United Parcel Service CEO Carol Tomé announced employee cuts during an earnings call on Tuesday, citing the company’s “difficult and disappointing year.”

Tomé expects the layoffs to save the company around $1 billion and said most jobs will be cut within the first half of the year. UPS says the cuts will affect less than 3% of its total workforce of more than 500,000 employees. Managers and contractors will reportedly make up most of the cuts.

Did the new union contract play a role in the layoffs? UPS avoided a strike last summer by agreeing to pay increases for International Brotherhood of Teamsters union members. Before that agreement was announced, the company lost business to competitors from customers concerned that a potential strike could affect shipments.

The company said it ultimately reacquired about 60% of that lost business by the end of the year. The International Brotherhood of Teamsters says no union jobs will be affected by the cuts.

This story originally appeared in WORLD. © 2024, reprinted with permission. All rights reserved.