ATLANTA, Georgia: This week, Brian Newman, CEO of United Parcel Service (UPS), said that a new five-year deal with Teamsters-represented workers would cost less than US$30 billion.
The contract will cover some 340,000 UPS workers in the U.S. and will increase wage and benefit costs at a 3.3 percent compound annual growth rate over the life of the agreement, he added.
"Our math was certainly lower than $30 billion," Newman said.
When the agreement expires in August 2028, the average UPS full-time driver will earn nearly $170,000 annually in pay and benefits. Part-time union employees will earn $25.75 per hour while receiving total healthcare and pension benefits.
Citing high labor costs and lost business during contract talks with the International Brotherhood of Teamsters, UPS cut its full-year revenue and profit targets in August.
The Atlanta-based company is trying to reduce costs to compensate for lower demand and higher labor costs by cutting 2,500 management positions in the second quarter, continuing selective management layoffs, and offering early retirement to company pilots represented by the Independent Pilots Association.
However, the new Teamsters contract allows UPS to automate some work, and it has begun using RFID tracking chips that could eliminate the need for workers to scan the roughly 20 million packages per day.