In an effort to improve cost control and simplify operations, UPS intends to lay off 12,000 employees.
The Wall Street Journal stated that the news, which was delivered during Tuesday’s quarterly results call, caused a sharp decline in the company’s stock price.
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Further information on the anticipated staff reduction was given by UPS CEO Carol Tome during the Tuesday call. She clarified that UPS hopes to save $1 billion in costs by eliminating employment.
“2023 was a unique, and quite candidly, difficult and disappointing year. We experienced declines in volume, revenue and operating profits and all three of our business segments,” CEO Carol Tomé said.
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” she added.
In an apparent strategic change, the corporation floated the idea of selling its Coyote truckload brokerage business.
Tome also introduced a new policy, mandating UPS employees to work in the office five days a week throughout the year, as reported by AP.
This comes after the approval of a tentative contract between UPS and the Teamsters in September, resolving labor negotiations and preventing potential disruptions to package deliveries nationwide.
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According to Forbes Business:
During the most recent earnings call, Tomé blamed UPS’s difficulties on the state of the economy as a whole, the labor disputes from last summer that caused disruptions, and the higher expenses associated with a new Teamsters contract. Negotiations for a new contract throughout the summer nearly prevented a threatened strike by hundreds of thousands of UPS employees, who are represented by the Teamsters.
The truckers union and UPS came to a $30 billion, five-year deal in August that included higher pay and improved safety protocols for drivers. According to Tomé, the firm was impacted financially by the significant contract as well as the possibility of a walkout.
The CEO of UPS stated on Tuesday that the increase in in-person Christmas shopping also had an impact on the company’s earnings.
The influence of its affiliation with Amazon has been observed in the interim. Even while the corporation only slightly increased delivery for Amazon from 11.3% in 2022 to 11.8% in 2023, this was partly due to Amazon’s skillful bargaining for prices that smaller suppliers would not be able to obtain. During Tuesday’s call, CFO Brian Newman stressed the importance of concentrating on health-care clients and smaller companies with better margins.
