FedEx begins offering voluntary separation packages to cut costs (2024)

FedEx Corp. began Friday offering voluntary separation packages to U.S. employees, mostly in its Express and Corporate Services divisions, as part of a cost-reduction initiative announced Dec. 18.

The company has not said how many voluntary departures it wants. It currently has more than 450,000 employees globally.

The Express division is the company’s largest with 227,000 employees — 166,000 full time and 61,000 part time as of May 31. Within those totals is FedEx’s TNT Express business in Europe, which has 41,000 full time and 8,000 part-time employees.

Corporate Services has 30,000 employees, including 14,000 in its FedEx retail offices.

FedEx Express operates a cargo sorting hub in Piedmont Triad International Airport. The company announced in August plans to add up to 400 management, full- and part-time workers at the hub by the end of 2018, which would have raised the workforce there to more than 800.

Frederick Smith, FedEx Corp.’s chairman and chief executive, said Dec. 18 in the company’s second-quarter earnings report that the job cuts were necessary even though “the U.S. economy remains solid, our international business weakened during the quarter, especially in Europe.”

“We are taking action to mitigate the impact of this trend through new cost-reduction initiatives.”

FedEx provided more voluntary departure details Friday. It said the offer would expire during its fourth quarter of fiscal 2019, which typically ends on May 31. It expects the majority of voluntary departures to occur before May 31.

The severance packages would include payments “calculated based on four weeks of gross base salary for every year of continuous FedEx service up to a maximum payment of two years of pay.”

It also includes funding to health-care reimbursem*nt accounts. These incentives do not include changes to retirement eligibility or payments.

However, employees eligible for the voluntary severance, and also eligible to retire, can take that option.

FedEx Corp. projects the pre-tax cost of the U.S.-based voluntary severance to range from $450 million to $575 million. It cautioned that actual costs will depend on employee acceptance rates.

Following the completion of the initiative, FedEx Corp. said it projects annual savings from its U.S.-based program of between $225 million and $275 million, starting in fiscal 2020.

FedEx said the voluntary separations will be managed so not to affect service levels to customers.

The cost-cutting initiative announced Dec. 18 also contains other components: international network capacity reductions within FedEx Express; limiting hiring in staff functions; and reductions in discretionary spending.

FedEx Ground has 26,000 full time and 71,000 part time employees, including at least 750 at its hub in Kernersville.

FedEx Freight has 44,000 employees.

The expansion to more than 800 employees at the PTI cargo-sorting hub represents about 53 percent of the 1,500 full- and part-time workforce that the company pledged in its 1998 marketing pitch. That pledge secured its eligibility for up to $142.3 million in state incentives — at the time a record for the state.

The remainder of the update addressed flight operations, which have been a sensitive issue for nearby neighborhoods ever since plans for the hub surfaced in the mid-1990s.

FedEx was scheduled to add a net total of eight flights, nearly doubling its existing capacity. The company will use Boeing 757 aircraft for the flights, along with two small turboprop feeder aircraft that replace two similar aircraft that currently operate earlier in the day.

“With few exceptions, the hub operations will be limited to four nights per week — Monday through Thursday,” the company said.

The new flights arrive between 10:30 p.m. and 1 a.m. and depart between 3 and 4 a.m.

The FAA, in approving the hub operations from an environmental perspective, directed that late-night and overnight flights arrive from and depart to the southwest.

PTI officials said Runway 5R/23L will serve as the primary runway, but any runway may be used at the discretion of air-traffic control. Runway 5R/23L is undergoing an accelerated reconstruction.

FedEx spokesman Jim Masilak said Aug. 16 that the company’s job plans are part of its growth and system strategy.

“The Piedmont Triad region has always been a large market for FedEx Express,” Masilak said. “We have significant pickup and delivery operations at the Greensboro hub that will only grow with this expansion.”

The FedEx expansion comes as Piedmont Triad Partnership officials listed the airport as one of four strategic economic megasites. PTI, however, is limited to aviation-related projects that can pass muster with the FAA.

The airport authority said in June that between 900 and 1,200 acres are being prepped for development following an investment of $120 million for airfield infrastructure. That includes the “Bridge to Commerce” that would open access to additional acreage on the west side of the airport property.

Altogether, the authority says developing those acres into commercial real estate could generate another 16,000 jobs and $1.6 billion in economic impact for the Triad.

The FedEx hub expansion comes on the heels of construction and grading at a planned Amazon fulfillment center in Kernersville, the latest step toward what could be a 1-million-square-foot facility.

The center could employ up to 953 full-time and full-time-equivalent workers.

The proposed Amazon site is near the FedEx Ground operations on Old Greensboro Road in Kernersville. It’s within 10 miles of the FedEx sorting hub at the airport.