Amazon plans to lay off 353 warehouse workers across two warehouse facilities in Maryland next month as the e-commerce giant works to pare back its headcount and continue its move away from labor “overcapacity.”
The company said in a filing with the Maryland Department of Labor it plans to shutter facilities in Hanover and Essex by Oct. 25, citing plant closures as the reason.
The Hanover facility totals 154,334 square feet and employs 190. The Essex building totaled 272,500 square feet and employs 163. Both addresses were used as delivery stations.
“We regularly look at how we can improve the experience for our employees, partners, drivers and customers, and that includes upgrading our facilities,” Amazon spokesperson Alisa Carroll said in a statement provided to Sourcing Journal Thursday. “As part of that effort, we’ll be closing our delivery stations in Hanover and Essex and offering all employees opportunity to transfer to several different delivery stations close by. These facilities provide upgraded amenities, including onsite parking and breakroom with Canteen Vending.”
The layoffs follow a quarter of big cuts across the organization, with Amazon reporting a 99,000-reduction in its headcount between the first and second quarters of this year. It capped the second quarter ended June 30 with a little over 1.5 million full- and part-time employees.
The change was driven by different circumstances in the operating environment. Last year the company had cut its net workforce by about 27,000, compared to the 14,000 people it added in the first quarter as the Omicron variant took hold.
“So we’re pretty transparent about the fact that we had hired a lot of people in Q1 for the coverage of the Omicron variant,” Brian Olsavsky, Amazon senior vice president and chief financial officer (CFO), told analysts in late July when asked about how the company thinks about headcount as it moves into the holiday season. “Luckily, that variant subsided and we were left with a higher headcount position. That has come down through adjusting our hiring levels and normal attrition and was pretty much resolved by the end of April or early part of May.”
Amazon, Olsavsky added, still has about double what its headcount was in early 2020, just before the onset of Covid domestically.
“There will be adjustments to that [headcount] as we move forward into more holiday-level demand. Right now, we see a stabilization in the workforce,” Olsavsky said.
The CFO was speaking more broadly to overall company hires, which would include those in the engineering, technical and other aspects of the business and not just warehousing and fulfillment.
The warehouse cuts represent a swing of the pendulum for Amazon as it climbs out from the previous strategy on labor in the back half of last year that was focused on padding its workforce and “chasing labor” as Olsavsky described in April, amid growth of the company’s real estate footprint.
“The issue is switched from disruption to productivity losses to overcapacity on labor,” he said. “And we believe that will dissipate.”
A shift is taking place across logistics as companies right-size workforces that were forced to quickly adjust during the e-commerce boom of the pandemic. As demand normalizes, logistics workforces are also being forced to make the adjustment.
Third-party logistics provider GXO Logistics said in a late July filing with the Texas Workforce Commission it would cut 116 jobs by Sept. 30.
GXO is a contract logistics company, meaning it helps retailers and other brands who outsource management of their warehouses and broader supply chains.
The company also has plans to close a warehouse in southeast Wisconsin this month, shedding 144 workers there, following a customer decision to relocate to northern Kentucky.