Shipping giant to lay off thousands of workers as union deal hurts profits

United Parcel Service (UPS) announced Tuesday that it would lay off 12,000 employees in an effort to adjust to higher labor costs under a new union deal.

UPS arrived at agreement with the International Brotherhood of Teamsters in July 2023, just days before an existing labor contract for 340,000 delivery drivers expired, giving workers an immediate raise of $2.75 an hour and a $7.50 raise for the five-year contract. The layoffs, which are expected to be in management positions and not Teamsters, were announced UPS CEO Carol Tome on an earnings call after poor fourth-quarter earnings, with revenue for the quarter down 7.8% year-over-year and consolidated operating profit down 27.1% over the same time period .

“2023 was a unique, and quite frankly, difficult and disappointing year,” Tome said on the earnings call. “We experienced declines in volume, revenue and operating profit across all three business segments. Part of this performance was due to the macro environment, and part was due to disruption associated with our labor contract negotiations , as well as the higher costs associated with the new contract.”

DEPARTMENT: UPS, $UPSto cut 12,000 jobs after what its CEO called a “difficult and disappointing” year.

The company has said it is looking to cut $1 billion in annual costs.

UPS shares are down 6% after the announcement.

Over the past 3 months, layoffs have… pic.twitter.com/zA4Laq9FPL

— Kobeissi Letter (@KobeissiLetter) January 30, 2024

Tome also noted on the earnings call that UPS would return to a five-day-a-week office work policy, ending changes made for some employees during the COVID-19 pandemic.

“We're going to align our organization with our strategy and align our resources with what's really important,” Tome said on the call. “This will result in a workforce reduction of approximately 12,000 positions and a cost of about $1 billion this year. We have identified new ways of working and we call it 'fit to serve.'

The layoffs will take place over the next few months and will include severance packages and replacement assistance, UPS told the Daily Caller News Foundation.

The Teamsters declined to comment.

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