline. As a result of those legal challenges, DHL had to sell the airline it had already owned to American investors. That airline became ASTAR Air Cargo. Moreover, when DHL purchased Airborne Express, it had to spin off the air cargo portion into a separate business, ABX Air, which remained under the ownership of the original Airborne Express stockholders.

The upshot is that DHL cannot fly its own packages. It collects packages on the ground and transports them to airports, but it has to contract the air transport of those packages to U.S.-owned airlines. DHL had used ABX Air (which also operated the sorting facility in Wilmington) and ASTAR Air Cargo to move packages by air. But, in May 2008, DHL announced that it would no longer use ABX or ASTAR and would instead pursue an agreement to contract its sorting and air freight to UPS. ABX Air President John Graber says that the move could cost his company 6,000 jobs. Wilmington's mayor, David Raizk, told the Dayton Daily News that another 1,000 ASTAR employees as well as 1,200 DHL workers could face unemployment as well.....

There is some truth to the ads. As we said, as many as 8,200 workers in Wilmington are likely to lose their jobs as a result of DHL's decision to outsource to UPS. It's also true that in 2003, some senators supported legislation that was designed to make German-owned DHL's purchase of U.S.-owned Airborne Express less attractive. McCain did in fact oppose the legislation. And it's true that DHL paid $185,000 to the firm of Rick Davis, McCain's campaign manager, to lobby for the merger (the $590,000 cited in the AFL-CIO mailer represents the entire amount that Davis' firm collected from DHL during Davis' tenure, most of which went for lobbying on other measures). But it's misleading to say, as Obama does, that McCain "used his influence" to help DHL "buy a U.S. company and gain control over" the 8,200 jobs in question. The AFL-CIO's claim that McCain "could have stopped the deal" is one we find dubious, to say the least.

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Posted by John Ray. For a daily critique of Leftist activities, see DISSECTING LEFTISM. For a daily survey of Australian politics, see AUSTRALIAN POLITICS Also, don't forget your roundup of Obama news and commentary at OBAMA WATCH