UPS to sack 12,000 workers as massive layoffs hit global tech firms

United Parcel Service (UPS) plans to cut about 12,000 jobs this year to save a total of $1 billion in costs.

Announced on Tuesday, UPS linked the job cuts to a reduction in package volumes and higher wages to a union contract it signed.

Speaking on the development, Carol Tomé, the chief executive officer (CEO) of UPS, told analysts during a conference call on Tuesday that it had been a “difficult and disappointing year.”

Tomé said the firm’s revenue fell more than 9 percent in 2023, and profit dropped.

She said most of the job cuts would be made in the first half of the year, reducing expenses by about $1 billion.

The UPS CEO also said the company’s sales topped $100 billion for the first time in 2022 due to the pandemic, however, the fact that “revenue in 2023 fell more than 9 percent and won’t top that benchmark again shortly is candidly difficult and disappointing”.

“Some of this performance was due to the macro environment and some due to disruptions associated with our labour contract negotiations as well as higher costs associated with the new contract,” Tomé added.

According to Brian Newman, UPS’s chief financial officer (CFO), the company has about 85,000 managers as part of its global workforce of nearly 500,000 employees and has more than 300,000 hourly US workers represented by the Teamsters union.

“It’s a change in the way we work. So as volume returns to the system, we don’t expect these jobs to come back. It’s changing the effective way that we operate,” Newman said.

In a statement on its website showing the fourth quarter Q4 2023 earnings, the e-commerce firm said it recorded a 31.8 percent drop in quarterly earnings per share revenue in 2023.

UPS also said it had consolidated revenues of $24.9 billion, a 7.8 percent decrease from the Q4 of 2022.

For the full year of 2024, UPS says it expects revenue to range from approximately $92 billion to $94 billion, and consolidated adjusted operating margin to range from approximately 10 percent to 10.6 percent.

GLOBAL TECH FIRMS AND LAYOFFS

Since the year began, several tech companies have announced massive layoffs, signalling the continuation of a trend that commenced last year over profitability concerns.

On January 25, 2024, Microsoft said it would sack around 1,900 or 8 percent of its total gaming workforce of 22,000, according to a memo from Phil Spencer, Microsoft’s gaming CEO.

Similarly, Google plans to cut “hundreds” of employees across its global advertising and sales teams.

The development came one week after it laid off “hundreds” more employees across several divisions, including its engineering and hardware teams, as well as employees developing its voice-operated virtual assistant, called Google Assistant.

Also on January 10, Amazon said there were plans to cut “several hundred” employees at its Prime Video and MGM Studios divisions, following a review of “nearly every aspect” of the company’s business operation.

In the same vein, Paypal on January 30, 2024, said 9 percent or 2,500 of its total workforce will be fired within the year.

The companies linked these layoffs to efforts to strengthen operations and save costs amid the global economic challenges.