Teamsters Local 710 announced on February 7 that they are aware of rumors suggesting that United Parcel Service (UPS) plans to close several centers within its jurisdiction. The potential closures are part of the company's strategy to achieve $1 billion in cost savings through facility consolidations and workforce reductions, following increased labor costs from its 2023 contract.
In its fourth-quarter earnings report for 2024, UPS revealed a multi-year initiative aimed at achieving these savings through an end-to-end process redesign. From 2025 to 2027, the company plans to implement a network reconfiguration that includes facility consolidations, reductions in its vehicle and aircraft fleets, and workforce cuts. UPS anticipates closing up to 10% of its buildings but has not disclosed specific details about the affected assets and jobs. These measures are intended to enhance profitability amid changing business demands.
In August 2023, Teamsters members ratified what the union described as the "most historic" collective bargaining agreement in UPS’s history, with an approval rate of 86.3%, the highest for a UPS contract to date. The five-year National Master Agreement from 2023-2028 secured significant wage increases and workplace protections for over 340,000 UPS Teamsters while introducing substantial financial obligations for UPS. Union leaders praised the contract for setting a new standard for worker pay and protections in the logistics industry.
According to Reuters, this agreement is projected to increase UPS's wage and benefit costs by a compound annual growth rate of 3.3% over its five-year term. In the second half of 2023 alone, UPS incurred approximately $500 million in contract-related expenses—substantially higher than initially anticipated. These increased labor costs have significantly impacted UPS’s financial performance; in Q2 2024, the company reported an adjusted profit that fell short of analysts' expectations due to weak package delivery demand and heightened expenses from the new labor contract.
In March 2024, UPS announced plans to close at least 200 facilities across the United States, aiming to save $3 billion by the end of 2028 through consolidation and increased automation. According to WSWS (World Socialist Web Site), the company has identified 63 sites for major automation projects by 2028 as part of a broader strategy to create a "highly productive network" with "less dependency on labor." Recently, UPS also announced major layoffs affecting over 1,000 workers at facilities in Colorado, Oklahoma, and California. A Portland, Oregon hub is set to close in summer 2025 and reopen as an automated facility with technology expected to eliminate up to 80% of warehouse jobs.
NBC News reported that under the new contract, some UPS employees have experienced reduced working hours and overall income. Otis Keys II, a feeder driver from The Colony, Texas, reported a significant drop in his annual income despite an increase in his hourly wage from about $35 to $37.70 with an expected rise to $45.11 in May 2024. His monthly take-home pay has decreased by around $3,000 due to fewer working hours resulting from company-wide cost-cutting measures including layoffs and reduced overtime opportunities. Keys expects his earnings will be about $22,000 less in 2024 compared to the previous year.