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    Amazon Fires Senior Managers Tied to Unionized Staten Island Warehouse

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    Company officials said the terminations were the result of an internal review, while the fired managers saw it as a response to the recent union victory.After Amazon employees at a massive warehouse on Staten Island scored an upset union victory last month, it turned the union’s leaders into celebrities, sent shock waves through the broader labor movement and prompted politicians around the country to rally behind Amazon workers. Now it also appears to have created fallout within Amazon’s management ranks.On Thursday, Amazon informed more than half a dozen senior managers involved with the Staten Island warehouse that they were being fired, said four current and former employees with knowledge of the situation, who spoke on the condition of anonymity out of fear of retaliation.The firings, which occurred outside the company’s typical employee review cycle, were seen by the managers and other people who work at the facility as a response to the victory by the Amazon Labor Union, three of the people said. Workers at the warehouse voted by a wide margin to form the first union at the company in the United States, in one of the biggest victories for organized labor in at least a generation.Word of the shake-up spread through the warehouse on Thursday. Many of the managers had been responsible for carrying out the company’s response to the unionization effort. Several were veterans of the company, with more than six years of experience, according to their LinkedIn profiles.Workers who supported the union complained that the company’s health and safety protocols were too lax, particularly as they related to Covid-19 and repetitive strain injuries, and that the company pushed them too hard to meet performance targets, often at the expense of sufficient breaks. Many also said pay at the warehouse, which starts at over $18 per hour for full-time workers, was too low to live on in New York City.Understand the Unionization Efforts at AmazonBeating Amazon: A homegrown, low-budget push to unionize at a Staten Island warehouse led to a historic labor victory. (Workers at another nearby Amazon facility rejected joining a similar effort shortly after.)Retaliation: Weeks after the landmark win, Amazon fired several managers in Staten Island. Some see it as retaliation for their involvement in the unionization efforts.A New Playbook: The success of the Amazon union’s independent drive has organized labor asking whether it should take more of a back seat.Amazon’s Approach: The company has countered unionization efforts with mandatory “training” sessions that carry clear anti-union messages.An Amazon spokeswoman said the company had made the management changes after spending several weeks evaluating aspects of the “operations and leadership” at JFK8, which is the company’s name for the warehouse. “Part of our culture at Amazon is to continually improve, and we believe it’s important to take time to review whether or not we’re doing the best we could be for our team,” said Kelly Nantel, the spokeswoman.The managers were told they were being fired as part of an “organizational change,” two people said. One of the people said some of the managers were strong performers who recently received positive reviews.The Staten Island facility is Amazon’s only fulfillment center in New York City, and for a year current and former workers at the facility organized to form an upstart, independent union. The company is challenging the election, saying that the union’s unconventional tactics were coercive and that the National Labor Relations Board was biased in the union’s favor. And the union is working to maintain the pressure on Amazon so it will negotiate a contract.Christian Smalls, the president of the Amazon Labor Union, testified on Thursday before a Senate committee that was exploring whether companies that violate labor laws should be denied federal contracts. Mr. Smalls later attended a White House meeting with other labor organizers in which he directly asked President Biden to press Amazon to recognize his union.A White House spokeswoman said it was up to the National Labor Relations Board to certify the results of the recent election but affirmed that Mr. Biden had long supported collective bargaining and workers’ rights to unionize.Amazon has said that it invested $300 million on safety projects in 2021 alone and that it provides pay above the minimum wage with solid benefits like health care to full-time workers as soon as they join the company.More than 8,000 workers at the warehouse were eligible to vote, and the union made a point of reaching out to employees from different ethnic groups, including African Americans, Latinos and immigrants from Africa and Asia, as well as those of different political persuasions, from conservatives to progressives.Company officials and consultants held more than 20 mandatory meetings per day with employees in the run-up to the election, in which they sought to persuade workers not to support the union. The officials highlighted the amount of money that the union would collect from them and emphasized the uncertainty of collective bargaining, which they said could leave workers worse off.Labor experts say such claims can be misleading because it is highly unusual for workers to see their compensation fall as a result of the bargaining process.Roughly one month after the union victory at JFK8, Amazon workers at a smaller facility nearby voted against unionizing by a decisive margin.The votes came during what could be an inflection point for organized labor. While the rate of union membership reached its lowest point in decades last year (about 10 percent of U.S. workers) petitions to hold union elections were up more than 50 percent over the previous year during the six months ending in March, according to the National Labor Relations Board. The number of petitions is on pace to reach its highest point in at least a decade.Since December, workers at Starbucks have won initial union votes at more than 50 stores nationwide, while workers have organized or sought to organize at other companies that did not previously have unions, such as Apple and the outdoor apparel retailer REI.Grace Ashford More

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    Gopuff Buys Time for Its 30-Minutes-or-Less Delivery Promise

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    The $15 billion rapid-delivery start-up decided to do business differently from rivals like Instacart. A changing environment is testing its model.From its beginning in 2013, Gopuff aimed to do rapid delivery differently.The start-up’s founders, Yakir Gola and Rafael Ilishayev, based the company in Philadelphia, away from other delivery ventures in Silicon Valley and New York. They opened warehouses and bought their own merchandise, instead of acting as middlemen who connected retailers and restaurants with customers. And they promised speed, delivering food and other items in 30 minutes or less.By late last year, Gopuff had amassed $3.4 billion in funding, bought the alcohol and beverage retailer BevMo! and was valued at $15 billion. This year, it appeared poised to go public.“We built a sustainable business that thrives and that is set up to win long term,” Mr. Gola, 29, said in an interview last month. Gopuff, he added, is “a disrupter.”Now the question is whether Gopuff has done delivery differently enough. In the past few months, the start-up environment has changed from boom to uncertainty, as tech stocks have cratered, inflation has risen, interest rates have increased and the economic outlook has darkened.In response, Gopuff recently put off its public listing and is trying to raise $1 billion in debt that could potentially be turned into stock. The unprofitable company also lowered its drivers’ minimum pay in California. This year, it has done two rounds of job cuts, including last month when it laid off about 450 people, or 3 percent of its 15,000 workers.Gopuff faces a dismal history of failed delivery start-ups, from Webvan and Kozmo.com in the early 2000s to Buyk, 1520 and Fridge No More in the past few months. Delivery — with high labor and transportation costs, stiff competition and lofty marketing expenses — is notoriously expensive and logistically complicated to provide and make money on.While delivery companies such as DoorDash and Grubhub have gone public, many of them lose money, and some have later been acquired. And with the bump in pandemic orders tailing off, many of these companies are hitting hurdles. Last month, the grocery delivery start-up Instacart cut its valuation to about $24 billion from $39 billion.“These companies are fine during a very ebullient and frothy capital markets environment,” said Ken Smythe, the chief executive of Next Round Capital Partners, which advises investors buying and selling stakes in start-ups. “The world has changed significantly in the past 60 days.”Gopuff’s delivery people are gig workers. The business also has warehouses where its workers are full-time employees.Gabby Jones for The New York TimesIn the interview, Mr. Gola acknowledged that delivery was “very logistically complex — it takes a lot of time and a lot of effort and capital.” But having warehouses and inventory is the only way to profit over time, he said, because it allows the company to make money from selling goods and not just charging delivery fees.“Once you can execute, and obviously that’s hard, it wins in the long term,” he said.Gopuff added that it was putting a public offering on the back burner because the stock market had been volatile and it had enough cash on hand. The layoffs were part of a global restructuring, it said.Mr. Gola and Mr. Ilishayev met as students at Drexel University in Philadelphia in 2011. In their sophomore year, they founded Gopuff for college students, offering fast late-night deliveries of junk food, condoms and smoking paraphernalia. They called themselves a “one-stop puff shop,” which led to the name Gopuff. Deliveries were available until 4:20 a.m.To set themselves apart from DoorDash and Instacart, which connect customers to restaurants and grocery stores via their apps and rely on gig workers, Mr. Gola and Mr. Ilishayev decided Gopuff would buy goods from distributors and wholesalers and have warehouses. Its warehouse workers would be full-time employees, though its delivery drivers and bike messengers would be contractors.Mr. Gola, who dropped out of college, and Mr. Ilishayev, who graduated from Drexel with a degree in legal studies, became co-chief executives of Gobrands, Gopuff’s parent company. To fund the business, they sold used office furniture on Craigslist and eBay. They also offered discounts on orders to attract customers and charged just $2.95 for delivery.As Gopuff gained traction beyond Drexel students, Mr. Gola and Mr. Ilishayev expanded their product offerings and set up warehouses in Boston, Washington and Austin, Texas. Starting in 2016, the company raised money from venture firms such as Anthos Capital and, later, investors including the Japanese conglomerate SoftBank.“We saw it in the data: customers coming back multiple times every month, very strong customer retention, customers who would stick around forever, basically,” said Jett Fein, a partner at Headline, a venture capital firm that invested in Gopuff.In 2020, the pandemic sent Gopuff’s business into overdrive as people shied away from shopping in person and relied on deliveries. Billions of dollars in new venture capital flooded in.Mr. Gola and Mr. Ilishayev went on a spending spree. That November, Gopuff acquired the California retailer BevMo! for $350 million, giving it a foothold in the state as well as the chain’s liquor licenses. In Europe, it bought the delivery start-ups Fancy and Dija.The company also started offering a $5.95 monthly subscription for delivery and began an advertising business.Gopuff now has nearly 700 warehouses that deliver to 1,200 cities in North America and Europe. It also has several retail locations in New York, Texas and Florida, where customers can walk in and shop.But profits have been elusive. The start-up is not cash-flow positive, which means it is spending more money than it is taking in, said Scott Minerd, the chief investment officer of Guggenheim Investments, which has invested in Gopuff. He added that the company had paused some plans to open new warehouses.Gopuff spends more on property and salaries of warehouse workers than its rivals, said John Mercer, head of global research at the firm Coresight Research. Discounts to attract customers have also eaten into revenue.Gopuff said it made money in its first three years. Its 2020 revenue was $340 million, according to a company document for potential landlords that was obtained by The New York Times. The document also showed that Gopuff’s cash balance dropped $111 million that year to $521 million.Revenue totaled $2 billion last year, Gopuff said. The company also lost $500 million, which was first reported by Axios.Some of its spending has gone toward handling delivery issues, said four former warehouse and district managers, three of whom declined to be identified because of severance agreements with the company. Several said they had sometimes spent hundreds or thousands of dollars a day on Instacart or at grocery stores to replenish Gopuff’s “never out of stock” staples like bacon, eggs and milk.At other times, suppliers sent pallets of items like ice cream that were not needed and could not be stored.“I would throw away $1,000, $2,000, $3,000 in inventory as soon as I received it because I had nowhere to put it,” said Anthony Nelson, who managed two Gopuff warehouses in Houston from 2019 through 2021. “That happened at least once or twice a week at bare minimum.”Mr. Gola said Gopuff bought items from Instacart or local retailers less than 1 percent of the time and threw out less inventory than the industry standard.The start-up has also faced questions over its use of gig workers, many of whom sign up for shifts with the company and report to managers. In 2018, the Labor Department found that Gopuff had misclassified delivery drivers in Pennsylvania as independent contractors.“Gopuff’s entire business model depends on flagrant misclassification of a kind that’s shocking well beyond what we see even from other gig companies,” said David Seligman, a lawyer who filed a 2017 class-action lawsuit claiming Gopuff wrongly categorized its drivers as contractors. The suit was settled in 2019.In November, hundreds of Gopuff gig workers went on strike, said Candace Hinson, a delivery driver in Philadelphia who helped organize the stoppage.Mr. Gola said the company used gig workers as drivers, rather than hiring employees, because “that’s what they want.” The company disputed that hundreds had gone on strike and said the workers’ action had not hurt its business.In the interview, Mr. Gola insisted that Gopuff would be the company to crack the instant delivery code.“The world is moving toward instant,” he said, “and Gopuff is at the forefront of that.” More

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    Warehouses Transform N.Y.C. Neighborhoods as E-Commerce Booms

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    The region is home to the largest concentration of online shoppers in the country. The facilities, key to delivering packages on time, are reshaping neighborhoods.An e-commerce boom turbocharged by the pandemic is turning the New York City region into a national warehouse capital.In just two years, Amazon has acquired more than 50 warehouses across the city and its surrounding suburbs. UPS is building a logistics facility larger than Madison Square Garden on the New Jersey waterfront near Lower Manhattan.In Brooklyn, Queens and the Bronx, 14 huge warehouses to help facilitate e-commerce operations are rising, including multistory centers previously found only in Asia.Fueled by the soaring growth of e-commerce while so many Americans have been working from home, online retailers, manufacturers and delivery companies are racing to secure warehouses in the country’s most competitive real estate market for them.Every day, more than 2.4 million packages are delivered just in New York City, an online-buying mecca in a region of 20.1 million people.The feverish activity has already transformed the landscape of city neighborhoods and rural towns, transforming Red Hook in Brooklyn into a bustling logistics hub and replacing farmland in southern New Jersey with sprawling warehouses where packages are sorted, packed and delivered, often within hours of being ordered.An Amazon grocery hub in Red Hook, Brooklyn, which has emerged as a nexus of e-commerce warehouses in New York because it offers relatively easy access to Lower Manhattan, Queens and the rest of Brooklyn.Clark Hodgin for The New York TimesJust 1.6 percent of all warehouses in New York City and only 1.3 percent in New Jersey are available for lease, according to the real estate firm JLL; only the Los Angeles area has fewer warehouse vacancies in the United States. Some companies are converting buildings never intended to be warehouses. Amazon turned a shuttered supermarket in Queens into a makeshift package hub.The soaring demand for warehouses, once the ugly duckling of the real estate industry, underscores their pivotal role in a complex global supply chain. Nationwide, developers are pouring billions of dollars into the construction of new facilities, helping lift the commercial real estate sector, which has been battered by the emptying of offices during the pandemic.But the rise of warehouses has also sparked significant opposition. While they provide jobs and can lower residential property taxes by contributing to the local tax base, people across the region say the large hubs will lead to constant flows of semi-trucks and delivery vans that will worsen pollution and traffic congestion.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.A New Normal?: The chaos at ports, warehouses and retailers will probably persist through 2022, and perhaps even longer.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.They have also bemoaned the loss of open land to mega facilities. In recent months, residents in the southern New Jersey township of Pilesgrove, just across the Delaware River from Wilmington, Del., protested plans for a 1.6 million square-foot warehouse — larger than Ellis Island — on former farmland.While Amazon, major retailers and logistics operators such as UPS, FedEx and DHL dominated the initial wave of warehouse deals at the start of the pandemic, interest is now coming from smaller businesses seeking greater control of their supply chain amid a global bottleneck in the movement of goods.“I’ve been doing this for 30-some-odd years, and I’ve never seen it like this,” said Rob Kossar, a vice chairman at JLL who oversees the company’s industrial division in the Northeast. “In order for tenants to secure space, they are having to negotiate leases with multiple landlords on spaces that aren’t even available. It’s insane what they are having to do.”The rising cost to lease facilities has frustrated some small business owners who cannot compete with retail and logistics giants, as well as newcomers like Tesla and Rivian, which have opened showrooms and service centers for their electric vehicles in Brooklyn warehouses. Leasing prices for warehouses in the Bronx, for instance, have jumped 22 percent since the pandemic started.Warehouse jobs are still just a fraction of New York City’s labor force, but companies are on a hiring spree. Since 2019, the number of warehouse jobs doubled to 16,500 positions in late 2021. New hires at Amazon make around $18 an hour and get starting bonuses up to $3,000. But the company has also been fighting workers at some of its warehouses, including on Staten Island, who are trying to unionize to improve working conditions.Prose employs about 150 employees at its facility in Brooklyn from where it ships products across the United States and to Canada.Clark Hodgin for The New York TimesToday, nearly everything — from cars to electronics and groceries to prescription drugs — can be ordered online and arrive in as little as a few hours. In New York City, new companies are offering 15-minute grocery delivery.And though most retail sales nationwide still happen at brick-and-mortar stores, online sales are increasing at breakneck speed, growing by 50 percent over the last five years to reach 13 percent of all retail purchases, according to the census.That surge is pummeling many retailers, especially smaller businesses, that have also had to weather the loss of customers during the pandemic.At the onset of the pandemic shoppers switched to online buying at a rate that had been expected to take a decade to reach, according to analysts.Some large retailers, such as Target and Best Buy, that have a handful of warehouses in the region lean on their stores to fulfill online orders. Wal-Mart, the nation’s largest retailer, does not have a store in New York City so it uses a warehouse in Lehigh Valley, Pa., just over the border from New Jersey, and stores in surrounding suburbs to serve city residents.Amazon is taking a different approach. Across New Jersey to the northern New York City suburbs to Long Island, Amazon is cobbling together a sprawling network of fulfillment centers, package-sorting facilities and last-mile hubs. In the city it has set up a handful of facilities in the Red Hook and Sunset Park neighborhoods of Brooklyn.Amazon’s rapid expansion is not unique to the New York area. Last September alone, Amazon said in a recent earnings call, it added another 100 facilities to its delivery network in the United States.Red Hook, a neighborhood of just under a square mile bounded by water on three sides, has become a center for warehouses in the city because it is near major roadways into population centers in other parts of Brooklyn, Lower Manhattan and Queens.The owner of Prose decided to keep all his manufacturing under one roof before the supply chain problems emerged. “It has been a great decision,” he said.Clark Hodgin for The New York TimesAt least three new warehouses have opened in the neighborhood and more could be on the horizon. UPS paid $300 million for a 12-acre property, and two developers of logistics centers spent $123 million in December to buy several industrial sites there.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More