Friday, January 8, 2010

Cutting Management at UPS

In announcing its expected strong earnings in the fourth quarter of 2009, UPS also announced significant cuts in its management structure.  

"Effective in April, UPS will reduce its U.S. Regions from five to three and its U.S. Districts from 46 to 20. As part of the realignment, UPS will expand its outreach to customers by strengthening local sales and marketing efforts.  The restructuring will eliminate approximately 1,800 management and administrative positions across the country. Normal attrition will minimize some job displacements, and approximately 1,100 employees will be offered a voluntary separation package. In addition, other impacted employees will receive severance benefits and access to support programs based on length of service."  [Emphasis Added]  (UPS Press Release)

The cuts are severe and the highlights above illustrate that the cuts will are deep and most likely will have significant one time costs for UPS.   The following bullets recast the information contained in the press release to illustrate how significant UPS's actions are

  • UPS is cutting its regional management by 40%.
  • UPS is cutting its district management by 57%.  For example, the reductions in the number of districts will put the corridor from Philadelphia to Washington DC into a single district.
  • The number of employees laid off will depend upon attrition and the number of employees taking voluntary separation packages.
  • The cost of this action for UPS will likely be between $100 and 300 million depending upon the number of people who leave under normal attrition and the cost of transfers for managers that are retained.  UPS expects that the charge will be offset by cost savings initiatives in its domestic ground delivery business.

Dow Jones  quoted UPS spokesman Norman Black explanation of the cuts as follows: "We're talking about adopting a leaner management structure for the domestic business," [The latest cuts have] "nothing to do with the economic recession." 


Anonymous said...

the post office could take a leason from this.

Tom Landis said...

The question is not if the USPS should make the necessary cuts to it's bloated bureaucratic multi-level management structure. Anyone in the crafts, the 'employees' who actually touch and move the nation's mail, have been aware of this for years and years. Unfortunately, Potter, Donahue et al, are part of this dysfunctional model of management. Has wikipedia incorporated 'Postal Management' under the heading of 'oxymoron' yet?