Amazon closes and abandons plans for dozens of warehouses in the United States
Just this week, Amazon warned officials in Maryland that it plans to close two delivery stations next month in Hanover and Essex near Baltimore, which employ more than 300 people. The moves are a stark contrast to years past, when the world’s largest e-commerce company typically entered the fall as it rushed to open new facilities and hire thousands of workers to prepare for shopping season. Holidays. Amazon continues to open facilities where it needs more space to meet customer demand.
“There are still significant cuts to be made before the end of the year, in North America and the rest of the world,” said Marc Wulfraat, founder and president of MWPVL. “That said, they continue to bring new facilities into service this year at an astonishing rate.”
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Maria Boschetti, a spokeswoman for Amazon, said it’s common for the company to crawl multiple sites at once and make adjustments “as needed across the network.”
“We weigh a variety of factors when deciding where to develop future sites to better serve customers,” she said in an emailed statement. “We have dozens of fulfillment centers, sorting centers and delivery stations under construction and evolving around the world.”
The Maryland closures are part of an initiative to shift work to more modern buildings, Amazon says. “We regularly review how we can improve the experience for our employees, partners, drivers and customers, and that includes upgrading our facilities,” Boschetti said. “As part of this effort, we will be closing our delivery stations in Hanover and Essex and offering all employees the option of relocating to several different delivery stations nearby.”
CEO Andy Jassy has pledged to unravel some of a pandemic-era expansion that has plagued Amazon with a glut of warehouse space and too many employees. The company generally weaned its ranks of hourly workers by leaving vacancies open, slowing hiring, and tightening disciplinary or productivity standards. But warehouse closures are also part of the mix, and workers are preparing for more. During the second quarter, Amazon’s workforce shrank by about 100,000 jobs to 1.52 million, the largest quarter-over-quarter contraction in the company’s history.
The Seattle company also sought to sublet at least 10 million square feet of warehouse space, Bloomberg reported in May.
When home shoppers rushed online during the pandemic, Amazon responded by doubling the size of its logistics network over a two-year period, a rapid build that outpaced competitors and partners like Walmart Inc., United Parcel Service Inc. and FedEx Corp. For a while, Amazon was opening a new warehouse somewhere in the United States about every 24 hours. Jassy told Bloomberg in June that the company had decided in early 2021 to build up its forecast for buyer demand, err on the side of having too much warehouse space rather than too little.
Wulfraat said most of the closures announced this year are delivery stations, smaller buildings that deliver already-packaged items to drivers. The facilities that have been canceled include several planned distribution centers, giant warehouses containing millions of items. MWPVL estimates that Amazon operates more than 1,200 logistics facilities, large and small, in the United States.
More belt-tightening could complicate Amazon’s already strained relationship with organized labor. Earlier this year, an upstart union started by a fired Amazon worker won a historic victory at a company warehouse in Staten Island, New York. A federal labor official on Thursday rejected Amazon’s offer to cancel the result. Last month, workers at an Amazon plant near Albany, New York, filed a request to hold a union election there.
It’s hard to gauge how much overcapacity Amazon has to manage, and some analysts think the extra space will come in handy during the Christmas holiday season.
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