After Amazon, UPS disclosed a massive layoff of 48,000! CEO: We are constantly finding opportunities to reduce costs

United Parcel Service (UPS) disclosed in its earnings report on Tuesday that it has cut 48,000 management and operational positions. Among these, 14,000 are management positions and 34,000 are operational positions. The company stated that these job cuts were achieved through layoffs and voluntary separation packages (buyouts).

The scale of this layoff exceeds UPS's previous plans. In April of this year, UPS announced it would cut about 20,000 operational positions to restructure its U.S. network, expecting to save about $1 billion in costs; in January 2024, UPS announced plans to cut about 12,000 management positions.

UPS stated that the company is well-positioned to welcome the upcoming holiday peak season; restructuring measures taken this year have resulted in approximately $2.2 billion in cost savings. The company has also benefited from increased automation and plans to reduce temporary hiring during the fall and holiday seasons.

Although UPS's profit and revenue in the third quarter declined year-on-year, the performance exceeded market expectations, thanks to its cost-cutting and job reduction efforts, which drove the company's stock price up nearly 7% during midday trading on Tuesday.

UPS CEO Carol Tomé stated:

"We continuously find opportunities to reduce costs. We are positioned to have the most efficient peak season operations in the company's history."

Tomé is under pressure to reverse the company's long-term stock price slump, particularly from employees and retirees. Due to UPS's unique shareholder structure, this group has significant influence over company affairs. According to earlier media reports, this group has a notable impact on management decisions.

Tomé is the first externally appointed CEO in UPS's history. She was previously the Chief Financial Officer of Home Depot and has long served on the UPS board. She took over as CEO during the COVID-19 pandemic, adjusting the company's business model from pursuing volume growth to focusing on high-margin packages.

UPS Chief Financial Officer Brian Dykes pointed out:

"We need less variable capacity, fewer leased planes, fewer rental trucks, and seasonal employees. This allows us to operate a more efficient network."

The personnel optimization at UPS closely follows the company's decision to reduce business volume from Amazon, which was previously UPS's largest customer. In the third quarter, UPS's Amazon-related business volume declined by 21.2%. UPS expects that the average daily package volume during this year's peak season will be lower than last year, primarily due to the company's continued reduction in shipments from Amazon.

As part of its cost-saving plan, UPS has closed 93 owned and leased facilities for daily operations by 2025 and expects to achieve approximately $3.5 billion in year-on-year cost savings for the entire year. Tomé added that UPS anticipates that Amazon's business volume will continue to decline and will further close more facilities within the year.

The layoff news from UPS and Amazon came one after the other. As the second-largest employer in the U.S., Amazon is initiating the largest layoffs in its history, affecting not only 10% of white-collar positions but also potentially jeopardizing hundreds of thousands of blue-collar jobs in the future, according to media reports

The ultimate goal of Amazon's robotics team is to achieve 75% operational automation. This plan is expected to avoid the addition of more than 600,000 employees while doubling sales by 2033 and save approximately 160,000 hiring needs by 2027, which could have a significant impact on blue-collar jobs