UPS Freezes Pay After Volume Drops Most Since 1999

Incidentally, they also froze promotions.

By Mary Jane Credeur

Feb. 3 (Bloomberg) -- United Parcel Service Inc., the world’s largest package-delivery company, said it’s freezing management salaries and suspending retirement contributions after U.S. volume plunged the most in nine years.

The shares rose 6.1 percent on investor optimism that this and other moves such as reducing some flights for air packages will allow UPS to control expenses, said Art Hatfield, an analyst at Morgan Keegan & Co. in Memphis, Tennessee, who rates the shares “market perform.”

UPS’s domestic shipments, which typically mirror U.S. gross domestic product, dropped 3.9 percent in the fourth quarter, the Atlanta-based company said today in a statement. That was the biggest decrease since the company’s initial public offering in 1999 as businesses and consumers spent less.

“It’s a pretty bad environment, but UPS is managing through it for the long term,” Hatfield said. “The fourth quarter was tough and the current quarter is going to be tough, but we may start to see some small improvements from there.”

UPS said volume in the U.S. will fall by 3 percent to 5 percent in the current quarter, and that the economic contraction will probably be worse than it was in the last three months of 2008 as businesses work through built-up inventory.

The package shipper predicted earnings of 52 cents to 68 cents a share in the current period, which missed the 69-cent average estimate of 11 analysts surveyed by Bloomberg.

Stock Gains

UPS climbed $2.58 to $45 at 4:03 p.m. in New York Stock Exchange composite trading. The percentage gain was the most since Nov. 21.

Fourth-quarter profit was $254 million, or 25 cents a share, compared with a net loss of $2.64 billion, or $2.52, a year earlier because of costs to withdraw from the Central States pension plan. Revenue dropped 5.2 percent to $12.7 billion.

Excluding $575 million in goodwill expenses for its freight unit, UPS said profit was 83 cents a share, which trailed the 86-cent average estimate of 15 analysts surveyed by Bloomberg.

UPS said U.S. overnight air shipments, one of its most profitable services, plunged 9.1 percent while ground volumes declined 1.7 percent as some customers switched to this less- expensive option. International package volume decreased 8 percent.

The company said it was suspending matches to employees’ 401(k) retirement accounts. The company didn’t make changes to its defined benefit pension plans.

‘Tough Decisions’

The pay freeze will affect 30,000 managers, spokesman Norman Black said, or about 7 percent of the company’s global workforce of 425,000.

“The severe decline in economic activity around the world resulted in sharply lower package and freight volumes for UPS,” Chief Executive Officer Scott Davis said in the statement. “We’re making the tough decisions necessary to adapt our enterprise to today’s realities.”

Chief Financial Officer Kurt Kuehn said the company may be facing its most difficult year since being founded in 1907.

Economists surveyed by Bloomberg expect gross domestic product to fall 3 percent in the current quarter. It contracted 3.8 percent in the fourth quarter, the most since 1982, the Commerce Department said on Jan. 30. Excluding a buildup of unsold goods, the drop was 5.1 percent last quarter.

Domestic volume will probably fall for the full year, Kuehn said today in an interview. He declined to give a specific projection.

Cost Cutting

“The pace of the economic recovery will be driving that,” Kuehn said. “We might have some stabilization” in volumes toward the end of the year.

To lower costs, UPS has moved some sorting of overnight packages to its main hub in Louisville, Kentucky, instead of smaller centers in Dallas and Columbia, South Carolina.

Total flight time declined 5 percent in the fourth quarter, Kuehn said, and the company plans to trim more flights from its schedule this year.

UPS has several internal groups of employees looking for ways to save more money by making changes such as improving efficiencies at sorting facilities or investing in technology that will lower costs, he said.

“We’re challenging what we’ve done in the past,” Kuehn said. “Do we modify it? Can we improve it?”

UPS controls about 56 percent of the U.S. package-delivery market, followed by FedEx with about 30 percent and the U.S. Postal Service with about 13 percent, according to SJ Consulting Group Inc. in Sewickley, Pennsylvania.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

Last Updated: February 3, 2009 16:19 EST

On Friends

Ah yes, the wonderment that is good food and friendly company.  Not THAT friendly.  No, just a pint with friends.  Nothing better in the world.

The Parting Glass

Of all the money e'er I had, I spent it in good company;
And all the harm I've ever done, alas was done to none but me;
And all I've done for want of wit, to memory now I can't recall,
So fill me to the parting glass, goodnight and joy be with you all.

Of all the comrades e'er I had, they're sorry for my going away,
And all the sweethearts e'er I had , they wish me one more day to stay,
But since it falls unto my lot that I should go and you should not,
I'll gently rise and softly call, goodnight and joy be with you all.

If I had money enough to spend and leisure time to sit awhile,
There is a fair maid in this town who sorely has my heart beguiled. 
Her rosy cheeks and ruby lips, I own she has my heart in thrall,
So fill me to the parting glass, goodnight and joy be with you all.

It Wasn't Me!

BALTIMORE (WJZ) ― City police are on the lookout for the person or persons responsible for shooting a UPS driver early Wednesday morning.

Derek Valcourt reports the shooting happened around 4 a.m. as the driver was exiting I-95 and getting onto Caton Avenue.

Police report that a black car pulled alongside the UPS tractor trailer and opened fire.

The 31-year-old truck driver was struck in the back below the shoulder blades. He was able to pull off the road and call for help.

Medics transported the driver to Shock Trauma.

Another UPS employee was inside the truck at the time, but was asleep. He says he didn't hear anything.

They were working a sleeper shift, where one member of the team sleeps while the other drives. They were just finishing their shift from Dallas to Baltimore.

The investigation into the shooting is ongoing.

-- http://wjz.com/local/Shooting.UPS.truck.2.794220.html

On Customer Service

Rules of Customer Service, with bonus clichés:

1. The customer is always right
2. Some customers are just plain bad for business
3. Trying to please everyone will please no-one
4. Radical policy changes to satisfy one customer invariably upsets the rest of your user community
5. Smoke and a Pancake?  No?  Then there is no pleasing you!

Who could forget the parable for the four Bodys?  (No, Mr. Boddy is not included.)  You know, the story about Everybody, Somebody, Nobody and Anybody.

There was an important job to be done and Everybody was sure that Somebody would do it.
Anybody could have done it, but Nobody did it.
Somebody got angry because it was Everybody's job.
Everybody thought that Anybody would do it, but Nobody realized that Everybody wouldn't do it.
Nobody told Anybody so Everybody blamed Somebody.

Differences between the old job and the new....

Some general notes on the difference I have experienced between my old, corporate job, and my new "world of academia" job in no particular order:

1. My new desk chair most likely cost more than a month's mortgage.
2. I went from two 17" monitors that I had to cobble together from parts I brought from home on an old, outdated PC, to a 24" LCD for my brand new laptop and a 22" LCD on my Macintosh desktop.
3. Lost: Cafeteria. Gained: Coffee machine that is smarter than I am and which produces a variety of coffees (including cappuccinos, espressos, and mocha drinks), teas, and hot chocolate.
4. One word: InfiniBand.
5. Hot: College campuses. Not: Corporate buildings.
6. It's a tad lonely. The researchers are out of the office the majority of the time and I am often one of two or three people in my part of the building.

That's just my impression after a short first week.

Ham Radio Accident Report

This one needs an introduction, so you won't be lost at the beginning. This man was in an accident at work, so he filled out an insurance claim. The insurance company contacted him and asked for more information. This was his response:

"I am writing in response to your request for additional information, for block number 3 of the accident reporting form. I put 'poor planning' as the cause of my accident. You said in your letter that I should explain more fully and I trust the following detail will be sufficient. I am an amateur radio operator and on the day of the accident, I was working alone on the top section of my new 80-foot tower. When I had completed my work, I discovered that I had, over the course of several trips up the tower, brought up about 300 pounds of tools and spare hardware. Rather than carry the now unneeded tools and material down by hand, I decided to lower the items down in a small barrel by using the pulley attached to the gin pole at the top of the tower. Securing the rope at ground level, I went to the top of the tower and loaded the tools and material into the barrel. Then I went back to the ground and untied the rope, holding it tightly to ensure a slow decent of the 300 pounds of tools."

"You will note in block number 11 of the accident reporting form that I weigh only 155 pounds. Due to my surprise of being jerked off the ground so suddenly, I lost my presence of mind and forgot to let go of the rope. Needless to say, I proceeded at a rather rapid rate of speed up the side of the tower. In the vicinity of the 40-foot level, I met the barrel coming down. This explains my fractured skull and broken collarbone. Slowed only slightly, I continued my rapid ascent, not stopping until the fingers of my right hand were two knuckles deep into the pulley. Fortunately, by this time, I had regained my presence of mind and was able to hold onto the rope in spite of my pain. At approximately the same time, however, the barrel of tools hit the ground and the bottom fell out of the barrel."

"Devoid of the weight of the tools, the barrel now weighed approximately 20 pounds. I refer you again to my weight in block number 11. As you might imagine, I began a rapid descent down the side of the tower. In the vicinity of the 40-foot level, I met the barrel coming up. This accounts for the two fractured ankles, and the lacerations of my legs and lower body. The encounter with the barrel slowed me enough to lessen my injuries when I fell onto the pile of tools and, fortunately, only three vertebrae were cracked. I am sorry to report, however, that as I lay there on the tools, in pain, unable to stand and watching the empty barrel 80 feet above me, I again lost my presence of mind. I let go of the rope..."

Shayne, it's been fun!

So we bid farewell to Ben... Let's recap what's happened over the last few years, think about funny tidbits and items, and by all means add your own comments:

• Watching Soccer Tournaments at The Still
• "I will destroy your shins."
• "I'm not dressed like a bum! This is Urban Sheik!"
  
• "I'll have two Irish car bombs, Two Guinness chasers, and a Milk for my friend over there..." (The Milk was for Dave E.)
• A Kirbing circa 2006:

Dave,
I just wanted to tell you it has meant so much to me having you mentor me here. When I see you walk into my cube my heart goes flutter and I can feel a rush of adrenaline. I hope we can continue this special bond for a while. Lets not let snogs get between us.

• Inappropriate propositioning by The Webmistress - to wit, the inability and unwillingness of said Webmistress to match drinks 1-for-1 in exchange for a no-holds-barred Q&A session on the nature of the male species.
  
• Some poor sod who chose to wear a red, white, and blue shirt proudly proclaiming "ENGLAND" into an Irish Pub.
• Others to follow...
  

This post will be updated with additional items :-)