![]() So just to- for- for clarity's sake there. JULIE HYMAN: And- and, Brian, just to be clear, that 170,000 is salary and benefits. So flexibility and getting the best labor out there will deliver the service. And so we're leveraging the best of both worlds, take the part timers who UPS, give them the flexibility to drive as part time sea- or full time seasonal drivers. So our part timers can now- during the sea- seasonal holiday during peak, they can come on as part time seasonal drivers. Ultimately, by- by- by giving them the pay they deserve, and- and- and it's a fair- fair trade, we've also employed flexibility. That's a fantastic wage, and it basically locks in that service and- and- and reliability that- that our customers rely on for UPS. The drivers will be making $170,000 at the end of this contract. I'm out here on the West Coast this morning with- with our employees as well. I was- I was in New York with a lot of our employees and drivers a couple of weeks ago as we celebrated Founder's Day. But something on the other side here for- for drivers if we consider how this also changes their existing assignments, the scheduling, what does that look like as part of this negotiation and part of the dealing that's essentially come to what you described as a win-win agreement?īRIAN NEWMAN: Yeah, it really, Brad. But that- that basically drives productivity.īRAD SMITH: Perhaps something that investors will be a- a little bit more excited about here is that this kind of locks in or at least gives them a benchmark for what labor costs will look like for- for the next five years. So the investments we'll be making over the next 3, 4 years will be really focused on how does UPS become more efficient? And that's in- in technology, like, RFID, digital capability, et cetera. But the reason I'm not as worried about that is we have- we've basically maintained the technology clause in the contract that allows us to- to deploy and leverage technology to become more efficient and drive productivity. So it gives us the ability to drive pricing and productivity to expand margins, throw off cash, et cetera.īy year 5, there's another step-up. That's a number that 3.3%, that's a gross number, does not include pricing, does not include productivity. I'll tell you why in a minute.īut the front end over the next 12 months, having nearly half, 46% of the inflation hit in that part, what it does is it sets you up for years 2, 3, and 4. I'm less worried about the back end of the barbell. I think, Julie, the tough part is the front end of the barbell. What's the other end of that barbell in the last year then? And- and how is it- is that paid out in the form of bonuses? What is that gonna look like?īRIAN NEWMAN: So- so the- the barbell is a good optical piece. JULIE HYMAN: So give us a little more color about how that money is gonna be spent and at what cadence, because you all have described this as sort of a barbell, right, with 46% of the cost coming in the first year. And so a 3.3% inflation rate over the next five years, you just benchmark that versus a 4 plus percent five-year treasury, that's a pretty good rate. ![]() But we actually think, Brad and Julie, that having the best workforce in the industry will deliver that service that we're known for, and ultimately that delivers for our customers. We're actually giving back things we were already investing in like vehicles AC, heat for heat reduction through some hydration programs, et cetera. The total cost growth or inflation will be 3.3%. Now that it's been fully ratified, we can come out and talk about it, which- which we've wanted to do for some time. Look, we're- we're actually very pleased with the contract. So kind of take us through some of the highlights just very briefly.īRIAN NEWMAN: Yeah, Brad and Julie, it's good to be with you this morning. You've got new AC installs for vehicles here. And- and it's particularly interesting as we were listening in to the announcement and hearing you highlight some of the details there. Look, Brian, we got a lot to discuss here. We've also got Yahoo Finance's Julie Hyman. Brian Newman, chief financial officer of UPS, joins us now to tell us more about what this new contract means. UPS employs about 340,000 Teamster members, making it the largest single employer of the Union.
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