Amazon Refutes Claims of Job Reductions Through Automation
Amazon has categorically rejected a recent assertion that it intends to substitute 600,000 positions with robotic technology. Characterizing the allegations as “wrong” and “incomplete,” the e-commerce titan dismissed the report, which was reportedly founded on internal documentation.
The contentious article, published by The New York Times, referenced various internal strategy frameworks suggesting that Amazon plans to automate a substantial number of warehouse roles in the forthcoming years.
Analysts from Morgan Stanley have posited that the company’s robotic initiatives could result in savings of approximately $4 billion in operational expenses. The Times indicated that Amazon aims to automate up to 75% of its operations and intends to inaugurate nearly 40 state-of-the-art robotic warehouses by the close of 2027.
Additionally, the company has commenced the renovation of its current fulfillment centers as part of this extensive transformation.
Despite the claims made in the report, Amazon has staunchly contested the narrative. Kelly Nantel, a representative for the company, asserted that the cited documents do not accurately reflect Amazon’s broader hiring strategy.
In a direct response to concerns about job losses, she highlighted that Amazon plans to onboard 250,000 new employees for the approaching holiday season, thereby contradicting the notion of widespread job cuts.
Insights from Morgan Stanley on Automation Prospects
A report from CNBC indicates that Morgan Stanley analyst Brian Nowak surmises Amazon’s automation transition could generate up to $4 billion in recurring savings annually by 2027. He maintains an optimistic outlook for Amazon’s stock, assigning it a price target of $300, noting the resilience of its cloud, retail, and advertising sectors despite a slight decline this year.
“In the near term, we anticipate AWS growth will be critical for share performance,” Nowak commented, adding that the marketplace may be underestimating “Amazon’s advancements in GenAI within its Retail segment, particularly concerning robotics-driven efficiencies.”
Nowak estimates that automation could reduce Amazon’s average order fulfillment cost from $3 to as little as $1.80, enabling savings of approximately 60 cents to $1.20 per order.
He referred to remarks made by CEO Andy Jassy in 2024, noting that a robotic warehouse in Louisiana had already achieved a cost reduction of approximately 25%.
The New York Times also suggested that this automation strategy could allow Amazon to avert the hiring of around 160,000 U.S. workers by 2027, realizing savings of approximately 30 cents per item dispatched.
“This figure appears elevated to us (considering next-gen robotic warehouses might only be fulfilling 10%-20% of units by that time). However, it will be crucial to engage further with Amazon and industry specialists regarding these projections, as it could indicate that Amazon is on track for even greater unanticipated savings through robotics,” Nowak remarked.
Source link: Timesofindia.indiatimes.com.
