DHL Logistics wins $3.1b British health service deal

Berlin: Deutsche Post AG, which is transforming itself into a global logistics company, said yesterday that its DHL unit has won business worth £1.6 billion ($3.1 billion) with the British health service.

Deutsche Post said DHL Logistics would create about 1,000 jobs under the 10-year contract signed with the British Department of Health.

However, a British labour union said it was holding a vote among some of the 1,650 staff that DHL will inherit on strike action to protest the decision to outsource the work.

Starting from October 1, DHL is to run a division called NHS Supply Chain on behalf of the National Health Service, supplying a wide range of items from food and bed linen to operating theatre equipment to 600 hospitals and clinics in England.

Deutsche Post said the deal will allow public health authorities to focus on patient care. DHL is to try to make savings of over £1 billion ($1.9 billion) over the 10-year period for the NHS.

Many of the new jobs will be at distribution centres to be opened in 2008 and 2012, Deutsche Post said.

Opposition

Labour union Unison said it would announce next week the results of the strike ballot at the NHS Logistics unit that DHL is to take over.

"Why break up a winning team like NHS Logistics and sell it off to a German parcel company like DHL? It makes no sense when there is no doubt that NHS Logistics is an NHS success story," Unison official Karen Jennings said.

British Health Minister Andy Burnham defended the deal, which also covers part of the health service's purchasing arm. DHL will offer far more of the products hospitals need at lower prices than the in-house NHS units, creating savings that can be channelled back into care, he said.

"The NHS is not an expert in distribution or warehousing. There is a compelling case to bring in a company which is," Burnham said. The pay and pensions of the affected staff are guaranteed, he added.

Deutsche Post, Germany's former state-owned mail monopoly, has carried out a string of acquisitions to build up its logistics business, including the 5.5 billion-euro purchase of Britain's Exel Plc in 2005.

Deutsche Post said DHL had already been working with the NHS for five years.