Struggling shipper DHL said Monday that it would close its 300-employee West Coast hub in Riverside County as it pulls out of the U.S. domestic shipping business, eliminating 9,500 jobs nationwide and closing most of its DHL Express service centers.
Deutsche Post, the Bonn, Germany-based parent of DHL, blamed the move on heavy competition from United Parcel Service Inc. and FedEx Corp. as well as severe financial losses stemming from the weak U.S. economy. It follows 5,400 U.S. job cuts the company had made earlier this year and will leave DHL with 3,000 to 4,000 workers in its U.S. express business.
"We are facing a tough challenge in the U.S. with enormous losses," Deutsche Post Chairman Frank Appel said during a conference call with analysts. "The impact of them has been that we think we have to take even further massive actions."
As of Jan. 30, DHL will focus on its international shipping business, which is "what we are the best at," Appel said.
Because of losses expected to amount to $1.5 billion for its U.S. operations this year, DHL plans to close 18 U.S. airport hubs and shut all but about 100 of its 412 U.S. service centers. The company projected that daily U.S. package volume would drop to about 100,000 from between 1.2 million and 1.5 million.
For the Inland Empire, which once viewed DHL's Southern California hub as an anchor that would help attract businesses and jobs, the news couldn't have come at a worse time.
The cuts include DHL's sophisticated distribution center at March Global Port, which sits on land that was formerly part of March Air Force Base.
Since 2005, DHL cargo planes have made four flights a day into March -- the only commercial flights into that airport. About 300 workers sort through packages and load them onto planes and trucks.
Now, those DHL employees will be added to the jobless ranks at a time when the region is suffering from a 9.1% unemployment rate, which is among the worst in the nation for large urban areas, Inland Empire economist John Husing said.
"One of the principal reasons for that high unemployment rate has been the collapse of the residential home construction industry," Husing said.
"The whole business of cargo distribution has really slowed down, and when there is less of that, it really affects the express-shipping industry," Husing said.
Laid-off employees will also find it hard to find jobs at DHL's toughest competitors, UPS and FedEx, analysts said.
