Dive Brief:
- Interest in UPS' voluntary buyout program has been in line with the company's expectations so far, executives said on an earnings call Tuesday.
- The buyout program — the first in UPS' history for delivery drivers — gives employees "an opportunity to leave with a nice check," CEO Carol Tomé said. The offer amounts to $1,800 per year of service with a minimum payout of $10,000. Executives didn’t provide specifics on what the carrier’s expectations were in terms of driver interest.
- Around 85% of UPS drivers are at the top end of the pay scale, said Nando Cesarone, EVP and president U.S. for UPS. Many drivers with 25 to 40 years of service are entertaining the offer, he added.
Dive Insight:
UPS is offering the buyouts as the company looks to speed up employee attrition amid a network streamlining and downsizing effort.
Per the earnings call, the company has closed 74 buildings so far this year as part of its Amazon volume reduction plans, but attrition tied to those closures was lower than anticipated. Impacted union employees have bumping rights, allowing them to replace less senior workers at other locations.
"The turnover on the part-time, hourly side is going to normalize over time as time progresses," Tomé said. "On the full-time drivers, they have the opportunity to bump into a building. They can follow the work and bump into the building if there's no driving work."
The driver buyout program is a means for UPS "to accelerate the attrition levels" and get back on track with its plans to realize $3.5 billion in expense reductions this year, according to EVP and CFO Brian Dykes.
The window for full-time U.S. drivers to accept a buyout began July 18 and will remain open until Thursday. Participating employees will begin leaving the company at the end of August, Tomé said.
The International Brotherhood of Teamsters, a union representing UPS drivers and other employees, has been pushing members to reject the company's buyout offers.
“The Teamsters are prepared to fight UPS on every front with every available resource to shut down this illegal buyout program," Teamsters General President Sean O’Brien said in a union news release earlier this month.
Clarification: This story has been updated to clarify remarks made by Nando Cesarone.
