United Parcel Service will cut 12,000 jobs and released a revenue outlook for this year that sent its shares down sharply.
via: NY Times
The company tries to slash costs in the face of falling package volumes and higher wages linked to a union contract it signed in the summer.
Carol Tomé, the chief executive of UPS, told analysts on an earnings call Tuesday that it had been a “difficult and disappointing year.” Revenue fell more than 9 percent last year, and profit dropped by a third.
Ms. Tomé said most of the job cuts would be made in the first half of the year, reducing expenses by about $1 billion. UPS employs nearly 500,000 people.
UPS narrowly averted a strike in the summer when the union that represents more than 300,000 of its workers, the International Brotherhood of Teamsters, threatened to walk off the job if a labor agreement that included higher wages wasn’t reached. A contract settlement was reached shortly after the previous agreement expired, but the uncertainty about a potential walkout hurt the company’s package volumes. UPS said about 60 percent of the volume it lost during the standoff had returned by the end of December.
The positions that would be eliminated this year are not union jobs, according to the Teamsters. The layoffs will instead affect managerial staff, “throughout the world and in all functions,” a statement by UPS said. The moves reflect a “change in the way we work,” Ms. Tomé said, and even if business rebounds, those jobs may not come back. Employees will also be expected to work from the office five days a week, she added.
UPS said it had recorded a 12 percent increase in wages for unionized workers in the fourth quarter as a result of the new contract. To reduce the hit to profits, the company said it reduced workers’ hours by about 10 percent last quarter.
UPS shares fell more than 8 percent Tuesday morning.
The company said it expected package volumes to continue falling in the first half of this year, then increase in the second half. The company’s weak demand forecast and job cuts stand in contrast to recent economic indicators showing resilient global growth and signs of an economic “soft landing,” defying predictions of a deeper downturn.
Still, the number of workers being laid off across the United States ticked up slightly in December, according to Labor Department data released on Tuesday. And several tech and media companies have announced large layoffs in recent months.
While the rate of overall layoffs is low compared with prepandemic levels, certain industries are feeling it more than others. “If you’re in those industries, it probably feels pretty uncomfortable right now,” said Julia Pollak, chief economist at ZipRecruiter.
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