January 30th 2024.
UPS made a big announcement on Tuesday, revealing that they will be laying off 12,000 employees. This comes just five months after they reached a new labor deal, which included significant pay raises for their workers. According to CBS News, UPS CEO Carol Tome stated in a conference call that this reduction in staff will save the company a whopping $1 billion in costs. In addition to the layoffs, UPS is also requiring employees to return to the office five days a week this year.
Tome explained that the decision was made in order to align the organization with its strategy and focus on what is most important. She was quoted by CBS as saying, "We are going to fit our organization to our strategy and align our resources against what's wildly important." Last summer, UPS and its 50,000 workers reached a five-year contract after tense labor negotiations that had the potential to disrupt millions of deliveries across the country.
Part-time workers received a raise from $15.50 to $21 per hour, while full-time workers now have an average hourly rate of $49. In addition, workers will receive a $2.75 per hour increase and $7.50 per hour increase over the course of the five-year contract. By the end of the agreement, UPS drivers will be making an average of $170,000 per year in pay and benefits. However, as reported by The New York Times, the 12,000 jobs being cut are not union jobs. Instead, they will come from UPS' managerial staff in various locations and departments around the world.
UPS also acknowledged that package volumes are expected to continue declining in the first half of this year before picking back up in the second half. In a statement, Tome stated that these changes reflect a shift in the way the company operates. She also noted that even if the business bounces back, those jobs may not be reinstated. The news of the layoffs caused UPS' shares to drop by 9%, and they fell just short of their revenue projections for the fourth quarter of 2023.
Unfortunately, UPS is not alone in announcing layoffs in recent months. Many other large companies, such as Google, Microsoft, Amazon, eBay, Macy's, and Wayfair, have also made similar decisions due to forecasts of slower economic growth. Despite these changes, UPS remains a major player in the shipping and receiving industry, delivering an impressive 27 million packages per day and 25 billion per year. This news was first reported by Black Enterprise.
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