Fedex offers staff voluntary lay-offs
FedEx has responded to the declining US air express delivery market by offering its first voluntary redundancy and early retirement programme, which will result in net costs of Dollars 130m-Dollars 160m in fiscal 2004.
The programme is expected to affect 14,000 salaried US FedEx employees. FedEx employs about 116,000 US workers. The scheme will not affect FedEx drivers and customer service agents, who are paid hourly.
FedEx, the world’s largest air express deliverer, would not say how many workers were expected to take the severance packages, but expressed confidence that employees would be attracted by the terms, which included a Dollars 10,000 lump sum and full pension benefits for those over 50.
The company, formed in 1971, said the move underlined the difficulties in the US, its largest market. In March, while announcing third-quarter volume gains in the FedEx US ground business and package delivery overseas, its US air express business remained in the doldrums, with volume declining 1 per cent in the quarter ending December 31.
Hit with rising fuel costs and downturns in the technology and manufacturing sectors, FedEx has already reduced capital expenditures, limited hiring and cut aircraft orders.
The company has also focused on its fast-growing ground business, which is still only one-fifth the size of its biggest rival, United Parcel Service. UPS, with its fleet of familiar brown trucks, has long dominated US deliveries by ground.
The FedEx programme, while voluntary, is a sensitive issue to a company that had a no-layoff philosophy.
FedEx said the programme would save the company a further Dollars 150m to Dollars 190m next fiscal year, starting June 1 2004.Betty Liu, Atlanta
Copyright © 2003: Financial Times Group
