UPS is the world’s biggest package-delivery corporation and has a major hub on the west side. Earlier this year the hub was awarded a property tax abatement by Columbus City Council and it should save UPS $10.4 million over the next decade. City Council claimed it was needed so UPS doesn’t move the hub that employs 800 to the suburbs or even out of state. The tax break would also create 75 additional jobs, said both UPS and city council.
The Columbus Free Press, however, has learned that within five years many of these 800 jobs may actually vanish even though the hub itself will not be going anywhere.
The age of e-commerce is accelerating at the speed of light. Together UPS and FedEx – which also has a hub in Columbus – delivered a mind-boggling 6.5 billion packages in 2012.
UPS confirmed to the Free Press the tax break approved by city council will be used to upgrade and modernize the hub on Trabue Road. Their plans include converting to automation, or automating some of the hub’s most important tasks. Sorting and labeling packages and loading them onto trucks.
UPS spokesperson Susan Rosenberg told the Free Press many of the 800 jobs at the west side hub are part-time package sorting and loading positions. The additional 75 jobs the tax-break promises will be the same job.
For more than three decades this part-time UPS gig has mostly been associated with younger male workers who live near local campuses. It is a physically challenging job from monotony hell. It pays around $12-an-hour to start and UPS allows workers only one 3-to-5 hour shift per day. But for these college-age workers, the education benefits UPS offers is what they covet.
Everyone knows automation, like outsourcing, takes away jobs. Yet Rosenberg insisted automating the west side hub will not force UPS to cut workers.
“It’s not necessarily true the package sorting positions will go away,” she said. “They may change. It may be we get more drivers. A job that’s more attractive than the package sorting job. It is true the automation provides some efficiencies and flexibility. Some of the equipment does simplify the process of loading and unloading, but there’s still a person there.”
A long-time UPS manager, however, who has worked nearly 30 years at the hub and nearing retirement, said one major reason UPS is automating is because there’s too much turnover among package sorters. He believes many of those jobs – and their education benefits – will be long gone once the hub’s automation conversion is completed.
“We got 75 percent turnover with that job,” said the manager who refused to offer his name for publication. “Half the hub has been automated, and the other half will be automated within five years.”
When Rosenberg was presented with the manager’s statements she reiterated those jobs will more-than-likely still be in place.
Nevertheless, the total cost to upgrade the hub and automate it will be close to $180 million, claims UPS. Thus the $10.4 million tax break is not a significant contribution. But during a summer when City Council is giving away tax breaks like Halloween candy to super profitable corporations – UPS had a profit of $4.8 billion in 2015 – it has local progressive activists in an uproar.
“In a one month period this year between May and June our mayor and City Council unanimously supported and approved $17 million worth of tax abatements,” says Clintonville’s Joe Motil, a long-time progressive and former City Council candidate. “City Council member Liz Brown (Sen. Sherrod Brown’s daughter) went as far as voicing her support for UPS’s $10.4 million tax break because she does not want to see companies become in danger of filing for bankruptcy.”
UPS’s plan to automate has been in the works for some time, added Motil. “The talk about Columbus having to compete with other cities for this expansion project is nonsense.”
Steve Schoeny, director for the city’s Department of Development, which researches the abatement proposals, has said Columbus was competing with Louisville, among others.
On its web site the Department of Development states it is “dedicated to improving the economy and neighborhoods of Columbus”. Yet last year the Free Press found the Department of Development is also (very) quietly trying to convince some local corporations to utilize the foreign-trade zone hub at Rickenbacker airport, which is one of the largest on the planet. Thus encouraging them to keep their manufacturing overseas and not bring it home.
Reporting on tax abatements can be difficult because corporations don’t have to thoroughly explain how they will use the tax break if their project is also funded with their own money. Besides UPS offering ambiguous answers about the hub’s expansion, the Department of Development never returned several inquiries.
There are certainties, however. The corporate handout given to the billion-dollar profitable UPS could have been used to help Columbus public school teachers who out of their own pocket buy school supplies for their students. Or help Columbus taxpayers themselves.
“Who makes up the difference in paying higher property taxes due these handouts?” asks Motil. “Your typical middle-class homeowner is struggling on a daily basis to make ends meet. So who on city council speaks on behalf of the property owners who pay the 5th highest overall taxes of any large city in the U.S.? Not a single one.”
