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Amazon Expands in Clay as Overbuilding Problems Persist

The e-commerce company has struggled throughout the pandemic with building too many warehouses and not having enough workers to staff them. But a 3.8-million-square-foot expansion in upstate New York has hired 1,500 full-time workers.

A man in an orange work vest inside the Amazon warehouse in Clay, N.Y.
The Amazon fulfillment center in Clay, New York, is the largest Amazon facility in New York.
(Katrina Tulloch/
(TNS) — Amazon’s opening of a huge distribution center near Syracuse, N.Y., comes as the company is facing two looming challenges that could impact its operations for years to come.

The first and most immediate problem is that the company built too many warehouses during the coronavirus pandemic, when consumer online purchasing soared. E-commerce sales slowed earlier this year as consumers ventured back to brick-and-mortar stores. Amazon said it suddenly found itself with more warehouse space than it needs.

The second challenge is a potential shortage of workers to fill its warehouses once demand returns. Vox’s Recode reported recently that, according to leaked Amazon internal research, the company is worried it could run out of people to hire in its U.S. warehouses by 2024, at least in certain markets.

Yet in Clay, just north of Syracuse, the retail giant is hiring hundreds of workers and expanding its service area from Central New York into neighboring states. The 3.8-million-square-foot warehouse opened here in April, months behind schedule.

Yet since then, it’s already hired 1,500 full-time workers, officials said Thursday. And it plans to double that workforce by fall, in time for the holiday shopping season.

In other markets, Amazon is subleasing portions of its warehouse space and pausing the opening of half a dozen sites. That bad news, along with Amazon’s plummeting stock value, has forced the nation’s second-largest employer to make sudden changes that are costing the company billions of dollars.

At the same time, the retailing giant is pushing ahead toward its longer-term goals: quicker delivery of more goods in more markets. That’s one of the reasons the site here, so far, is booming.|The Post-Standard talked this week with industry experts about Amazon’s challenges and what that means for one of Onondaga County’s newest and biggest employers. Here’s what they said:

‘The One in Clay was Necessary’

Amazon doubled its warehouse space to more than 410 million square feet during the pandemic.

The Clay warehouse is a part of that effort: 3.8 million square feet inside a five-story building that aims to pump out as many as 150,000 items a day.

Just as Amazon was finishing construction in Clay, sales slowed way down in the first three months of 2022. Amazon reported a loss of $3.84 billion — its first quarterly loss since 2015. A year ago, it reported a profit of $8.1 billion for the first quarter.

In response, the company reportedly is planning to sublet 10 million square feet of warehouse space and terminate some warehouse leases early because of an excess of space in New York, New Jersey, Southern California and Atlanta.

But it kept moving ahead in Clay, after pushing back the opening and hiring dates three times. The company finally started hiring in April and held its grand opening on Thursday.

In other places, Amazon put some of its new warehouses on hold.

The company is delaying the opening of six distribution centers — all similar to the one in Clay — for one to two years, said Marc Wulfraat, president of MWPVL International, a global supply chain and logistics consulting firm. The warehouses being mothballed are in Sioux Falls, South Dakota; Davenport, Iowa; Shreveport, Louisiana; Rockford and Clarksville, Tennessee; and Bexar County, Texas, he said.

Just the opposite is happening in Clay, though. Wulfraat said Amazon has moved forward with the opening of its Clay site for two reasons:

First, construction at the Clay facility was further along than it was at the six warehouses that are being mothballed.

And second, the Clay warehouse is the only fulfillment center Amazon has to serve a wide swath of Upstate New York, stretching to Buffalo, Watertown, Binghamton and Utica. (The company is building a center in Gates, near Rochester, but it has not been completed; plans to build one in Grand Island near Buffalo ran into local opposition in 2020.)

Amazon is on a years-long push to provide customers with next-day delivery, and the only way to do that is to open fulfillment centers close to where its customers live, Wulfraat said.

“They needed capacity in northern New York,” he said. “They don’t have one in Buffalo, and Rochester isn’t open yet. So opening the one in Clay was necessary. It wasn’t something you want to delay.”

Irfaan Hafeez, Amazon site leader in Clay, said the center also serves parts of Massachusetts and Connecticut and will eventually serve other states.

“We want to grow, and not just in Upstate New York,” he said.

Many workers in orange vests inside the Amazon warehouse in Clay, N.Y.
Workers package products at Amazon's new distribution center in Clay, New York, on Thursday, June 23, 2022.
Rick Moriarty/TNS

Amazon’s Clay Site Attracting 200 Workers a Week

Amazon workers join and leave the company at stunning rates. Even before the pandemic, the turnover rate among hourly workers was as high as 150 percent, or about 3 percent of its warehouse workers every week, according to an investigation by The New York Times in 2021.

That constant churn is business as usual for Amazon. But if it continues, it could literally run out of workers to operate its expanded network of warehouses, the company’s own researchers have warned.

Amazon’s internal research report concluded that if it continues that trend, the company will deplete its available labor supply in the U.S. by 2024. Facilities in Phoenix, Arizona, and the Inland Empire region of California running out of workers even sooner, according to the Recode report.

Yet, so far, hundreds of workers in Central New York are applying each week for open spots in Clay.

Amazon said Thursday it has hired 1,500 people for the Clay facility and has plans to double that number by the time the holiday shopping season starts in October. Hafeez said the company has had no problem attracting applicants and is adding 200 workers a week to its workforce in Clay.

“We’re thrilled to be able to bring great jobs to this community,” said Jennifer Cruickshank, head of New York public policy and community engagement for Amazon.

Looking at a large “hiring” banner on the front of the building, she said, “Hopefully, that banner will stay up for a while because we’ve got so many opportunities here, so many types of jobs for the people of this community.”

Many are attracted to the pay and a full suite of benefits, such as health insurance, 401(k) match, tuition assistance.

“All our front-line employees who are full time earn more than $16 per hour, with some earning even more than that,” Hafeez said.

That hiring comes as the Syracuse metro area is experiencing one of its tightest labor markets on record. The area’s unemployment rate was just 3.2 percent in May, the lowest for any May going back to 1990, with the area having regained nearly all the jobs it lost during the pandemic.

So Amazon is trying to hire at a time when most people in the area who want a job already have one.

“I certainly think it’s possible that they’ll run out of people to hire,” said Gretchen Purser, an associate professor of sociology at the Maxwell School of Citizenship and Public Affairs at Syracuse University.

Even if the company reaches its hiring goals in Clay, it could have trouble maintaining that staffing level because of its notoriously high turnover rates, said Risa Lieberwitz, professor of labor and employment law at Cornell University’s School of Industrial and Labor Relations.

“Amazon has a problem with high rates of turnover nationally, so it stands to reason it may have that problem in Clay,” she said.

Lieberwitz said the company loses workers at such an alarming rate primarily because its warehouses are incredibly stressful places to work, with associates under constant computerized surveillance to make sure they meet strict production quotas.

New York lawmakers recently passed legislation that would limit the use of production quotas in the warehouse industry, a bill widely viewed as targeting Amazon. Gov. Kathy Hochul has not said if she will sign it.

Up until now, the company has actually viewed its high turnover rate as a positive, Lieberwitz said.

“Amazon doesn’t want people to stay too long because they might want to start making demands,” she said.

But in tight labor markets, where workers have other employment options, high turnover will hurt the company, she said.

Amazon is also known for its aggressive anti-union stance, which has helped to keep unions out of its warehouses, preventing workers from having the opportunity to bargain collectively for better pay and working conditions, she said.

To avoid running out of workers in Clay and elsewhere, Amazon needs to improve working conditions and agree not to actively oppose unionization efforts, Lieberwitz said.

“People need to feel safe, with breaks, and not feel like they are under constant surveillance,” she said. “People want to be and deserve to be treated with respect.”

an Amazon worker stands in an aisle in the warehouse in Clay, N.Y.
Amazon employs 1,500 people at its new fulfillment center in Clay, New York, and has plans to double that number by the end of 2022.
Katrina Tulloch/TNS

Will More Automation Replace Future Workers?

Not everyone believes the company’s staffing troubles will last, however.

While the unusually tight labor market may make it harder for the company to fill jobs in the short run, Amazon could solve the problem within a few years by increasing automation at it warehouses, said Marshall Van Alstyne, a business professor at Boston University and a leading expert on network business models.

Amazon’s warehouse in Clay is highly automated, with thousands of robots constantly moving products around the building. But humans still perform many routine tasks like pulling items from storage shelves, packaging them and loading them onto trucks for shipment.

“If they can increase automation, by having robots pick up items and place them in pallets, for example, that could resolve their labor problem,” Van Alstyne said.

©2022 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.
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