DHL to lay off 2,870 US workers in the wake of its Airbourne purchase
The decision to cut costs at the expense of employees is a sign that the German giant is confidently pressing ahead with its strategic plans in the US rather than a sign of weakness. A more effective and organized DHL should be able to animate the US express landscape.
While DHL Express is busy hiring staff at its new US headquarters in Plantation, Florida, it is cutting 2,870 jobs at its pickup and delivery centers across America as part of its consolidation with Airborne. The layoffs represent about 6% of the company’s total US workforce, which is estimated to be around 44,000 employees. Couriers servicing Airborne’s delivery network will now handle DHL’s pickup and delivery services.
Despite the financial strength of DHL’s parent company, Deutsche Post World Net, the announcement of redundancies in its US operations comes as no surprise. When DHL pressed ahead with the acquisition of Airborne, which is the foundation of its major strategy to further penetrate the US, it was clear the company would integrate its businesses in the region with those of Airborne.
It makes sense for DHL to move the bulk of its services to Airborne’s US operations, which are much larger than its own. In addition, Airborne has traditionally been lower-cost than any of the major express players in the US, mainly because of the large number of independent contractors it has within its system. From a cost-efficiency standpoint it makes sense to restructure the internal organization of the company and make use of Airborne’s extensive network and client base in America.
DHL is firmly proceeding with its growth strategy in the US, as confirmed by the recently announced structural changes. Despite the ongoing litigation against DPWN concerning the acquisition of DHL Airways, Deutsche Post seems confident about the expansion plans of DHL Express in America. The new DHL (the Airborne name will disappear eventually) will have a stronger presence in the US, provided the US Department of Transportation does not rule against DPWN. Nevertheless it will not pose a serious challenge to the dominant position of FedEx and UPS for the foreseeable future, as they hold a combined 80% of the US express business.
