ATLANTA - Atlanta-based United Parcel Service Inc. is planning to cut 12,000 jobs worldwide and explore the sale of its Coyote truck brokerage business in response to soft demand and higher union labor costs in 2023.
The announcement was made during an earnings conference call by Chief Executive Officer Carol Tomé on Tuesday, according to Bloomberg.
"2023 was a unique and difficult year," Tomé said in a statement. "Through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth."
The company plans to eliminate management positions and contractors. The move will save the company approximately $1 billion.
The shipper lost business during the contentious union talks last summer. Additionally, people have been shopping more in stores again post-pandemic and inflation has affected sales.
UPS shares dipped about 7% in early trading after the announcement.
Tomé says the company is focused on boosting efficiency and shifting to higher-profit deliveries such as medical supplies.
UPS's 2024 outlook expects revenue to range from $92 billion to $94.5 billion.
Several other large corporations have announced layoffs already this year, including Amazon, eBay, Google, TikTok and Twitch.
Macy's also recently announced that it is cutting 2,000 jobs and closing 5 stores. Additionally, Wayfair cut about 13% of its global workforce.
UPS issued the following statement:
"In 2023, dynamic external and economic conditions led to lower volume and a more than $9 billion decline in revenue year over year. As a result, today UPS announced plans to right-size its global staffing and eliminate roughly 12,000 jobs around the world over the next several months. The company will provide support to all affected employees, including severance packages and outplacement assistance."
UPS has about 500,000 employees worldwide.
UPS layoffs: Economic impact to Georgia
UPS cuts may not hit Georgia’s economy hard, experts say
The announcement UPS plans to eliminate 12,000 jobs sounds like a lot, but experts do not believe it will hit the economy hard in Georgia.
File: A United Parcel Service (UPS) driver sits in his delivery truck on January 31, 2023 in San Francisco, California. (Justin Sullivan/Getty Images / Getty Images)
Roger Tutterow, economics profession at Kennesaw State University says while UPS is integral in Georgia’s economy, the job layoffs will have a minimal impact.
"We don’t want to welcome any job loss. But it’s important to note these 12,000 jobs being reduced are global," Tutterow said.
"Relative to the size of the Georgia economy or the Atlanta economy, they’re not going to be catastrophic," he added.
Tom Smith, an economist and financial profession at Emory University’ Goizueta Business School echoes those sentiments.
"I don’t anticipate a lot of the layoffs will be in the Atlanta metro area," Smith said.
However, with other major companies expected to announce or have already announced layoffs, Smith pauses on if there will be a bigger impact, but not to read into it too much.
"There certainly is the possibility this is the first of a set of dominoes," he said.
"The U.S. is now in a soft-landing position. so, we missed the recession," he added.
Tutterow says this could signal a slowing economy either locally or nationally.
"There’s still an elevated risk of a recession in 2024," he said.