Just Months After "Massive Labor Deal," UPS Announces Massive Layoffs
How it started: The most pro-union president in history, President Biden, applauded Teamsters and logistics company United Parcel Service last summer for agreeing on a new labor contract that would significantly boost pay.
How it's going:
UPS workers approve massive new labor deal with big raises: Aug 23, 2023
— zerohedge (@zerohedge) January 30, 2024
UPS to cut 12,000 positions: Jan 30, 2024 pic.twitter.com/OWywSrnYZ5
Five months after unionized UPS workers ratified a massive five-year labor deal that included massive pay bumps (read: here), the logistics company announced on Tuesday morning that 12,000 jobs, or about 14% of its 85,000 management jobs, would be cut.
Chief Executive Officer Carol Tomé was quoted on an earnings call by Bloomberg as saying job reductions were due to sliding package demand and soaring union labor costs. She said the layoffs would save the company about $1 billion this year.
"We are going to fit our organization to our strategy and align our resources against what's wildly important," Tomé said. She said that even after shipping volumes grow, those jobs will not come back, as "it's a change in the way we work." She also ordered workers to return to the office five days a week.
"2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth," Tomé wrote in a statement.
Fourth-quarter sales and 2024 guidance fell short of average analysts' estimates due to higher labor costs and slowing package demand.
Also, "UPS is seeking alternative strategies for its truck brokerage business, which has seen sales plummet amid a freight recession marked by declining rates and overcapacity," Bloomberg pointed out.
Following the labor deal with the International Brotherhood of Teamsters and UPS, delivery drivers had some of the "richest national contracts" ever, according to Teamsters General Secretary-Treasurer Fred Zuckerman.
Thousands of UPS drivers are about to find out what the natural end result of unionized negotiated raises in a free market means for their employment. This is one development the Biden administration will ignore - and or be forced to deflect blame.