United Parcel Service (UPS) has announced the layoffs of 12,000 workers, just five months after gaining attention for agreeing to a substantial pay raise for drivers negotiated by a union.
CEO Carol Tome referred to 2023 as a "difficult and disappointing year" for the company during a conference call, emphasizing the need to align resources with the organization's strategy. UPS reported a 7.8% revenue drop in the fourth quarter to $24.92 billion, slightly below Wall Street projections.
The layoffs are expected to save the company around $1 billion, and Tome mentioned a return to a five-day office work week for employees. Social media commentary points to the earlier union agreement, which raised driver pay to $170,000, as a factor in the company's troubles. The Teamsters' Union, representing about 70% of UPS employees, had celebrated the deal as the "single largest private-sector collective bargaining agreement in North America."
The company attributed its challenges to the broader economy, including the threat of a Teamsters strike and the impact of the union deal. Other recent layoffs by various companies are seen by some economists as indicators of economic weakening. There is also mention of public opinion blaming President Joe Biden for high inflation affecting household budgets negatively. UPS stock experienced a nearly 9% decline following the announcement.