Amazon is hiring fewer workers this holiday season, a sign that robots are replacing them
Amazon is hiring fewer workers this holiday season, a
sign that robots are replacing them
By Alison Griswold November 2, 2018
Amazon is staffing up for the holiday rush with around
100,000 additional hires. As big as that number sounds, it’s actually fewer people
than the e-commerce giant added in either the 2016 or 2017 holiday seasons,
when it brought in 120,000 additional workers.
Citi analyst Mark May says he thinks the reduction in
seasonal hiring is strong evidence that Amazon is succeeding with plans to
automate operations in its warehouses.
“We’ve seen an acceleration in the use of robots within
their fulfillment centers, and that has corresponded with fewer and fewer
workers that they’re hiring around the holidays,” May told CNBC on Nov. 2. He
added that 2018 is the “first time on record” Amazon plans to hire fewer
holiday workers than it did the previous year.
“Since the last holiday season, we’ve focused on more
ongoing full-time hiring in our fulfillment centers and other facilities,”
Amazon spokesperson Ashley Robinson said in an email, adding that the company
has “created over 130,000 jobs” in the last year. “We are proud to have created
over 130,000 new jobs in the last year alone.”
Amazon bought robotics company Kiva Systems for $775
million in 2012, and began using its orange robots in warehouses in late 2014.
By mid-2016, it had become clear just how big a difference those robots were
making. The little orange guys could handle in 15 minutes the sorting, picking,
packing, and shipping that used to take human workers an hour or more to
complete. In June 2016, Deutsche Bank predicted Kiva automation could save
Amazon nearly $2.5 billion (those savings dropped to $880 million after
accounting for the costs of installing robots in every warehouse).
Robinson said Amazon has added 300,000 full-time jobs
since 2012. ”It’s a myth that automation replaces jobs and destroys net job
growth,” she said by email. “Our teams work alongside more than 100,000 robots
at over 26 fulfillment centers worldwide and we are excited to continue
increasing the technology we use at our sites while growing our global
workforce.”
The success of robots thus far may also have contributed
to Amazon’s Oct. 2 decision to raise its minimum wage to $15 an hour for all US
employees, affecting around 250,000 full-time employees and 100,000 seasonal
workers. That move is less financially risky if Amazon sees itself rapidly
replacing these human workers with robots and other automated systems.
In an Oct. 15 research note, Morgan Stanley analyst Brian
Nowak was optimistic about Amazon’s ability to offset higher wages through
automation. Nowak noted that Kiva robots were already enabling smaller Amazon
warehouses to handle the same capacity as other centers, and leading to a drop in
fulfillment costs. “We think improved fulfillment efficiency is set to offset
the aforementioned wage increase,” he wrote.
In other words, the 2018 holiday season could be a
harbinger of what’s to come.
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