Amazon’s ‘negative press based on myth’
James Titcomb visits the company’s giant fulfilment centre in Baltimore to see how the online retailer is revolutionising its logistics operations
CRITICISM of Amazon’s working conditions is uninformed and grounded in “myths”, a senior executive has said.
Amazon announced a major pay increase for staff in its fulfilment centres amid allegations that staff were poorly compensated for their work.
“There is a lot of negative press out there, on working conditions, on pay, on safety,” said John Felton, the head of Amazon’s warehouse operations.
“For the most part I don’t agree with any of it. Much of it is written by people that haven’t been to the buildings. A lot of it is myths out there, not reality.
“We’re a big company and I think that means that we are a target. As a big company, one of our responsibilities is to accept scrutiny.”
Earlier this month, Amazon announced a pay rise for staff in the UK and US and did away with incentivebased pay. Staff in London had their minimum pay raised from £8.20 to £10.50, and £8 to £9.50 for the rest of the UK. Staff in the US had minimum pay raised from $10 to $15.
The company had previously been accused by US senator Bernie Sanders of underpaying its workers, while several investigations raised questions about working conditions and safety.
Amazon has embarked on what the company calls a transparency drive in recent months in an attempt to dispel critics. The push has included employing “ambassadors” who reply to allegations of poor treatment on Twitter.
Mr Felton said Amazon was also planning to increase the number of fulfilment centre tours it gives to the public to counteract negative perceptions.
“We’ve got a great employee experience we’re really proud of,” Mr Felton said. He added that Amazon was taking a “leadership position” on pay and hoped other companies would follow.
This week, Amazon is expected to give more details of how much the pay rise will cost the company when it reports financial results for the third quarter of the year.
Analysts expect sales to rise about 30pc to $57bn (£43bn).
When staff enter Amazon’s cavernous distribution centre on the outskirts of Baltimore they pass under a sign that reads: “Work hard. Have fun. Make history.” Before they go through an airportstyle security screening to start work, they stash personal items in a locker (keys, change and mobile phones are prohibited on the warehouse floor). A sign reinforces “Amazon’s peculiar ways”. One reads: “We avoid the bland personality that customers typically associate with the big homogeneous, corporate Borg.”
The first thing you notice as you walk into the four-storey centre is the roar of the conveyor belts. Hurtling along 14 miles of track are yellow containers carrying children’s vitamins, running socks and charging cables. Containers are yellow because it is the least common colour of things sold on Amazon, so it is easier to identify items in the containers.
On adjacent belts, cardboard boxes of different sizes race up and down levels, before falling into one of several helter-skelter slides to be arranged for shipping. Machines print postage labels and stamp them on packages in less than a second.
The fulfilment centre, known as BWI2 (they are named after their nearest airport’s code, starting up from one; Baltimore goes up to BWI6) is one of 175 around the world. It is Amazon’s second biggest, and at one million square feet, is so vast that you cannot make out the other end.
Amazon has 3,000 “associates”, the name for its warehouse staff, at the centre. But soon, the humans may be outnumbered by robots. Shuffling around the fulfilment centre, although separated from workers by metal fences, are hundreds of orange, puck-shaped machines.
The robots, around the size of a car tyre, pick up four-sided pods that are stuffed with items such as ice packs, books and chargers, and transport them to be collected by a human.
They do not get tired, or demand breaks or holiday (humans, by comparison, work 10-hour shifts, with two half-hour stops). They rarely make mistakes, and are unlikely to sue the company if they do.
The robots represent the future of the company that has reshaped the world of shopping. Since spending $775m (£595m) on Boston-based robotics company Kiva in 2012, about 25 of Amazon’s fulfilment centres, including one in Manchester, have become robot-operated. It is now the default for new ones: a centre is being built in Bristol.
The investment in robotics is seen as one of Amazon’s key strengths as it grapples with an explosion in online orders and shoppers’ demands for near-immediate gratification.
This week, the company will report a boom in sales and profits. Analysts expect revenues in the third quarter of the year of around $57bn, up almost a third year on year. This year shares have climbed 55pc, although they have fallen from the September peak that pushed its value past one trillion dollars.
The company has been seen as emblematic of both the benefits and the downsides of the modern economy. Amazon has granted untold convenience to its customers. It’s chief executive Jeff Bezos has become the world’s richest man, worth as much as $150bn.
But the company’s success often did not seem to be shared by its workers, at least those on the warehouse floor. Critics claimed they were underpaid and made to endure a brutally efficient work environment that left them exhausted and stressed. The robot revolution, which many workers fear will take their jobs someday, is happening apace inside the Amazon fulfilment centre. How the company handles that transition may well be a marker for how the rest of the world follows.
This month, Amazon sought to ease any fears that automation will be bad for the rest of us. It announced a pay rise for its workers, from a minimum of $10 an hour to $15 in the United States, and from £8 to £9.50 in the UK.
Analysts at Morgan Stanley said the pay jump, which will cost about $3bn, will be essentially paid for by robots. “We think increased fulfilment efficiency is set to offset the aforementioned wage increase,” the analysts said in a note last week.
In non-robotocised fulfilment centres, Amazon’s workers walk along miles of shelves to find the right product. Entry-level jobs include “stowers”, who put items that arrive from suppliers and other warehouses on to the shelves, and “pickers”, who retrieve the items from the shelves
‘I think there’s a myth that robots destroy jobs; I don’t think that’s right, that’s not the Amazon experience’
when a shopper has ordered them. But in robotic centres, the shelves come to the workers. Pickers stand at their assigned station, and a queue of robots carrying pods full of hundreds of items line up to deliver their goods.
Once an employee has grabbed
what they need – a self-help CD, a battery pack, a toy car – they place it in their assigned bin to be delivered to another cog on the production machine. The robot moves on, letting the next one shuffle into position. Once raided, the pods will join a different line for a stower, who will stuff items back into their free space.
Entering the area can be dangerous for humans: if they want to go into robot territory they must wear a newly designed belt that emits a signal stopping anything nearby.
Machine-vision cameras and a smart spotlight system track workers’ hand movements, registering where they have placed items in a pod and directing them to the next product to pick up. This year Amazon was granted a patent for a wristband that would track hand movements and vibrate to manipulate them, although it says it has no plans to introduce such a device. The end result is that Amazon runs a logistics operation that is possibly unmatched for efficiency, a key advantage in the retail wars.
Millions of items are dispatched from the BWI2 centre every week. One picker at the Baltimore warehouse wears a T-shirt proclaiming him to be a member of the “400 UPH” club, meaning he has picked more than 400 items per hour. Stations carry tips on the “route to 350 UPH”.
These rates were never possible when workers had to make the long walks between shelves. John Felton, the head of Amazon’s warehouse operations, declines to quantify the productivity increase of a robot warehouse, but one stower says his rates have tripled.
For Amazon’s customers, the upshot is quicker delivery, more choice and lower prices. But what do they mean for workers? Should they fear becoming obsolete? Felton says: “I think there’s a myth that robots destroy jobs; I don’t think that’s right, that’s not the Amazon experience.”
He points out that Amazon’s workforce has grown substantially even as the company has invested in robots, and highlights new jobs, such as the technicians that maintain the robots. The point conveniently ignores Amazon’s rapidly growing percentage of all shopping.
But none the less, there are many things that robots cannot do. Identifying and grasping items that come in an infinite array of shapes and sizes requires perception and dexterity, which robots still lack.
Amazon claims that its robots are meant to make life easier for humans, not replace them. “Humans are so good at tasks that robots are so far away from doing,” says Joe Quinlivan, the chief operating officer of Amazon’s robotics division.
Felton says it is hard to imagine fully automated distribution centres, at least not for several decades. But the ratio of robots to humans is only likely to go in one direction. Meanwhile, Amazon is encouraging its workers to sign up for schemes that will retrain them for the next generation of jobs, from IT technicians to software engineers.
“A lot of those jobs were not needed in the old fulfilment centres,” says Felton. “We know that being a picker might not be the career people want for the next 30 years.” A good thing too, because it probably won’t exist.
Robots now bring pods full of items, left, to human pickers at Amazon’s fulfilment centres