00:10:38 · Romaine Bostick, S1, Carol Tomé, S0
[00:10:38] S3: Well, talk about some of those management changes. [00:10:40] S1: You recently sort of reorganized the structure of this company, a focus on obviously the international health care, the U.S. business, the global operations, and then commercial strategy. You've pretty much put in people for all of those roles, except for the commercial strategy role. [00:10:53] S3: Yes. Why? [00:10:54] S1: What's the holdup there? It's been a couple of months since that announcement. Are you looking for someone? [00:10:57] S2: So, I am so pleased with how the RE-ORG has developed in just a short period of time. You know, we run the most efficient global smart integrated network. But the truth is, we ran it like an international business, not like a global business. [00:11:13] S3: I'm sorry, what does that mean? [00:11:14] S0: Well, we had different standards. [00:11:15] S2: Some of the building standards that we had in the United States were different than the standards that we had outside the United States. Automation was different inside the United States than outside the United States. We run an airline, but our gateways were managed locally, not under the airline. [00:11:32] S0: I'm like, we have so much opportunity to.
00:11:32 · S0, Carol Tomé, S1, Romaine Bostick
[00:11:32] S0: I'm like, we have so much opportunity to. [00:11:34] S2: Globalize with standards and SLA service level agreements to support the commercial businesses. As efficient as we are, we have the best margins in the industry, as efficient as we are, we can be even more efficient. So we put our best operator, Nando Cesarone, in charge of that, and I couldn't be more pleased with what he's doing. Then we've got two P & L leaders. These are experienced UPSers, one running the U.S. and one running international health care and supply chain. And they're one of the reasons why the results were so good and why we've got so much confidence in the fourth quarter and beyond. [00:12:09] S1: A lot of analysts took note of the expansion of Nando Cesarone's duties, kind of overseeing all the physical stuff. And they immediately looked at that and said, that must be the successor to Carol Tomei. [00:12:19] S2: Oh, well, there's not been. I've got a bunch of potential candidates here. There's not been a successor called. And isn't that what leaders should do? They should develop strong succession plans. [00:12:29] S3: And you're doing that? [00:12:30] S0: And that's what I'm doing.
00:12:30 · S0, S1, Carol Tomé
[00:12:30] S0: And that's what I'm doing. [00:12:31] S1: When you are doing that, what is the ultimate goal here? Because we get back to this idea of growth. And you mentioned your stock price doubling the market cap. But, of course, this share has peaked back in 2022. They're down significantly from that. Investors are asking the question as to what are they buying? Are they buying a value company? Are they buying a growth company? I mean, what is your successor or, for that matter, you actually carrying forward here? [00:12:59] S0: Precision growth. This is a big, important value equation. precision growth. [00:13:06] S2: We want to be selective, focused, and balanced, grow in the right parts of the market, serve our customers better than anybody else, and create a whole lot of money doing that. So you'll see top line growth and profit growth. And in an addressable market, that's healthy. [00:13:19] S0: That's focused. [00:13:22] S2: And we're all excited about the future and lined up and ready to go. [00:13:27] S1: Is most of the cost cutting done? I know there's still a little bit left in the efficiency program. I know you said it was going to run through 2027.
00:13:27 · S1, Carol Tomé, S0
[00:13:27] S1: Is most of the cost cutting done? I know there's still a little bit left in the efficiency program. I know you said it was going to run through 2027. [00:13:32] S2: Yeah, it I don't think productivity is ever done. I think it's a virtuous cycle. When you think about just the RFID scanning that we've introduced into our company, it's actually not scanning but sensing, moving our company from a scanning to a sensing company. This is going to drive productivity like we've never seen before. Imagine all the package cars that go out for delivery every day. We had loaders loading packages into those cars and scanning them. Now the car senses the package. So we would go, used to go out with a misload. In other words, the wrong package was put on the package car and it couldn't be delivered. [00:14:11] S0: That's all behind us now. [00:14:14] S2: And we'll continue to invest in other capabilities that will drive productivity. [00:14:18] S1: How do you balance, though, this sort of technological progress that creates greater productivity with the human aspect of it? I mean, Sean O'Brien, the head of the Teamsters, has made it clear that automation and technology is going to be a key bargaining point when negotiations do finally start ahead of that 2028 expiration of the contract.
00:14:18 · S1, Carol Tomé, S0
[00:14:18] S1: How do you balance, though, this sort of technological progress that creates greater productivity with the human aspect of it? I mean, Sean O'Brien, the head of the Teamsters, has made it clear that automation and technology is going to be a key bargaining point when negotiations do finally start ahead of that 2028 expiration of the contract. [00:14:39] S2: So inside of our buildings, these are part-time jobs. And oftentimes these part-time jobs are held by students. So there's a lot of turnover inside of our buildings. So if automation comes into the building just with natural turnover, you just don't backfill for that. For our drivers, these are the brand people of UPS. Every day they're in front of our customers, belly to belly. They're not just delivering packages, they're doing good. Oftentimes a driver will save someone's life, pull them out of a burning builder. I have no desire to automate that or bring an autonomy to that. [00:15:14] S0: They're the face of UPS. [00:15:15] S2: And I believe, well, I believe that's where leadership is really focused is on that population. [00:15:20] S1: Have you thought about the contract negotiations? I know it's still, what, a year and a half away. [00:15:25] S0: It is. [00:15:26] S1: But I'm sure it's got to be in your radar. Sean O'Brien has been out talking about it in some cases, very profane ways. Do you have a relationship with him?
00:15:26 · S1, Carol Tomé, S0
[00:15:26] S1: But I'm sure it's got to be in your radar. Sean O'Brien has been out talking about it in some cases, very profane ways. Do you have a relationship with him? [00:15:35] S2: So I certainly have met Sean on several occasions and we invited Teamsters into our company over 100 years ago. And our approach has always been to have a constructive relationship with Teamster leadership. [00:15:47] S0: And I can give you an example of that. [00:15:50] S2: This summer we had a driver buyout program that was oversubscribed and Teamster leadership was very vocal about their displeasure with that program. So we met with them And we reached alignment on what was mutually satisfactory for both of us. So that's our approach to work with Teamster leadership. To your point, the contract is out until August 1st of 2028. [00:16:11] S1: Would you start those negotiations any earlier than that, though? [00:16:15] S2: So there's really no mechanism for starting early. I think for us, our focus right now is returning our company to growth. I will say this, Romain, as I reflect back on our company history now over 100 years with Teamsters in our company, I believe other than our founder, I will be the only CEO who's negotiated two union contracts, two Teamster contracts. And I have a lot of lessons learned from the 2023 negotiation. I'm not going to share those lessons learned with you today, but I have a lot of lessons learned. I think that gives me a distinct advantage as we think about the upcoming contract, which again, it's not till 2028.