Wednesday, February 04, 2009

Managing to Fail

The alarmist, emotionally manipulative tone, and shallow nature of this report offends me; but I have to say, if anything, the picture they paint of DHLs operations is actually nowhere near bad enough. They're only focusing on the impact of the closure here without ever asking why.

I know from the inside.

I was a contractor at DHL for over a year (and excuse me if I'm a bit vague. I have to be careful what I say and how I say it, so as not to violate my confidentiality agreements). During that time, I and my team re-architected their entire security infrastructure; along with much of their data warehousing operations, and the open systems components of their dispatch and tracking systems. We made several hundred million dollars in capital expenditures, and spent well over a hundred thousands man hours (at anywhere from $75 to $150 an hour) in doing so.

At the end of the project, what we had was 4 or 5 times more efficient and effective than what they had before, and would have saved the company hundreds of millions of dollars; and they scrapped it, because it would have cost several hundred jobs in Germany and the EU.

Instead, they took a special inter-EU deal with the Czech Republic, and started over from the beginning; spending several hundred million more dollars to redo the work we had already done (and several billion dollars in total), only with mostly EU workers, in Prague.

DHL took a profitable, growing, fortune 500 business in Airborne Express; and they ran it into the ground from the beginning.

I don't believe I'm violating my confidentiality agreements to tell you that DHL was the worst managed company I have ever seen; and that's really saying something, as I've worked primarily in financial, medical, defense, and government.

The essential conflict was that at all times, DHL was managing to the interests not of making the American operations successful (or rather keeping those operations successful, as they had been originally); but of protecting the jobs of German workers, in Germany.

I'm dead serious. Every single decision management made was expressly in the best interests of German workers (or to a lesser extent Swiss workers, formerly of Danzas overocean); not for the company as a whole, not for profit, not for any benefit to the American operations.

During the time I was there, it was entirely acceptable to spend a million dollars to protect a single German job. We constantly had to work around the systems they had in place, and go through these arcane rules for finance, staffing, personal interactions... everything.

On the other side of things, we couldn't EVER do anything more efficient if it would threaten a single German job. The company would rather lose ten million dollars, than a single German job; and that is no exaggeration. We presented management with many such opportunities, and in every case, the decision was made to protect German jobs rather than the company.

In the process, all the contracts and relationships that Airborne had built up over the years in the fulfillment industry, in the computing industry (EVERYONE used to use Airborne for their RMAs), in the film industry, in heavy shipping; all of them were flushed down the toilet.

Every interaction DHL had with its major customers, and its major vendors, was loaded with arrogance and condescension. Everything was slow and ponderous and loaded with red tape and doubletalk. Everything had ridiculous reams of paperwork and layers of approval and huge convoluted contracts associated with it.


Because DHL is a division of the "Private" (private in name only) German company Deutsche Post; who assumed the German postal monopoly. I say private in name only, because controlling interest in the company is held by the German state owned "development bank".

The entire ethos of the company was that of a civil service, semi-socialist, state sponsored monopoly. All major decisions were made by German (and other EU) bureaucrats, guided by that ethos. They managed not as businessmen running a business, but as politicians pandering to their constituents.

This is what happens when the state controls private businesses. Every time. The state acts in the interest of the state, not of the business; and that business will fail, in this case taking an Ohio town down with it.