UPS recently announced plans to reduce its workforce by 12,000 employees due to a lower than expected sales forecast for the year. This decision comes shortly after the company reached a significant agreement with its union five months ago.
According to CEO Carol Tome, the company will be able to save $1 billion in costs by implementing job cuts, as discussed in a call on Tuesday morning. The roles that will be affected the most are those of managers and contract workers.
In the previous year, negotiations between labor and the company had the potential to disrupt the delivery of packages for numerous customers. However, an agreement was eventually reached with the Teamsters, averting a strike. Due to concerns about potential disruptions, consumers turned to other companies such as FedEx. While UPS anticipates regaining most of the lost business, they have only managed to win back 60% of it so far according to reports.
The projected revenue for UPS in 2024 is predicted to be between $92 billion and $94.5 billion, which is lower than the anticipated figure of over $95 billion by Wall Street.
The year 2022 marked a significant achievement for UPS as they surpassed $100 billion in sales for the first time ever. However, while UPS executives expressed disappointment, as it is unlikely that this milestone will be achieved again in the near future.
According to UPS, there is a possibility that they may sell their Coyote truck load brokerage business.
The organization has also mandated that its workers come back to the workplace for five days every week in the current year.
On Tuesday, there was a decrease of almost 9% in the value of UPS’s shares.
With a global workforce of approximately 500,000 individuals, UPS employs around 85,000 managers. Furthermore, in the United States alone, the company has more than 300,000 hourly employees who are members of the Teamsters union.
