UPS CEO Carol Tome Says Teamsters Labor Deal Will Cost Less Than Union’s Estimate
UPS CEO Carol Tome announced on Monday that the company’s new labor deal with the Teamsters will cost less than the $30 billion outlined by the union. The company hopes to sell the agreement to investors after its stock fell following the announcement of the tentative deal.
According to Carol Tome, a Teamsters strike would have been the “costliest in a century,” resulting in a $7 billion hit to the U.S. economy within the first 10 days. This estimate came from a report by Anderson Economic Group.
Tome emphasized that the costs incurred by UPS for the new labor contract are substantially lower than the union’s claimed amount. However, she did not disclose the internal projection, as the company released its first presentation to investors on Monday.
The agreement reached with the Teamsters in July prevented a potentially disruptive work stoppage and was considered a significant milestone during a summer marked by pushes for massive new contracts and strikes in various industries. Full-time UPS drivers will earn up to $170,000 in pay and benefits in the final year of the contract, while part-time workers will see their starting pay increase from $16.20 to $21 an hour.
While the tentative deal was celebrated by the union, customers, and the company, UPS shares have fallen by more than 14% since the announcement. Carol Tome estimated that UPS lost more than 1 million packages per day in volume in the weeks leading up to the deal. However, she expressed optimism about the future, stating that with labor costs now known for the next five years, the company can develop plans to mitigate costs and drive productivity through automation.
As the holiday-shipping peak approaches, Tome emphasized the importance of the deal for customers. U.S. holiday e-commerce sales are expected to increase by 1% year over year to $273 billion, according to a recent forecast from Salesforce.
Looking ahead, Carol Tome said she is focused on implementing her “Better and Bolder” strategy, which aims to modernize and maximize profits at UPS. The strategy involves increasing worker and facility productivity and utilizing automation, artificial intelligence, and other innovations to capture more business. Tome highlighted the use of generative AI to improve the customer experience, envisioning a future where bots learn from customer interactions to provide better service.
Overall, UPS is optimistic about the new labor deal and its potential to drive growth and improve the customer experience. With the uncertainty of labor costs eliminated, the company can now focus on its long-term strategic goals.