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Amazon plans to lay off thousands of employees, according to report

Nov. 14, 2022 Updated Mon., Nov. 14, 2022 at 7:09 p.m.

The logo is displayed outside the company’s fulfillment center in Kenosha, Wis., in August.  (Jim Young/Bloomberg)
The logo is displayed outside the company’s fulfillment center in Kenosha, Wis., in August. (Jim Young/Bloomberg)
From staff and wire reports

Amazon plans to lay off about 10,000 people in corporate and technology jobs starting as soon as this week, people with knowledge of the matter said, in what would be the largest job cuts in the company’s history.

The cuts will focus on Amazon’s devices organization, including the voice-assistant Alexa, as well as at its retail division and in human resources, said the people, who spoke on condition of anonymity because they were not authorized to speak publicly, the New York Times reported.

The total number of layoffs remains fluid. But if it stays around 10,000, that would represent roughly 3% of Amazon’s corporate employees and less than 1% of its global workforce of more than 1.5 million, which is primarily composed of hourly workers.

In the Spokane area, the region’s labor market diversity would create opportunity for laid-off technology workers from Amazon and other companies to find employment in multiple other industries, including health care and education, said Doug Tweedy, a regional economist at the Washington state Employment Security Department.

“The thing that I’m seeing is the number of jobs that have been created since the pandemic has created a worker shortage,” Tweedy said. “Those workers that are being impacted have opportunities in other industries. An IT worker can cross industry lines. They could go into health care, hospitals, even in manufacturing with automation.”

Amazon’s regional footprint has rapidly expanded in the region, with its two fulfillment centers in Airway Heights and Spokane Valley, in addition to an air cargo facility at Spokane International Airport.

While the current number of Amazon workers in the region is unknown, the company was estimated to have more than 4,000 workers as of June 2021, making it among the larger employers in the Spokane area.

Amazon’s planned retrenchment during the critical holiday shopping season – when the company typically has valued stability – shows how quickly the souring global economy has put pressure on it to trim businesses that have been overstaffed or underdelivering for years.

Amazon would also become the latest technology company to lay off workers, which only recently it had been fighting to retain.

This year, the e-commerce giant more than doubled the cap on cash compensation for its tech workers, citing “a particularly competitive labor market.”

Changing business models and the precarious economy have set off layoffs across the tech industry.

Elon Musk halved Twitter’s head count this month after buying the company, and last week Meta, the parent company of Facebook and Instagram, announced it was laying off 11,000 employees, about 13% of its workforce.

Lyft, Stripe, Snap and other tech firms have also laid off workers in recent months.

Brad Glasser, an Amazon spokesperson, declined to comment.

Grant Forsyth, Avista Corp. chief economist, said if Amazon were to lay off workers, the impact would likely be centered in the Puget Sound region.

“But for technology firms in our region, it does cause some loosening up in the labor market, so they can fill positions because there will be more people looking for work,” he said.

In addition, potential technology industry layoffs could take pressure off of wages in the sector. Layoffs may also have implications on household spending and state tax revenue, Forsyth said.

He anticipates the Washington State Economic and Revenue Forecast Council will be closely watching what occurs with Amazon’s reported plans to layoff workers. The council provides economic activity and general fund revenue forecasts for the Legislature and Gov. Jay Inslee that will be used as a basis for preparing the state budget, according to its website.

“Our state’s tax system is heavily weighted toward people spending more, so what’s going to happen as people are laid off is we’ll see downward pressure on spending in the state and, of course, that will potentially flow through the state’s coffers,” Forsyth said.

The pandemic produced Amazon’s most profitable era on record, as consumers flocked to online shopping and companies to its cloud computing services. Amazon doubled its workforce in two years, and funneled its winnings into expansion and experimentation to find the next big things.

But earlier this year, Amazon’s growth slowed to the lowest rate in two decades, as the bullwhip of the pandemic snapped. The company faced high costs from decisions to overinvest and rapidly expand, while changes in shopping habits and high inflation dented sales.

Amazon experienced a slight rebound in its latest quarter. But it has cautioned investors that growth could weaken again, possibly falling to its lowest pace since 2001.

The company has told Wall Street that it has tightened its belt in the past and can do so again.

Last week, Amazon executives met with institutional investors, according to three people, just as its stock sank to its lowest level since the early days of the pandemic, erasing $1 trillion in value since Andy Jassy took over as CEO last year.

Jassy, who previously ran Amazon’s lucrative cloud computing business, has been closely scrutinizing businesses to trim costs quickly. He initially pulled back on a warehouse expansion that was supercharged during the pandemic, then moved to other parts of the company.

In recent months, Amazon has also closed or pared back a smattering of initiatives, including Amazon Care, its service providing primary and urgent health care that failed to find enough customers; Scout, the cooler-size home delivery robot, that employed 400 people, according to Bloomberg; and, a subsidiary that sold sewing supplies for three decades.

From April through September, it reduced head count by almost 80,000 people, primarily shrinking its hourly staff through high attrition.

Amazon froze hiring in several smaller teams in September. In October, it stopped filling more than 10,000 open roles in its core retail business.

Two weeks ago, it froze corporate hiring across the company, including its cloud computing division, for the next few months.

That news came so suddenly that recruiters did not receive talking points for job candidates until almost a week later, according to a copy of the talking points seen by the New York Times.

Devices and Alexa have long been seen internally as at risk for cuts.

Alexa and related devices rocketed to a top company priority as Amazon raced to create the leading voice assistant, which leaders thought could succeed mobile phones as the next essential consumer interface.

From 2017 to 2018, Amazon doubled staff on Alexa and Echo devices to 10,000 engineers. At one point, any engineer getting a job offer for other Amazon roles was supposed to also get an offer from Alexa.

The company has sold hundreds of millions of Alexa-enabled devices. But Amazon has said the products are often low margin and other potential revenue sources such as voice shopping have not caught on.

In 2018, Echo and Alexa lost about $5 billion, said a person with knowledge of the finances. When Amazon introduced new devices this fall in an annual event, it was notably more restrained than past years when it had featured zany products such as a sticky note printer and $1,000 home robot.

Amazon’s retail business, which covers its physical and online retail business and its logistics operations, has been under strain after the surge of demand and breakneck expansion during the pandemic.

The company has said it has pulled back expansion plans, and has told investors it sees uncertainty with consumers.

“We’re realistic that there’s various factors weighing on people’s wallets,” Brian Olsavsky, the finance chief, told investors last month. He said the company was unsure where spending was heading, but “we’re ready for a variety of outcomes.”

Spokesman-Review staff writer Amy Edelen contributed to this report.

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