UPS, leveraging artificial intelligence, has terminated approximately 12,000 managerial positions without plans for rehiring, alongside unveiling other substantial operational shifts, including a mandate for employees to return to the office five days a week. These strategic moves aim to enhance efficiency within the company.
Last year, discussions between UPS and unions revealed a shift in the company’s ethos from “better not bigger” to “better and bolder,” as articulated by Carol Tomé, UPS CEO. The decision to reduce 12,000 out of 85,000 management roles was driven by heightened labor costs and customer purchasing power erosion due to inflation, with anticipated savings of approximately $1 billion.
Carol Tomé attributed the job cuts to advancements in technology, particularly artificial intelligence, ensuring that redundancies are not revisited in the future. Moreover, remote work opportunities will be curtailed, requiring employees to return to office premises five days a week, among other forthcoming changes set to be unveiled on March 26.
Critics, including Glenn Gooding, an industry consultant at iDrive Logistics and former UPS manager, expressed concerns about the impact on morale and potential loss of valuable expertise, noting that many affected managers had risen through the ranks from parcel delivery roles.
The announcement led to an 8% decline in UPS shares, accompanied by a 7.8% reduction in revenue, totaling $24.9 billion compared to $27 billion in the previous year. Additionally, UPS disclosed considerations for the sale of Coyote, a freight broker facilitating connections between shippers and carriers.
Reflecting on the challenges encountered in 2023, Carol Tomé acknowledged declines in volume, revenue, and operating profits across all business segments, characterizing the year as unique, difficult, and disappointing.
Source: Bloomberg
