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Buckeye Boondoggle

The truth about John McCain and those DHL workers.

In the weeks before his address to the Democratic convention, pundits and politicos alike were of the seemingly unanimous opinion that Barack Obama was being too timid toward John McCain. Clearly, none of these critics had been to Ohio. Since mid-August, the Obama campaign has been on the air in the Buckeye State with radio and TV attack ads that are much harsher than any of the harsh words Obama had for McCain in his convention speech. "In Washington, John McCain helped pave the way for foreign-owned DHL to take over an American shipping company," an announcer says in the television spot. "McCain's campaign manager was lead lobbyist for the deal. Now, thousands of Ohio jobs at risk." Meanwhile, the AFL-CIO has been complementing the Obama ads with a mailing to Ohio voters alleging that "McCain helped cut a deal that sent over 8,000 Ohio jobs to a foreign-owned company."

The attacks refer to an air park in the southwestern Ohio town of Wilmington, which the German-owned delivery company DHL acquired as part of its purchase of Airborne Express in 2003. After using Wilmington as its North American air-freight hub for the past five years, DHL announced on May 28 that it was outsourcing its North American air cargo operations to UPS, which operates a hub in Louisville, Kentucky--resulting in the likely loss of thousands of jobs in Wilmington. As for McCain's connection, he played a role in getting DHL's purchase of Airborne through Congress, and his campaign manager, Rick Davis, was hired by DHL to lobby on behalf of the deal. All of which has created a perfect storm of political trouble for McCain in a battleground state that could very well determine the next president. It's little wonder, then, that, when Davis's role in the DHL deal was revealed by the Cleveland Plain Dealer in early August, Obama campaign manager David Plouffe deemed it "the most important development of the entire campaign this week," adding that "John McCain can become an emblem for people about what is wrong with Washington."

But the story of the DHL deal--and McCain's role in it--is less an emblem of what's wrong with Washington than an example of what happens when a complicated tale of globalization gets filtered through the prism of a white-hot presidential race. Because, in reality, McCain played a largely peripheral--and, from all available evidence, principled--role in approving the DHL deal; and, what's more, the deal itself was once considered a boon to the Ohio community it now threatens to destroy. But, in the current presidential campaign, both of these realities are being largely ignored. And for that, it turns out, John McCain has no one to blame but himself.

With runways of 9,000 and nearly 11,000 feet set on 2,200 acres, the Wilmington air park is one of the largest privately owned airports in the United States. But, when Airborne Express was its owner, the airport was hardly being used to its full potential. Mired in a distant (and perennial) third place in the U.S. express delivery market, behind FedEx and UPS, Airborne Express was, in the assessment of one industry analyst, "always teetering on the brink of financial collapse." And so, when DHL--which had a booming international air express business but a marginal presence in the United States- -decided that it wanted to compete with FedEx and UPS in the American market, Airborne Express was a ripe target for takeover. In 2003, Deutsche Post World Net, the German company that owns DHL, offered $1.05 billion to purchase Airborne Express and its assets-- including the Wilmington air park.

In Wilmington, news of the offer was greeted with cautious optimism. Airborne had been a good corporate citizen for nearly 25 years, but it wasn't exactly a company on the move. Deutsche Post World Net, by contrast, was a global behemoth with tens of thousands of employees in 220 countries and annual sales of $46 billion. And, while the fact that it was a German company gave people some pause, its foreign ownership was viewed as an opportunity as well. Indeed, there were some in the sleepy city of 12,000 who believed that DHL would usher in boom times there. "We started to envision that Wilmington would become an international port of entry with freight and maybe even passengers some day," recalls Wilmington Mayor David Raizk, a rare Democratic elected official in an otherwise staunchly Republican town. "Planes were going to be landing here from Hong Kong and Europe; that would lead to hotels and restaurants and the potential for trade and growth. What was there to be negative about if you believe globalization works? This was a perfect opportunity to create a global economy right here in Wilmington, Ohio. Where was the downside? We were all thinking, 'My gosh, how much more can we dream?'"

On Capitol Hill, the response was a little different. Although Ohio's congressional delegation was ultimately comfortable with DHL's acquisition of Airborne, and even organized labor gave the deal its tacit blessing, FedEx and UPS, fearful of a newly competitive DHL, tried to scuttle it. Because U.S. law prohibits foreign entities from owning more than 25 percent of an American air carrier, DHL planned to spin off Airborne Express's airline into an independent company called ABX Air. But FedEx and UPS contended that since almost all of ABX Air's business would come from shipping freight for DHL, the airline would be effectively foreign-owned. The argument evidently struck a chord with Alaska Senator Ted Stevens--he of the Ted Stevens International Airport in Anchorage, where both FedEx and UPS have major hubs--who, in April 2003, inserted a provision into a supplemental spending bill for the Iraq war that would have jeopardized DHL's acquisition of Airborne by further narrowing the ownership criteria for air carriers seeking military contracts. Under pressure from the White House and a number of members of Congress not to lard a war-spending bill with provisions unrelated to the war, Stevens submitted a revised bill that slashed the more stringent criteria and called for an administrative law judge to assess carriers' effective U.S. ownership. The subsequent court ruling in December cleared the way for ABX to operate as DHL had envisioned.

McCain was one of those senators who opposed Stevens's original measure. As McCain explained in a press release at the time, "If there are legitimate reasons to change the criteria for determining U.S.-citizen control of air cargo carriers, these considerations should be clearly articulated and debated in the normal legislative process--not inserted into a non-amendable vehicle in the dead of night." McCain's statement was consistent with his long-standing opposition to earmarks and other extraneous amendments. What's more, his opposition to Stevens's amendment was consistent with his long-standing opposition to Stevens himself. "Just on a philosophical level, he would have been instinctively on the other side of Ted Stevens," says one McCain associate. "His instinct would have been to walk into the room, see where Stevens had put himself, and immediately go in the opposite direction."

But what of Davis's lobbying for DHL, for which his firm was paid $185,000 in 2003? Did it influence McCain, who that same year installed Davis as president of the non-profit group he'd established to promote campaign finance reform (and keep himself in the political spotlight)? There's no evidence that it did. "I don't know how to say it without sounding like I'm in the tank, but I never once saw the guy do anything for anybody," says Ken Nahigian, who was a lawyer on McCain's Commerce Committee staff at the time of the DHL deal. "It's just against how he operates. Everyone has this turnstile of lobbyists coming in to talk to him. McCain's never been that way." Indeed, if McCain were going to be swayed by lobbying, it's just as likely he would have been swayed in the other direction, given his longstanding friendship with--and the thousands of dollars in political contributions he's received from--Frederick Smith, the chairman of FedEx.

In other words, McCain's opposition to Stevens's amendment--and his tacit support of the DHL deal--appears to have been entirely principled and even predictable. Which makes you wonder why DHL felt the need to hire Davis in the first place. "Davis took advantage of the situation and said to DHL, 'I can help you here,' when, in fact, they didn't need any help," says the McCain associate. "That was the racket he was running." (Davis did not respond to interview requests.)

The fact that all this has now come back to haunt McCain is merely symptomatic of the larger problem his campaign has with lobbyists. Despite his record in the Senate of having little tolerance for lobbyists--"He'd go out of his way to not do what certain lobbyists were telling him to do," says Nahigian--McCain's current presidential campaign is crawling with them. And, when they have lobbied on issues that suddenly pop up in the news, those issues become a lot more complicated for McCain than they otherwise would have been. Witness the case of McCain foreign policy adviser Randy Scheunemann having lobbied for the Georgian government.

McCain seems to have forgotten a crucial lesson he claimed to have learned back in the 1980s: that, when it comes to political scandal, appearances matter. During the Keating Five affair--in which he and four other senators were accused of improperly interfering in a federal investigation of a prominent contributor--McCain was cleared of any wrongdoing but was criticized for "poor judgment." As he later said, "The thing I learned was that it's not only impropriety that counts, it's the appearance that is just as important."

Now, almost two decades later, the DHL story is forcing McCain to learn that lesson all over again. Were it not for Davis's lobbying, the closing of the Wilmington air park might still have been an issue in the presidential campaign, but it would have been an issue that both candidates were forced to address, rather than an issue that one candidate is using as a cudgel against the other. And, even though the particulars of Obama's attacks on McCain over the DHL deal are unfair--the group goes so far as to label Obama's ads "misleading" and "unsubstantiated"--they are fair in a cosmic sense of sorts: While McCain was hardly alone in failing to foresee the catastrophe that would eventually befall Wilmington because of DHL, it shouldn't have taken much foresight to realize that, in surrounding himself with lobbyists, he would leave his campaign exposed to the kind of attacks Obama is now unleashing. Defending himself and his candidate from those attacks, Davis has accused the Obama campaign of "playing politics with [air-park workers'] jobs." That's true. But it's a game Obama can play thanks to Davis and McCain.

Jason Zengerle is a senior editor of The New Republic.

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