UPS Layoffs: Cutting Jobs, Boosting Shares

Ups cuts 48,000 jobs to appease Wall street and reshape its network. So here's the headline. UPS has eliminated 48,000 jobs in just the last year. About 70% in driver and warehouse roles as part of a profit push that sent shares up 7% on Tuesday. Pretty big jump in their stock price. According to the Times, the company reported $1.33 billion in third quarter net income on $21.4 billion in revenue, both down year over year, but highlighted a 10% jump in US revenue per package. Chief Executive Carol Thome said, we are executing the most significant strategic shift in our company's history designed to deliver long term value. All stakeholders please note that she didn't say designed to create long term value for employees. Employees. More about that in a moment. She also said UPS is, quote, in compliance with the terms of our contract with Teamsters who previously warned they'd fight improper cuts. UPS cited tariffs fallout China to US parcels felt nearly 30% and said it trimmed unprofitable Amazon volume. Surprise there. It's hard to make money if you deal with Amazon because that was down 21%. Even with today's stock bounce, the stock is still off nearly 25% this year, flagging FedEx and the broader S&P 500. What's the real message here? UPS, like everybody else, has found out if we fire a bunch of employees, our stock price goes up and we, the owners, the managers, the shareholders get richer. This is not a trend that's going away. Let's dig a little bit deeper here. Now, UPS famously was a place where people without college degrees could make a nice living, could get perks, benefits, get a good paycheck without having to be highly credentialed. You don't have to go to law school to get a job at ups. So they've been a backbone of a middle class economy for a long time and they're an old company. And what they are finding is very hard to compete with the Amazons of the world because Amazon does not have Teamsters contracts with its delivery people. So again, look at some of the facts. There have been also management reductions. 14,000 in the last year, 48,000 cuts in just the last year total. So when you reduce headcount, even if revenues go down a little, you become more profitable and you are rewarded. So am I saying this is an unbridled good thing? No, it's good for shareholders. It's not good for the 48,000 people who lost their job. So what's the real message for you or me. This is yet another sign that our economy is changing. This was one of the few places left in our economy where it was unionized and it wasn't the government. Yes, teachers are still unionized by and large. Federal government employees are still unionized, by and large. But the percentage of private sector employees in America who are represented by a union and therefore have a lot of benefits and good pay is smaller now than at any time in the last 80 years. And it's only going down. So. So the real message, unfortunately for you and perhaps your children or other family members care about is you cannot count on the Teamsters or any other union to keep your job. You cannot count on government protection to keep your job. Because companies, especially big companies, every single day are going to ruthlessly try to cut cost or automate, use AI and robots, or AI robots to reduce headcount. It's just not going to stop. And there's no legislation that's going to make that stop. Certainly not in today's current political environment. So here's the ugly, ugly reality. America, we used to have a time and it's a part of the mystique about people who want to make America great again. They want to go back to the 1950s, 60s and 70s where it was possible for you to be a man, typically, and typically a white man, play football in high school, not really study, barely get out of high school with maybe a C plus average and then go right into a factory job or a union job or a job delivering for ups and have a nice middle class existence and keep that job for 30 years until you get a pension or enough retirement where you can have a house, your house could be paid for quite often. Your spouse didn't have to work, they didn't want to. You can have two cars. That is the reality for many Americans. 50s, 60s, 70s. The neighborhood I grew up in Charlotte, North Carolina, Starmount. Most of the parents there did not have college degrees yet. They had a house, maybe 1800, 2000 square foot house, half an acre, two houses, two cars, not two houses, two cars, a spouse that didn't work. And they were able to do this. They either had a unionized job, some manual labor jobs, where their labor through hard work, physical work, quite often could sustain a middle class income. I'm sorry, but those days are gone because people simply willing to do hard work. You can find those in the rest of the world, people who could not compete because of transportation and communication challenges in the 50s, 60s, 70s and 80s. Now, whether they live in Mexico South America, Asia, Africa even, they can compete and they can work for a lot less than what it cost to give someone a middle income, middle class income in America. So you're losing out on one end to them if it's just about physical labor on the other end. Workers are going to lose out to artificial intelligence and robots and the combination. Certainly when it comes to warehouse, Amazon is way, way ahead. But you have to think that UPS is leveraging the power of robotic workforces more efficiently than they have in the past. And maybe the people who are already in, who have enough seniority, the Teamsters was able to fight for them, keep them from getting fired. But you have to ask for how much longer? So the real message I have to you, whether you're looking for a job or you have a job and you're worried about being replaced by a computer, is this. You've got to figure out how to add value beyond what a machine can do or what a lower cost worker in another country can do. This means, unfortunately, always learning. There was a time again when Americans clock out. You know the Fred Flintstone, if you remember that cartoon, the bell hit five o', clock, he ran off the bulldozer which was powered by a dinosaur, and he could just spend the rest of the evening and weekends playing, relaxing, doing games, sitting in the hammock with Barney Rubble and Fred and Wilma and Betty. Those days are gone. And I'm very, very sorry. There. There are political leaders across the world in various democracies saying they're going to bring those days back. They're lying to you. They say they're going to bring back the coal miners. They're lying. Coal mining isn't coming back for many, many reasons. And if all of a sudden coal mines discovered that they have 50 times as much coal in America than they thought before and it's just an inch underground, not going to result in more coal miners. It's going to result in more robots, more machinery, more technology, more AI guidance, figuring out where's the deepest vein. It's not going to create more middle class jobs. So you may be thinking, well, tj, you're saying, well, everybody has to be smart and go to college and get graduate degree. And that's not my message. What I am saying is you've got to figure out how is it you can do things better than what artificial intelligence or robots can do. It could mean you focus on opening, opening an electricity, an electrician business or a plumbing business in the wealthiest part of your town. Because there's always Going to be some people who think, oh, my gosh, I've got a leak, the ceiling's leaking, the refrigerator is leaking. I got a crisis. I'm going to call a plumber. I don't care what they charge. I don't want to walk around in 3 inches of water in my house. And you can charge a lot there. It doesn't take a graduate degree in plumbing to have your own independent contractor's business. As a plumber. The truck trades are going to be with us at some point. Robots will be so good, we might not need a plumber. I think we're a little ways away from that. I'm trying to help you figure out what is the best career strategy for you, and I don't have a panacea. All I can tell you is if you're in a job where there are a lot of other people doing stuff just like you, and you're using the same skills you used yesterday, last week, last year, or even 10 years ago, there's a good chance you're going to be fired. So that a CEO can get another $3 million bonus this year, and so the shareholders can get another 5% on their stock price. And that is capitalism. It may sound like I'm saying that's awful. It's not awful in terms of our entire capitalistic system, but it's awful for you. If you lose that job and I'm on your side and I want you to have a job, and maybe you're fine, but your kids or your grandkids are trying to navigate this. This. There's no one easy solution. Even the old advice of go to law school or go to medical, that's not a sure thing anymore. And the advice of major in computer science isn't necessarily the surefire ticket to success anymore. The only thing that really seems to work is to be extraordinarily aggressive at learning new skills to solve new problems people have, and packaging that with the ability to communicate the value you provide and to have. Whether you want to call yourself an independent contractor, a freelancer, start your own company, that's really the only way to survive, as I see it. If you have a better solution, let me know. If you lost your job from ups, let me know what you were doing. I'd love to hear from you. I'm even more interested in knowing, what are you going to do next? Because if you're hoping the Teamsters get your job back or hoping to file a lawsuit to fill, force people to give you a paycheck, I don't think that is going to be a winning solution in the long run.