The Wizard of Fedex
 

It’s important to know who the wizard is behind the curtain “DRIVE”-ing the change at Fedex.


https://www.currentaffairs.org/2023/02/exposing-the-secretive-and-sinister-work-of-mckinsey-co

To quote a section of the article -
“Yes, that’s correct. The easiest way to boost profits and the bottom line is to cut expenses. It’s much more difficult to actually produce a better product or invent something—that’s on the revenue side. That takes work, creativity, and skill. It doesn’t take any damn skill to lop off a quarter of the workforce and say, “good luck,” or to offshore those jobs, as they [have] over and over again. They were one of the biggest cheerleaders of offshoring, and that obviously has an effect on the families of these people who lost their jobs, but also on the communities in which they live. So, they have had a hugely negative impact in many communities in this country.”

Instead of offshoring think “outside airlift”. These people are bad news!

Is McKinsey on the property here at FedEx?

DE Shaw is definitely on my radar at the moment.

https://www.fordharrison.com/

This is our enemy. Every airline retains their services. They have an office in Memphis. Why do you think that is?

At this point, no they aren’t. They are on the micro scale of things. On April 5th I fear we will see a tectonic shift like no other in this company’s existence. FH is the least of our worries.

Nah, nothing will change for us. They still had money for stock buybacks in December. Don't let them scare you into accepting anything less than an industry leading contract.

That was a disturbing interview to read. It is unsettling that they have been here poking around looking for ways to cut, outsource, and streamline. I tend to agree with you that the fundamentals of the company we have known are at risk. There is posturing for a contract (FH), then there is this which seems to be something much more threatening.

Funny that our Secretary of Transportation worked for McKinsey from 2007 to 2010.

Interesting article! It seems that they don’t have a problem with conflict of interests, in that light, maybe the union should consider hiring them. We could get some insight into how the company does negotiations and we could respond accordingly. Probably not realistic, but food for thought.

That is a terrifying article.

Good for them, maybe they can advise them to pay an industry leading contract now. It’s only getting more expensive.

DE Shaw
 

https://youtu.be/Vt6P2gSFDHo

Dean Maciuba seems to think a 30-40 % reduction at Express might happen. He also touches upon activist investor DE Shaw and their role in reshaping FedEx. They’re driving the company right now. See video link above. 41:00 and 48:50 marks are eye opening.

https://www.linkedin.com/in/dean-maciuba

He also had an interesting piece many months ago detailing DE Shaw going directly to the ISPs (Ground Contractors) with questions. This was seen as highly unusual and a possible sign that DE Shaw no longer has confidence in Raj and senior leadership at FedEx. See below:

https://ci.linkedin.com/posts/dean-m...file_like_view

sounds ominous…please elaborate

I think he is referring to the “ground” side of Express. Because he is saying it in the context of Ground taking over.

DE Shaw has 3/15 seats at the board. Oh by the way FS is not only still on the board but the executive chairman and chairman of the board in case you all forgot. Pretty sure the wizard is still FS.

There is this narrative going around that somehow just because FS stepped down as CEO he has just vanished into thin air and is going to let his company get eaten up by these activist investors and consultants. Is that whats happening? He is still very involved even if he is not in the spotlight as the CEO.

While alarming to read articles like this, realize we as outsiders only see or hear about a small fraction of what goes on at that level and we cannot come to a true conclusion of what will or won’t happen with the company because we don’t have all the information.

I think you underestimate their influence. They got extra seats almost immediately just because they demanded them. That sure looks like "calling the shots" to me.

Forgive me for my ignorance, but can you explain to me how or what leverage they had to demand their way into these board seats?

They have zero influence on how we vote for an industry leading contract. Activist have been around forever and boards change constantly.

Forever and ever, amen!

if we reduced our flight crews by 30-40 percent that would put us real close to the same number of pilots our closest competitor has. I have been saying for years we are turning into IPS minus the brown uniforms…

that video is referring to Express trucks.

https://www.cnbc.com/2022/06/14/fede...-to-board.html

https://capital.com/fedex-activist-i...-price-de-shaw

A quick google search yields a bunch on the topic. Though they own under 1% of the shares, yet they have clearly established a voting bloc on the board - a bloc that is influential enough that sitting directors agreed to dilute their own influence in order to give it to DE Shaw. I'd love to know how these other BOD members were "influenced".

That’s right. They (DE Shaw) initially had the 2 seats with the option of a third. First 2 were Vena (Union Pacific) and Lane (Merrill Lynch). Then they added Gorman (Delta Airlines). FedEx BOD went from 12 seats to 15 seats.

It would be interesting to find out if the announcement to utilize additional belly freight via pax carrier coincided with the addition of Gorman. Even if it did, it could just be a coincidence. Hard to tell.

DE Shaw wants returns on their investment. The stock hasn’t performed so well since they initially vetted FedEx, so I would think they are going to demand substantial changes occur (DRIVE?) to boost margins and drive up the share price. Taking a meat cleaver to staffing has this effect. Last round of layoffs seemed to boost the share price.

Yes they are! As others have posted, the board is putting pressure on the company to transform itself and reduce costs. FedEx has retained McKinsey to help in the structuring of those cost savings initiatives known as Drive. As the article notes, their means of cost savings can be quite harsh. More details of Drive will be disclosed at the shareholders/pilot meeting on April 5th. Guess we’ll get a better picture of the future then.

They already increased dividends by over 50% and bought back $1,500,000,000 in stock. But that wasn’t enough. Enter McKinsey and their DRIVE initiative.

The Time for Scope Is Now!

I say we all pool our money and buy controlling interest in DE Shaw after which we immediately hack the living $h!t out of it.

I guess we “the company and investors” have forgotten what made us millions and saved the world was OUR lift capability. You know all the belly freight opportunities dried up during COVID!!!, when NO passenger airlines were flying. They would be crazy to rely on that capability to carry the lions share of our freight!

Don’t fall for the hype. Industry leading and no concessions!

that was yesterday. what did you do for us today.

"laser focused on execution, and right sizing"
"looking forward, not in the rear view mirror"
"optimizing"

etc etc McKinseyisms

This. Forever and ever, amen.

hallelujah.

Yep! And let’s show them how committed we are by showing up on their front door April 5th!

"According to McKinsey, they put out a release at one point saying that modest profits were no longer acceptable. To create an outstanding corporation, managers had to keep their stock price high, and cutting costs by layoffs was usually easier and quicker than boosting revenue. In their view, an average corporation that’s just keeping families fed and making products that are used and appreciated is not good enough. You got to make extraordinary profits, and that’s what they help corporations do. And they charge a lot of money for it."

The axe is about to fall... what a messed up thing for a profitable company to do.

Can't say I'm an avid reader of the NYT, but this was a great expose. Just bought the book for further reading.

That checks out with the new PSP: Profit Service People

Sorry, that has been replaced with Profit Service Profit!

I think you meant "Profit, Stock, Profit".

I'm not really seeing the service piece being prioritized either.

This for sure. Stock price and buybacks are more important than service to the current FedEx. Our reputation has never been worse.

I have been talking with ramp managers from different EUR stations about how they see the operation. Every one has told me how concerned they are about FDX and its handling of the old TNT flying, and for how our reputation in Europe has just gone down the fking tubes in a short couple of years.

The USA sucks too. My last two packages delayed in the system. Don’t even try to compare our customer website against UPS. UPS customer interface blows us out of the water.

You paying attention RS? Did Fred walk away with 100% of management's give-a-damn attitude about the long term of this company?

It’s amazing that they pay someone to tell them layoffs will boost profit. Of course it will. For a very short period of time. Then the fallout is tremendous. In this labor environment, they'll struggle to bring back lost talent. When they do, it’ll cost them more than it did to retain them in the lean times. I’m in my 5th decade of life and have watched this game play out over and over again. How many times must we stick our finger in the socket before we learn shrinking to profitability rarely works. SMH.