UPS CFO Looks to Speed Up Some Cost Cuts as Shipping Volumes Fall
Wall Street JournalApr 27, 2023
UPS to Lay Off 12K Employees
The Facts
Delivery company UPS announced Tuesday that it will lay off 12K of its roughly 500K workers this year. This comes after the Teamsters union, which represents around 340K UPS workers in the US, approved a new contract for its members in August that included an average annual pay plus benefits for drivers of $170K, as well as more full-time jobs and air conditioning in new trucks.
The job cuts are expected to impact contract workers and management positions, of which UPS currently has a total of 85K. As the company expects small package volume to increase by less than 1% this year, Chief Executive Carol Tomé said the layoffs are aimed at shifting the company toward utilizing artificial intelligence (AI) and other technologies.
The Spin
Narrative A
UPS has typically not pursued mass layoffs as a fiscal policy, but with the costs of sorting and shipping packages going up, the company needs to consolidate sorting facilities and streamline its technical operations. To make shipping less expensive for customers, UPS will now have to take this freed-up cash and invest it heavily in technology.
Narrative B
Corporations have no idea what AI's potential is, let alone what the long-term consequences in the labor force will be. While executives have so far agreed with the optimistic predictions of tech companies, history shows us that they usually choose more profits when technological changes occur. People could very well end up working shoulder-to-shoulder with AI, but they could also end up jobless.
Nerd narrative
There's a 50% chance that Amazon will deliver some products by drone by June 2026, according to the Metaculus prediction community.