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Economy

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FedEx using buyouts to slash workforce

– FedEx plans to offer some employees up to two years’ pay to leave the company starting next year.

The voluntary program announced last week is part of an effort by the world’s second-biggest package delivery company to cut annual costs by $1.7 billion within three years.

The restructuring is a response to a shift by customers away from premium package-delivery services and toward slower, less expensive modes as the global economy struggles to grow.

Employees who volunteer will receive four weeks of pay for every year of service, capped at two full years of base pay. FedEx has said previously that the buyouts should reduce “fixed head count by several thousand people.”

Those eligible will be notified in February and have until April to apply. They’ll find out in May whether they are accepted. The first wave of employees will leave May 31, the last day of FedEx’s fiscal year.

Founder and CEO Fred Smith said in August that most of the cuts will come in the company’s Express and Services units, which have been hurt the most by the global economic conditions. Most of those employees are in the U.S.

The Express unit is where FedEx got its start in 1971, and it is still the company’s biggest segment by far. The division moves 3.5 million packages on an average day, mostly by air.

It’s been hit hard as customers shift to slower delivery methods such as ground delivery and ocean shipping to conserve cash. Also, as technology products get lighter, FedEx charges less to ship them.

FedEx Services is FedEx’s behind-the-scenes logistics division, but it also includes FedEx Office, formerly Kinko’s.

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