DHL Executive Testifies on UPS Deal

“The proposed agreement with UPS, if consummated, would not involve any merger, acquisition or transfer of assets between DHL and UPS. It would be a commercial vendor contract for services between two separate companies, limited to DHL's airlift delivery and certain sorting services in North America.”

Mullen pointed out that similar vendor arrangements involving competitors are common in the transportation industry.

Mullen also sought to address the perception that DHL was abandoning the Wilmington facility after accepting $400 million in incentive benefits from the state of Ohio. “DHL was induced to consolidate operations at the Wilmington Air Park in part by the offer of incentives that the State has valued in excell of $400 million. DHL has received less than $4 million in incentives,” he said.
Included in the testimony is a breakdown of the incentives.

Ohio offered an estimated $13 million in job creation tax credits in an agreement that was not executed and for which DHL realized no benefit.

A job retention tax credit estimated by the state to be worth $66 million was submitted to ABX and, if the vendor services contract is consummated, DHL will realize no benefit.

DHL did receive a $2 million business development grant and $2 million for an Ohio Investment in Training program.

A $300 million volume cap allocation (estimated) for tax exempt financing will not be required and neither the Dayton-Montgomery County Port Authority nor DHl applied for or received any volume cap for the bonds issued by the Dayton Port, says DHL. DHL is obligated to pay rent sufficient to pay all of the debt charges on the bonds issued by the Dayton Port, it said. No governmental entity is liable for payment of this debt from its own resources.

An estimated $729,760 for employment pre-screening test and recruitment services relate to the state of Ohio reimbursement to local government agencies for those costs and its value to DHL was indirect and cannot be calculated precisely because the amount expended by the state is unknown.

DHL received an estimated $600,000 abatement on real property taxes in 2007 of an estimated $17 million community reinvestment area benefit. It does not expect to realize more than $1 million of a $9.6 million Ohio Enterprise Zone Program benefit.

Runway fee savings on landing fees that DHL realized by consolidating operations at the Wilmington Air park rather than the Cincinnati/Northern Kentucky Airport in Covington, KY was a function of DHL's acquisition, expansion and improvement of and consolidation of operations at the Air Park, said DHL. The state of Ohio did not provide DHL with either casy or credit against any payments that would otherwise be owing to the state, it added.

An OWDA Local Economic Development Loan was received by the City of Wilmington for public improvements with no cash benefit to DHL.
Of the total estimated incentives offered by the State of Ohio or $422,389,760, DHL realized $5.6 million.

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