FedEx laid off 1,000 employees last Friday under its cost-cutting plans announced in mid-March tosave a further $1 billion in response to the market downturn.
About half of the staff dismissed were employed in Memphis, where the company’s headquartersand FedEx Express are based. Prior to the cuts, FedEx counted about 33,000 staff in the Memphisarea from a total of 290,000 employees worldwide. All the staff who were given notice were salariedemployees or held management positions.
FedEx spokesman Jess Bunn told US media that the cuts were implemented company-wide. “Thedecision to reduce the work force across our companies was difficult but unavoidable given theglobal economic recession and its effect on our business,” he said. The laid-off workers will begiven severance packages, advance notice of job openings and career counselling.
On March 19, FedEx announced $1 billion worth of capacity cuts in its express and freightnetworks in response to a double-digit revenue drop and a 75% fall in profits in the third quarterending February 28, 2009. The US group had already announced in December that it was targeting $200million worth of salary savings and total cost reductions of $1 billion in the current June 2008 –May 2009 fiscal year.
New measures announced in March included network capacity reductions at FedEx Express andFedEx Freight, further reduction of personnel and work hours, expansion of previously announced payactions to include non-US employees, where permitted, and other cost savings. The measures, whichwill result of Q4 charges of about $100 million, are targeted to reduce expenses by approximately$1 billion in fiscal year 2010.
“Our goal when we implemented compensation reductions in January for US salaried personnelwas to both protect our business and minimise the loss of jobs,” CEO Fred Smith said at the time.“With industrial production and global trade trends worsening since last quarter, we are applyingthese additional measures to continue to secure as many of our jobs as possible during thisdownturn.”
In the December 2008 – February 2009 third quarter, covering the peak Christmas season, FedExCorp. saw group revenue drop 14% to $8.14 billion. Operating income slumped 72% to $182 millionfrom $641 million, and net income declined 75% to $97 million from the previous year’s $393million. FedEx Express reported an 18% drop in revenue to $5.05 billion in Q3. Its operating incomefell 89% to $45 million, down from $425 million a year ago.
