CEO Frederick Smith said continued growth at the FedEx Express world hub and other Memphis-based enterprises should benefit the city. He made the comments near the end of the 2012 Investors & Lenders Meeting.
The Commercial Appeal (http://bit.ly/SU0tCU) reports that Smith said most of the cost cuts will come in the company's Express and Services units, which have been hurt the most by the global economic conditions. He said a voluntary buyout program announced in August should reduce "fixed head count by several thousand people."
A "substantial" number were expected to come from Memphis, though the total might not be known until next year.
"It's a reasonably small number, but because they are highly compensated staff personnel, it's a big number on the bottom line on a go-forward basis," Smith said.
Smith said the FedEx Express world hub's latest expansion, which came on line Oct. 1, plays a significant part in the profit improvement plan.
"I think there will be more volume coming through Memphis. ... One of the big reasons that addition was put there was to flow a lot more intercontinental traffic in and out of Memphis," he said.
The impact of the employee cuts could be significant to the region because FedEx is the city's largest private employer.
"We don't anticipate having more details about the voluntary buyouts until the second half of fiscal 2013," FedEx Express president and CEO David J. Bronczek said.
Bronczek said improvements at Express should be mostly complete by 2015 and none of the changes would compromise safety or customer service. With the changes, the company expects savings in several areas, including $400 million by making staff functions and processes more efficient, $300 million by modernizing its fleet and $350 million by changing its U.S. domestic express network.
Officials said the changes would not compromise safety or customer service.
"We are going to accomplish this with zero impact to our customers," Bronczek said.
Information from: The Commercial Appeal, http://www.commercialappeal.com