UPS announces mass layoffs just after high paying union contract

UPS announced the layoff of 12,000 employees Tuesday, while acknowledging drops in shipping volume, both internationally and domestically, in its fourth-quarter earnings report.

The workforce reductions were announced as part of an effort to align resources in 2024, according to CNBC. UPS has roughly 500,000 employees.

CEO Carol Tomé said on a company earnings call that the cuts will save the company about $1 billion in costs.

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“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,” Tomé said, adding, “We are going to fit our organization to our strategy and align our resources against what’s wildly important.”

UPS reported a 7.4% drop in average daily volume domestically and an 8.3% decrease internationally.

Another occurrence that took place in 2023 was a new 5-year labor agreement with the Teamsters Union that will result in drivers averaging $170,000 in pay and benefits by the end of the deal.

Tomé touted the agreement reached in August, saying at the time, “When you look at total compensation, by the end of the new contract, the average UPS full-time driver will make about $170,000 annually in pay and benefits. And for all part-time union employees that are already working at UPS, by the end of this contract, they will be making at least $25.75 per hour while receiving full health care and pension benefits.”

“We will be improving the working conditions for all employees, including air conditioning in every new U.S. packaged car, starting in January 2024,” she added.

In October 2023, UPS expanded its emergency childcare program providing on-site day care for its employees if their typical childcare option falls through.

As CNBC reported, UPS reported net income of $1.61 billion, or $1.87 per share, for the last three months of 2023, compared with $3.45 billion, or $3.96 per share, a year earlier.

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