Ghost Town: An American Nightmare
Wilmington, a small town in America’s Midwestern rust belt, was home to the world’s largest private airport. Then recession struck. Olivia Fincato reports.
Tuesday 17 March 2009
We will probably lose our home, and maybe our truck," says Jessica Siders, a former employee at DHL's US delivery hub in Wilmington, Ohio – the world's largest private airport. She lost her job as a sorter at DHL Solutions back in December. Her husband Kenneth was also laid off from ABX, an air cargo company controlled by DHL. "We had health insurance through his severance package, but only until 1 March. He's diabetic and his heart condition is bad."
Sider and her husband are among the estimated 7,500 residents of Wilmington – out of a 12,000 population – who have lost their jobs with DHL since cuts were announced late last year (9,000 were laid off nationwide). Employed as sorters, fork-lift drivers, mechanics and supervisors, the people of this small town north-east of Cincinnati were hit the hardest when the shipping company announced swingeing cost-saving measures in November last year in the midst of the worst financial crisis in decades. In Wilmington, every small business has been affected by the actions of DHL. Stores are closing, and people are leaving.
Dominated by a single employer, Wilmington is one of America's "company towns". When DHL announced last November that it would end its US domestic freight operations and turn over its American air-cargo service to competitor United Parcel Service (UPS), its Wilmington hub bore the brunt.
DHL had been in Wilmington for only five years, and the closure of its base there demonstrates not just the impact of the global recession – although demand for express shipments in the US has fallen sharply – but the end of an ambitious dream to take on its rivals FedEx and UPS.
In 2003, Deutsche Post, the German logistics group that owns DHL, one of the world's leading delivery companies, acquired Airborne Express, a domestic delivery concern. In America, Airborne Express was served by ABX air cargo airlines, based in Wilmington, Ohio. The purchase represented DHL's effort to consolidate US operations – and finally offer serious competition to the big two. Central to DHL's audacious plan was the establishment of a new distribution base at the sprawling, 2, 200 acre Wilmington airport.
The DHL/Airborne Express deal looked like the perfect match: a German shipping corporation that was efficient, on time and detail-oriented, to be served by a cargo airline and sorting company with more than 25 years of experience of domestic express delivery.
In the beginning, DHL's investment was huge: $1.3bn to buy the vast airport hub, plus about $500m of incentives from the State of Ohio to improve and maintain jobs. "We thought that DHL, with its own airport, would become No 1 in the world," says Randy Riley, Clinton County Commissioner, who has lived in Wilmington for 32 years. "It hired people from all over the state. In south-west Ohio, it became the largest employer. Workers from 84 of the 88 counties of Ohio were working for DHL."
All the ABX planes were painted in the DHL livery. The company started building new facilities around the airport area. It adopted a strong and aggressive corporate advertising campaign, an unusual tactic in a small farming town which, 20 years previously, had been known only as the hog capital of Ohio. But, five years after DHL moved in, in May 2008 it announced that it would be restructuring its US operations and shifting the domestic air cargo business from ABX to its rival UPS.
"We just thought that it was the worst business plan ever," says the Mayor of Wilmington, David Raizk, who was invited to Bonn, Germany for the occasion. "They did this multimillion-dollar investment in Wilmington, but we are not sure if they understood how the express product works here. They tried to impose their plan, but the two business cultures were really different. It is a shame, because if you own your airport, you can control your costs and how you ship your freight. They were losing enormous amounts of money and clients."
Critics of DHL's plan say the company pushed too hard and too fast, and without listening to those who have worked at Wilmington for years. "DHL wanted to take over everything, but they didn't have a clue how to manage," says Joanne Heller, a fork-lift driver with ABX, who's lost her job. "This time last year, they realised they had lost an enormous amount of money. They started talking about restructuring. We thought we were safe. We had no idea of what was going on. We heard all kinds of things, and finally they decided to get rid of night shifts and domestic traffic. Eventually [we heard] that they are going to move back again to Cincinnati airport."
Express shipments in the US carried by the top three companies fell last year for the first time since 2001. In November 2008, DHL said it was going to shut the door and leave the US domestic shipping market by the end of January, slashing thousands of jobs in Wilmington.
People in this town are scared to death. Their futures, held in the hands of just one big company, have been shattered. This is the destiny of many company towns in America. These people are losing everything but the ground under their feet: their severance packages will cover them for just a few weeks, having received one week for each year of work. Health insurance is lost, too.
"I thought I was able to send my kids to college, but now I worry for them," says Chris Fisher, a logistics worker at DHL Solutions, who was laid off in December after 11 years at ABX. "This is going to hurt the school system, which depends heavily on tax income to generate its funds."
Wilmington could be destined to become a ghost town. But this small community still has something very valuable: the largest privately owned airport in the United States. Eventually, someone else is going to take it over and redevelop business in the area.
The airport is still currently under DHL ownership. Mayor Raizk is fighting with all the power of his office to buy it back for the community, and city leaders are in talks with DHL Express executives in an attempt to lessen the severity of the regional economic crisis. DHL is paying for a "transition centre" at its air hub, while the state is providing assistance to those who are unemployed: how to write a résumé, learning to use Excel and Word, how to search for work on the internet, and how to prepare for interviews.
For others like Jessica Siders and her husband, staying to fight for survival is less appealing than the alternative: to take flight. "We're thinking about moving out of the state," she says. "There's no future for us here."
My story: Wilmington residents
Chris Fisher: Logistics worker at DHL Solutions, laid off in December after 11 years at ABX
"After November 2008, they just wanted to find a reason to fire you. They kept saying that our jobs were safe and a month later they told us they were closing the doors. Since then, it has been just devastating. Everything they promised to us is gone. I have never been unemployed till now. While I was working at the airport, I had a life outside home, with friends and colleagues. I had 15 people working for me and now we are all breaking up – it's sad. Things for the past couple of years were blooming. Everybody was happy with their job and house. It was difficult to get where we are now. We worked really hard and bought a house for our family. I earned good money. Now, I might have to work five to 10 years to get to that salary again. I'm scared."
Randy Riley: Commissioner of Clinton County, of which Wilmington is the county seat
"When I started here in 1976, the No 1 industry in Clinton County was farming. We were the hog capital of Ohio. Five years later, Airborne Express moved into town and into the old air base. They started to do overnight package delivery on a very small scale, and they grew and grew until they had something between 15 and 20 per cent of the market. Then DHL came. One of our hopes is that DHL will continue to have some kind of business in Wilmington. They should use the airport as an international gateway from where they can fly freight to and from Asia and Europe. In this way, at least 1,000 jobs will stay here. I would of course prefer to have 8,000 to 9,000 jobs here – but 1,000 is better than nothing."
John Lundblad: A retired ABX pilot, Lundblad flew with the company from 1990 to 2004
"Airborne Express was a niche company and we never lost money until DHL showed up. I think they wanted to compete with UPS and FedEx – and now, I am sure, they've found out just how good those two companies are. The management of these companies seemed to lose touch with the real world."
Molly Dullea: Owner of General Denver Hotel, Wilmington, since 2003
"Pilots are not flying, so they are not coming any more. All their meetings, dinners and conferences have dropped off. It was doing so well when I arrived. The shops were all filled up. It was a vibrant, alive small town. But since last May, it seems like someone has switched off the lights. Every day it gets a little bit less lively, and people are sadder and sadder This is just the tip of an iceberg. In June or July, we will experience the full brutality of it. It is really getting rough. If you stay, there's no place for you to work, but if you go, how can you sell your home? Lots of small businesses have closed. I can see signs for rent all over, but nobody's buying or renting. It is so sad."
Joanne Heller: Formerly a fork-lift driver at ABX, Heller was let go in December 2008 after 12 years. She has lived in Wilmington since the age of four
"Before DHL, working at the hub was very different. Airborne knew what they were doing. DHL wanted to take over everything but they didn't have a clue about how to manage. They kept saying that they were our customers, and we had to do what they wanted as they owned the place. I thought [the DHL deal] was a good change, that I was going to have a job for ever and be a part of it. After 12 years my position was eliminated, so for me there's no possibility to work there any more. I have a 13-year-old son, and I just bought a house thinking I had a good future. I still have health insurance but when my severance package is gone next month, I won't have it any more."
John Graber: President of ABX Air since 2006
"DHL told us that they don't need our service any more. We are eliminating thousands of people's jobs as a result of the domestic service going away, so our company is not anything close to what we were. We have thousands of employees who have been working and growing up with this company. I was reading in a school last week and a child asked me, 'Mr Graber, what do you do?' I said I worked for ABX and every kid raised their hand, saying, 'Do you know my brother?' 'You know my sister?' 'You know my uncle?' This company is so tight to this place."
Jessica Siders: A former worker at DHL Solutions, she was laid off in December 2008 after eight years with DHL
"I lost everything. They just terminated me. I thought I was working at ABX for the rest of my life till I retired. I felt that [the deal with] DHL was a positive move; it would switch hands and we would continue the same job we were doing. When you are over 50, it is very difficult to find a job. I have four children and six grandchildren, and my daughter has worked for ABX since she was 17 years old. She got laid off and she can't sleep at night. I don't ever remember having a Christmas without presents for all our kids. Last year we couldn't buy any. My husband gave the children snowballs."
Russ Leighton: A pilot with ABX since May 1997, Leighton was laid off in January 2009
"DHL should have listened to ABX and taken their advice on how to do things. I think people in top management were fighting like kids – 'Do it my way', 'No, do it my way' – and nothing was getting done. Slowly, it fell apart. It's funny, because Mercedes did the same thing to Chrysler. They came over and they just did what they did in Wilmington. They worked for five years and laid off all these people then closed and left. The economy is so bad now that there are not many airlines hiring, and if you get a job you start back at the bottom – so your salary is very low. I have two daughters. I was going send them to college. I don't know if I am going to do that any more. I am not sure if I will keep my house."
The deepest cuts: Failing company towns
Charlotte, North Carolina
A greater percentage of the population work in banking here than in New York, as it is home to Bank of America and Wachovia, two of the crippled giants of the credit crisis. Between them, the banks employ 34,000 in Charlotte. BoA is shedding jobs; Wachovia was sold to avoid going bust.
These are hard times for the quintessential company town, nicknamed the Sweetest Place on Earth, where the street lamps are shaped like Hershey's Kisses. The chocolatier has been slashing jobs and moving production to Mexico.
This Orange County town was the centre of the US sub-prime mortgage industry, but dozens of the lenders that were based here have gone bust, shut their doors or scaled right back.
President Barack Obama visited this city of 60,000 when trying to sell his economic stimulus bill last month, highlighting its soaring unemployment. It is the motor-home manufacturing capital of the US, but sales have collapsed.
Nothing can top Detroit as a symbol of economic calamity in the US, as two of the three big carmakers based here totter on the verge of bankruptcy. The city has halved in size in 50 years, and its decline has accelerated alone with plunging automobile sales.
Created just before the Second World War to house Volkswagen workers, this one-company town has suffered as the carmaker laid off 750 permanent staff and hundreds more temporary workers.
Corus, the Indian-owned company that used to be called British Steel, is cutting almost half its 1,600 workforce in Rotherham, heaping misery on the Yorkshire town where 6,000 people are already claiming unemployment.
This Durham town of 20,000 people, in Tony Blair's old constituency of Sedgefield, has taken a double blow in the current recession: both Electrolux and Black & Decker have shut their factories.
Additional reporting by Stephen Foley
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