UPS plans to offer voluntary buyouts to unionized delivery drivers for the first time in its history as it looks to align the workforce with the downsizing of its domestic ground network and Amazon business.
The news follows management’s disclosure in April of intentions to eliminate 20,000 front-line positions as part of a broader effort to cut excess capacity and improve profits. UPS’s (NYSE: UPS) network optimization plan, called Network of the Future, envisions closing 200 sortation centers over five years and increasing automation for handling packages. Dozens of facilities have already been consolidated in the past year.
Package drivers would “receive a generous financial package if they choose to leave UPS” on top of earned retirement benefits, including pension and healthcare, the parcel freight company said in a statement Thursday. “As we navigate an unprecedented business landscape, we are executing the largest network reconfiguration in UPS history” and need to similarly adjust headcount, the company explained.
Parcel volumes are under pressure from a variety of headwinds, including Trump administration tariffs that have slowed imports and a January decision to reduce Amazon business by 50% over 18 months because so much of it is unprofitable.
UPS’s voluntary severance plan angered the Teamsters union, which says the Atlanta-based company is obligated to create 30,000 jobs under a five-year contract ratified in August 2023, which forestalled a nationwide strike. It urged members to reject the buyout offer.
“UPS is trying to weasel its way out of creating good union jobs here in America by dangling insulting buyouts in front of Teamsters drivers. It is an illegal violation of our national contract,” said Teamsters President Sean O’Brien in a news release. “UPS is obligated to establish tens of thousands of new full-time jobs under the agreement. But CEO Carol Tomé and UPS’s corporate managers are hoping that if they offer paltry severance packages to enough workers, no one will notice the company is setting the union’s contract on fire. UPS Teamsters work too damn hard to be treated with such disrespect.”
Teamster contracts enable UPS drivers employed 30 years or more to receive employer-paid health care throughout retirement, a benefit that would not be guaranteed to all workers under UPS’s severance plan, according to the union. The current contract calls for UPS to elevate 22,500 part-time workers to full-time positions and create another 7,500 positions.
“We have approached the Teamsters on this topic and remain committed to the agreements we reached in 2023,” UPS said.
