UPS plans to eliminate around 12,000 white-collar roles over coming months as the logistics bellwether looks to right-size staff strength in response to slump in ecommerce volumes. This represents a near 14% downsizing of its global manager pool of 85,000 currently. Impacted staff will receive severance packages.
At the same time, the Atlanta-headquartered company is also set to discontinue hybrid arrangements by March, requiring all office workers to resume working from headquarters five days a week. UPS had earlier instituted a 3-day in-person expectation.
Aligning Talent, Costs With New Strategy
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” said CEO Carol Tomé on the earnings call. She reiterated that the move aims adjusting workforce size and costs to evolved business priorities for supply chain services marketplace.
UPS posted $25 billion revenue in Q4 2022, down 7.8% on year facing economic headwinds compared with pandemic’s retail boom. But the restructuring is forecast to generate savings up to $1 billion as per estimates.
Share Prices Tumble After Profits Dip
UPS stock dropped over 8% to $144 after the company declared net earnings had shrunk nearly 32% amid a 9.3% full year revenue decline, partly attributed to newly implemented Teamster wage hikes averaging 48% for US ground handlers.
Sales guidance for 2024 is also cautiously pegged between $92-95 billion versus street consensus of $96 billion. Tomé indicated 2023 had been a uniquely challenging year necessitating realignment initiatives now underway to position UPS for profitable growth looking ahead.
