Amazon CEO explains thinking behind layoffs as unionized warehouse workers protest outside

By Catherine Thorbecke, CNN Business

Amazon CEO Andy Jassy on Wednesday said an “uncertain” economy pushed the e-commerce giant to move forward with rare and wide-ranging layoffs after having gone on a significant hiring spree for much of the pandemic.

“We had the lens of a very uncertain economic environment, as well as our having hired very aggressively over the last several years,” Jassy said in an interview at the New York Times DealBook summit on Wednesday. “We just felt like we needed to streamline our costs.”

The remarks came as part of Jassy’s first interview since Amazon confirmed earlier this month it had begun laying off corporate workers, with plans for layoffs to continue into early next year. The company is reportedly planning to cut up to 10,000 employees, though it has not confirmed a figure.

Amazon, more than most tech companies, experienced a staggering pandemic boom as more customers shifted their spending online during the health crisis. Like other tech companies, it has since changed course and begun cutting employees as it confronts a shift in demand as well as rising inflation and recession fears.

“A lot has happened in the last few years that I’m not sure people anticipated,” Jassy said. “You just look in 2020, our retail business grew 39% year-over-year, at a $245 billion annual run rate, which is unprecedented, and it forced us to make decisions in that time to spend a lot more money and to go much faster in building infrastructure than we ever imagined we would.”

“We built a physical fulfillment center footprint over 25 years that we doubled in 24 months,” Jassy said.

Even so, Jassy said he thinks the team “made the right decision” regarding its infrastructure build out. Regarding the hiring spree, Jassy said he now looks at is as a “lesson for everyone.”

“I don’t necessarily think it was the wrong thing to have been doubling down, because we were growing so well and we had so many ideas that we thought were good for customers and good for the business, but I think it’s a good lesson, I think, for everybody,” Jassy said. “When you’re hiring, even when things are going really well, that it’s good to think about if there’s some kind of sudden change, even one that you just have a little bit of a hard time imagining. Would you like the incremental headcount that you’re adding at that time, or do you want to be a little bit more conservative?”

Legal battle with union is ‘far from over’

As Jassy spoke, Amazon warehouse workers who helped organize the company’s first-ever US labor union at a Staten Island facility gathered in the rain outside of the venue to protest their chief executive’s appearance in New York.

Despite the landmark union victory in April, Amazon has so far refused to formally recognize the grassroots worker group known as the Amazon Labor Union, or come to the bargaining table. The company has aggressively pushed back against the workers’ victory through the National Labor Relations Board (NLRB).

While the NLRB battle indicates the labor union is on the cusp of being certified, Jassy suggested Amazon’s legal battle with the worker group isn’t done yet. He said there “were a lot of irregularities in that vote,” which is why the company filed objections with the NLRB. (Amazon’s objections were previously rejected by an NLRB hearing officer.)

Jassy also emphasized that the last two Amazon union elections held resulted in workers voting not to unionize, and that Amazon prefers to have a direct relationship with fulfillment center workers rather than going through unions.

“In my own opinion on where we are with that legal process is that we’re far from over with it,” Jassy said. “I think that it’s going to work its way through the NLRB, it’s probably unlikely the NLRB is going to rule against itself, and that has a real chance to end up in federal courts.”

In an interview with CNN Business ahead of Jassy’s remarks, Amazon Labor Union President Chris Smalls slammed that Jassy “even had the audacity to feel comfortable to come to New York City knowing that we haven’t negotiated anything yet.”

“We definitely want to take this opportunity to let him know that the workers are waiting and we are ready to negotiate our first contract,” he added of the demonstration, which he called a “welcoming party” for Jassy.

Smalls said he’s been contacted by a few laid-off Amazon employees in corporate roles, who have since grown interested in the protections of unions. “I tell them — you may have good salary, you may have good perks, you may got good stocks and benefits, obviously better than warehouse workers, but at the end of the day, you’re still an at-will employee,” Smalls said.

“I explained to them, the one building that can’t be touched right now by mass layoffs is JFK8 Staten Island,” he said. “I encourage them to do what they have to do, if that means form a union, so be it, we support it.”

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