BAX Global Inc., a division of German transportation giant DB Schenker, announced Friday that it will close its U.S. air hub at Toledo Express Airport and shed its fleet of leased planes as part of what it is calling a “strategic realignment” of its North American business model.
About 700 jobs, mostly part-time, will be affected, the company said. Some employees will be given an opportunity to “redeploy to other parts of our business,” the company said.
Heiner Murmann, chief executive officer of Schenker, said in a statement: “We deeply regret that there will be some layoffs as part of this realignment. However, we are working to redeploy as many employees as possible to other parts of our business.”
The company said the phasing out of the U.S.-dedicated air fleet, which represents less than 10 percent of the company’s business in North and South America, will take place over the next several weeks, and “is in response to changing marketplace conditions and along with the renewed focus on transportation management services is aimed at positioning the company for continued growth and success.”
Employees at the Toledo facility were told of the announcement Friday morning, a company spokesman said.
In a written statement, Paul Toth, director of the Toledo Lucas County Port Authority, which operates Toledo Express, said the agency was “incredibly disappointed to learn that our partner for more than 20 years... will be phasing out of its U.S. dedicated air fleet and transitioning from operating its own air fleet to a non fixed-base model.”
Mr. Toth said “Toledo Express has a strong background in the global cargo market and it is the desire of the Toledo-Lucas County Port Authority to continue cargo operations absent of BAX Global. The Port Authority continues to actively pursue various activities and opportunities relative to cargo development at Toledo Express. We believe the combination of the experienced existing workforce and the logistical advantages of the Toledo region and Toledo Express provide a strong framework for these activities.
The Port Authority’s lease agreement with BAX Global, which was guaranteed by D.B. Schenker, is effective through September, 2013. Mr. Toth said the agency would “determine the impact this will have on Port Authority operations” in the coming weeks.
“It’s very regrettable, but it was necessary,” Jay Arnold, senior vice president of human resources for the Americas for DB Schenker, told The Blade.. “The operating model has shifted from air to ground transportation solutions.”
The company’s Toledo operation had fallen to 19 domestic flights per day, nearly half of what it had been just a few years ago, because of the global economic recession and rising fuel costs which impacted customer purchasing habits, he said.
“Customers have changed their buying patterns from air to a ground transport solutions. We tried other avenues [to keep Toledo open], we reduced the number of planes that fly,” Mr. Arnold said. “We’re going to do everything in our power to help as many of our employees as possible find employment at our other locations.”
Schenker has about 90 other locations across the United States, including logistics facilities in Cleveland, Dayton, Columbus, and Detroit. Mr. Arnold said the company is offering its employees a severance package, if they remain on the job through the Sept. 1 closure, “to help them if they don’t move on.”
The hub has been in place at Toledo Express Airport since 1991, when it moved from Ft. Wayne, Ind. and was known as Burlington Air Express. At the time it opened on Sept. 4, 1991, the 279,000-square-foot hub had 800 jobs locally and served customers in 130 cities across the United States, and could sort up to 1.4 million pounds of cargo per shift. At the time, the company signed a 23-year lease agreement with the Toledo-Lucas County Port Authority that was used to repay a $30.8 million bond issue used to build the facility.
Representatives of the Toledo-Lucas County Port Authority said they have been trying for months to keep the BAX Global air-cargo hub at Toledo Express Airport but were finally done in by the bad economy.
The port authority more than two years ago had secured $6.2 million in state and federal grants to pay most of the cost to build a customs facility and truck terminal at the hub and relocate the hub’s maintenance operations.
BAX was expected to contribute $1 million of the construction program’s total $7.2 million estimated cost. But Port Authority officials said they were told in January by executives of German transportation giant DB Schenker to put all of those plans on hold.
In 1997, as a subsidiary of the Pittston Co., Burlington Air Express changed its name to BAX Global Inc. The company was purchased for $1.2 billion by Deutsche Bahn, Germany’s largest rail operator, and its Schenker logistics affiliate, in 2005.
Blade staff writer David Patch contributed to this report.
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