The United Parcel Service (UPS) announced Tuesday that it would be laying off 12,000 employees in a bid to adjust to higher labor costs from a new labor union deal.
UPS reached a deal with the International Brotherhood of Teamsters in July 2023, just days before an existing labor contract for 340,000 delivery drivers was set to expire, giving workers an immediate $2.75 per hour pay increase and a $7.50 hike over the course of the five-year contract. The layoffs, which are expected to be in management and not Teamsters positions, were announced by UPS CEO Carol Tome in an earnings call following poor fourth quarter earnings, with revenues in the quarter down 7.8% year-over-year and consolidated operating profit down 27.1% in the same time frame. (‘Not A Big Deal’: Rank-And-File Autoworkers Are Bucking UAW Biden Endorsement, Say They Can ‘Think For’ Themselves)
“2023 was a unique, and quite candidly, a difficult and disappointing year,” Tome said in the earnings call. “We experienced declines in volume, revenue and operating profit in all three of our business segments. Some of this performance was due to the macro environment, and some of it was due to the disruption associated with our labor contract negotiations as well as higher costs associated with the new contract.”
BREAKING: UPS, $UPS, to cut 12,000 jobs after what its CEO called a “difficult and disappointing” year.
The company has stated that they are looking to cut $1 billion of annual costs.
UPS stock is currently down 6% after the announcement.
Over the last 3 months, layoffs have… pic.twitter.com/zA4Laq9FPL
— The Kobeissi Letter (@KobeissiLetter) January 30, 2024
Tome also noted in the earnings call that UPS would be returning to a policy of in-office work for five days a week, ending changes made for some employees during the COVID-19 pandemic.
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” Tome said in the call. “This will result in a workforce reduction of approximately 12,000 positions and about $1 billion in cost out this year. We’ve identified new ways of working and are calling this ‘fit to serve.'”
The layoffs will take place over the next several months and will include severance packages and outplacement assistance, UPS told the Daily Caller News Foundation.
Teamsters declined to comment.
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