A confrontation this week between Amazon and its U.S. warehouse workers over health risks posed by the coronavirus outbreak escalated significantly on Wednesday, when leaders of some of the country’s largest labor unions sent a letter to Amazon (AMZN) CEO Jeff Bezos calling on the company to temporarily close all facilities until it addresses the infection dangers.
A nationwide closure would be crushing for the company, crippling its distribution network amid a spike in demand for Amazon’s delivery service as hundreds of millions have been forced into their homes, several logistics experts and a Wall Street analyst told Yahoo Finance. Still, the experts acknowledged that the company will likely have to reach a middle ground with the workers.
Dale Rogers, a professor of logistics and supply chain management at Arizona State University, called potential widespread warehouse closures “disastrous,” noting that even if the closures were temporary, it would prove challenging for the company to quickly reopen the large facilities.
“People think you can turn something off and turn it back on, and it works the same — but that’s not the case,” Rogers adds. “Right now they’re being asked to deliver a lot more stuff to meet more demand.”
Warehouse closures would deliver a “body-blow disruption” to Amazon that would pose “major logistical issues,” says Dan Ives, an equity analyst at Wedbush focused on tech companies. “It would obviously be a clear concern for investors in terms of the e-commerce piece.”
On Monday, workers at a warehouse in Staten Island — where an employee tested positive for coronavirus last week — walked out during a shift over infection fears, and the dispute deepened when later that day the company fired one of the participating workers, Chris Smalls, for allegedly violating social distancing guidelines. Smalls, union leaders, New York’s attorney general, and elected officials like Democratic New York Rep. Alexandria Ocasio-Cortez have publicly criticized the company’s conduct toward him.
Two days later, leaders of the some of the nation’s largest labor organizations including AFL-CIO, the Service Employees International Union, and the American Federation of Teachers — which count tens of millions of members combined — called on the company for the reinstatement of Smalls and the temporary closure of all U.S. warehouses as well as full compensation for workers until it addresses their health concerns.
“We write to you today shocked at reports that Amazon warehouses are not practicing the protocols necessary to protect the well-being of your workers and of the public,” says a letter signed by the labor leaders and addressed to Jeff Bezos as well as other Amazon executives.
The letter questions the veracity of Amazon’s public statements about steps it has taken to address safety concerns at its facilities, which include enhanced cleanings the company has conducted at some warehouses and paid sick leave it has made available for all employees diagnosed with coronavirus, among other steps taken to address the health risks.
The letter is also signed by dozens of elected officials in New York, where Attorney General Letitia James is considering legal options to punish Amazon for the seemingly retaliatory firing of Smalls, Yahoo Finance’s Alexis Keenan reported. (James did not sign the letter).
Workers at Amazon warehouses nationwide in recent weeks have accused the company of having inadequate safety measures and insufficient paid sick leave. In at least ten 10 different Amazon facilities, employees have tested positive for the coronavirus, the Washington Post reported. The company has more than 110 fulfillment centers in North America, according to its website.
In response to the letter, Amazon Spokesperson Kristen Kish said, “These accusations are simply unfounded. Nothing is more important than the safety of our teams.”
“We are encouraging those who are unwell to stay home and taking extreme measures to keep people safe in our buildings,” she adds. “Since the early days of this situation, we have worked closely with health authorities to proactively respond, ensuring we continue to serve customers while taking care of our associates and teams.”
Amazon plans to implement temperature checks and provide protective masks for employees at all of its facilities in the U.S. and Europe by next week, Reuters reported on Thursday.
The closure of all U.S. Amazon warehouses would be “a huge disruption,” says Yossi Sheffi, a professor at the MIT Center for Transportation and Logistics.
Pointing to the dependence of many Americans on Amazon for shipments of food and medical supplies, Sheffi said it’s highly unlikely such a closure would take place.
“It’s not going to happen,” he says.
Rogers and Ives both shared that sentiment, saying a widespread warehouse closure would not come about because it would hurt the company and consumers alike.
But the company will likely have to compromise with the workers in order to ensure that they’re safe on the job, the experts said.
“It’s a clear balancing act for Amazon,” Ives says. “They’re going to have to come to some middle ground.”