Fred Smith Floats Idea Of Higher Fedex
“I am sure we are going to be doing a lot of things as a result of this tax bill because it was a very, very good policy.”
That is what Fred Smith — founder, chairman, and CEO of Memphis-based FedEx Corp. — told Stuart Varney, host of the Fox Business Network’s Varney & Co. during a Tuesday, Jan. 16, interview.
What exactly those things might be Smith did not say, but he did say the company’s board would need to approve any items before announcements were made.
When Varney asked if FedEx could do something similar to Walmart and give bonuses to one million workers, Smith responded, “My guess is we will be responsive to the tax bill.” He continued that it might not be in the form of employee bonuses but rather increased wages — something he said FedEx does every year.
Varney Then Asked If Tax Reform Would Translate To Higher Wages.
“It could well be,” Smith said. “For the very simple reason that the tax bill corrects something that has been a real problem for American business for years, and that is the punitive tax code that we used to have that dissuaded investment. And, investment is the only way to make blue-collar workers — people who don’t have college degrees — more productive and have more income. You can hire six people to move a pile of dirt or you can hire one person with a bulldozer. The difference is the bulldozer. The bulldozer driver makes a lot more money than the people with the shovels.”
In other words, an investment in infrastructure can equal an investment in people.
Varney also asked Smith whether Amazon’s investment into its own delivery fleet worried FedEx. Smith responded by flexing FedEx’s muscles, citing the company’s extensive inventory of 650 planes, 13 million daily shipments, and nearly half-a-million employees.
The topic of drones was briefly touched on, as well. Smith acknowledged efforts were underway for autonomous vehicles and aircraft at FedEx but said he did not like to talk specifics about things that might not later appear in operations.
“I think, some of these things, in the next couple of years you will see a lot of announcements from FedEx,” Smith said.
The bottom line: Smith, who has historically proved very vocal on the topic of tax reform, said the recent action was a long time coming.
“It will allow us to put more into the business with less risk, and that was the big issue that was solved with the tax bill,” Smith said. “That and the ability to bring money that was locked overseas back to the United States.”
FedEx has more than 400,000 employees, averages 13 million shipments per business day and connects more than 220 countries and territories. In fiscal 2017, FedEx reported $60.3 billion in annual revenue. In Q2 2018, the company had $16.3 billion in revenue.