UPS is closing dozens of facilities in the United States, but an Atlanta-area government agency appears to have cut a deal to prevent the global shipping company from shutting down a facility in its jurisdiction.
The Development Authority of DeKalb County is providing UPS with a $10.1 million property tax break in exchange for UPS maintaining its processing center in the county, according to public records. UPS expects to invest about $151 million to upgrade the parcel sorting facility at 3930 Pleasantdale Road in Doraville, Georgia, as part of the agreement.
UPS still plans to reduce its headcount at the facility by about 15% to 1,700 jobs, according to a notice from DeKalb County. The development authority, also known as Decide DeKalb, approved the tax break last week.
UPS is pivoting away from high-volume, low-profit-margin deliveries for its largest customer, Amazon, to expand shipping services where the Atlanta-based company can charge a premium. On Nov. 1, the company acquired Andlauer Healthcare Group, which provides the premium service of shipping pharmaceutical products in Canada, including certain products that must be kept cold.
UPS said on an earnings call last month that it has closed 93 buildings in the United States this year and completed a voluntary retirement program for certain delivery-van drivers. UPS has not provided a full list of specific properties that have closed. It is also automating some functions in package sorting centers and upgrading its technology.
As a result of the building closures, expansion of automation processes, technology upgrades and job cuts, UPS expects to trim expenses by about $3.5 billion this year, Brian Dykes, chief financial officer of UPS, said during the Oct. 28 conference call.
In reference to the Atlanta-area facility, a UPS spokesperson said in an emailed statement, "UPS looks forward to continuing to contribute to the community with our Pleasantdale hub serving as one of several key anchors in the Atlanta area." The spokesperson declined to answer additional questions.
The management of UPS' property portfolio has also included at least one sale-leaseback. Earlier this year, UPS sold at least four industrial and office properties in Atlanta, Chicago and Southern California to Fortress Investment Group and planned to continue an office building in the Atlanta area.
UPS has renovated other distribution facilities in the U.S. to accommodate its automated package sorting processes, Nando Cesarone, executive vice president and U.S. president, said during the conference call. UPS recently upgraded sorting centers in Houston and Mesquite, Texas, he said.
For the record
Arnall Golden Gregory and Holland & Knight served as legal counsel to the DeKalb County Development Authority in connection with the agreement with UPS.