UPS announced Tuesday it will lay off 12,000 workers just five months after it reached a new labor deal that gave its workers big raises.
CBS News reports UPS CEO Carol Tomé said in a conference call Tuesday morning that reducing the company’s headcount will save UPS $1 billion in costs. Tomé added that UPS was also ordering employees to return to the office five days a week this year.
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” Tomé said, according to CBS.
Last summer, UPS and its 50,000 workers agreed to a five-year contract after contentious labor negotiations threatened to disrupt millions of deliveries to businesses and households across the United States.
In the agreement, part-time workers got a raise from $15.50 an hour to $21 an hour; full-time workers now average $49 an hour. Under the deal, workers also received $2.75 more an hour in 2024, and $7.50 an hour more over the five-year contract. UPS drivers are set to average $170,000 in pay and benefits at the end of the five-year agreement.
The New York Times reports that union jobs will not suffer the layoffs. Instead, the layoffs will be of UPS’ managerial staff “throughout the world and in all functions.”
UPS added that it expected package volumes to continue falling in the first half of this year, then increase in the second half.
“The moves reflect a “change in the way we work,” Tomé said, adding that even if the business rebounds, those jobs may not come back.
After the announcement, UPS shares dropped nearly 9%, falling just short of its revenue projections for the fourth quarter of 2023.
UPS is one of several large companies that have announced layoffs in recent months amid forecasts for slower economic growth. Google, Microsoft, and Amazon also recently announced layoffs, along with eBay, Macy’s and Wayfair.
According to UPS, the multinational shipping & receiving service delivers 27 million packages per day and 25 billion per year.