Sigh, I know you like to harp on passing up the 748s.
You know, my big issue was the way she talked about it. I would have shrugged if she had said, "Our people came to the conclusion that our current aircraft orders in the VLA area were more than sufficient to get us through, and it didn't seem prudent to buy more of this aircraft -- although we love it -- when we just didn't need it."
That's not what she did. Like a lot of incoming CEOs, she needed to shoot something in the head in front of everybody to show she was The Boss. So her message came through as, "Our people were considering these because Boeing was desperate to unload them and we could have had them at a good price, but because my new plan is going to unload a lot of business, we didn't need them regardless of what my people were thinking under the Old Way. So I showed them all and nixed it. Because I'm The Boss."
I'm not quite sure thats what she said and how she said it. From Bloomberg
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She gave the example of the company’s fleet of Boeing Co. 747s. The company pressed those wide-body jets into service to help handle the large demand for products out of Asia with fewer flights in an effort to “sweat the assets that we have.” But when an opportunity recently became available to buy more of the jets, UPS passed. The planes would have created excess capacity that UPS then would have had to find volume to fill, likely at unattractive prices. “We have not gotten the returns that we should have delivered on some of the capital investments that we made,” Tome said. “We will get the network right before we think about investing more dollars’’ in it, she said.
This reads to me like she's trying to chase yield and not volume. Full planes and trucks don't mean you're making a profit. Any idiot can fill a plane with passengers or packages, it takes care and smarts to fill them with profitable passengers and packages. If you're filling your plane and it isn't as profitable as you'd like, why buy more planes?
Really UPS is deciding that they don't want to be the McDonald's of package carriers, they want to be the TGI Fridays or Outback steakhouse of package carriers. Its really the same move that Delta made in the market of passenger carriers.
As to Amazon, their employment has gone nowhere but up. Automation is used to help their people, and people are still the center of sorting. I have no beef with UPS using a machine to eliminate repetitive tasks like applying labels, and making people's lives better perhaps, but to just come out and say, "This is how we'll cut the workforce" was crass.
At least in the Forbes article that started this off she didn't say "This is how we'll cut the workforce" She said:
So we’re looking at how we can use technology to automate some of the manual processes in our facilities. How we can introduce technology to eliminate the people tasks? A really good one is robotic labeling. Rather than people putting labels on packages, having robotic arms putting labels on packages. We have that under a pilot, and it’s progressing nicely.
I agree that this could've been a bit more diplomatic, mostly with a statement about keeping the workforce steady and/or growing it. Something like, "Putting labels on packages isn't the best use of our employee's time."
Ms. Tomé tenure as CEO is shaping up to be very much like Oscar Munoz's term at United. Fix and refine the strategic direction, then find and groom a successor. Its likely that how how her predecessor David Abney left, "Abney will serve as board chairman until he retires in September but will remain as a special consultant through the end of 2020, the company said." (USA Today
) he was asked to resign abruptly. Like Mr. Munoz, Tomé, was a board member who was asked to take over to repoint the ship.