A Union For Amazon?

Organizing efforts couldn't come at a worse time

This year's Nasdaq meltdown may have savaged Amazon.com Inc.'s (AMZN) stock along with the rest of high tech, but the online retailer remains one of the country's most promising e-commerce companies. Now this paragon of the New Economy faces a decidedly Old Economy threat: labor unions.

In mid-November, no fewer than three union groups launched recruitment drives among the company's 8,000 employees. Their efforts highlight the fact that large numbers of employees at e-commerce companies have Old Economy problems and concerns. One union is targeting Amazon customer service reps, who complain of long hours, subpar pay, and hourly quotas of customer e-mails they must respond to, piecework-style--not to mention options under water. The other two union groups are talking to the Seattle company's 5,000 blue-collar warehouse workers, who have similar gripes.

All this activity couldn't come at a worse time for Amazon. While the company's sales are on track to nearly double this year, to an expected $2.8 billion, profits are still at least a year or two away. Once-patient investors have slashed Amazon's shares to 25 13/16 as of Nov. 20, from 113 last December. Amazon CEO Jeffrey P. Bezos has been trying to cut costs with a view to lifting margins--and distribution centers are a key focus.

Worse, the unions hope to capitalize on Amazon's vulnerability as it enters the crucial holiday season. The company's sales growth slowed this year, but analysts expect it to boom in the yearend crush. Bezos is holding daily meetings with top managers to ensure that Amazon can handle the flood of orders.

Union leaders, who know all this, hope to use the threat of worker disruption to force Bezos not to oppose unionization. They want him to agree to quick elections and to not campaign against them. "Workers should act when they have the greatest leverage, and this is clearly the time of year when they're most needed by this company," says Duane Stillwell, a former organizing director of the Laborers union, who is heading up a warehouse-worker drive. "I'm not concerned at all that it will disrupt the holidays," says Bezos, after a tour for reporters of the Fernley, Nev., warehouse. "We don't believe in unions, because everybody is an owner, and everybody has rights as individuals to talk about workplace concerns."

The Amazon union drives are the first real test of organized labor's ability to penetrate the New Economy. The customer service rep effort is being mounted by the Washington Alliance of Technology Workers (WashTech), a unit of the Communications Workers of America (CWA). The CWA has scored big recruitment gains among wireless and broadband workers, but mostly at Bell companies where they already represent traditional phone workers. WashTech, formed to help so-called permatemp programmers at Microsoft Corp. (MSFT), has a few hundred members at Seattle area high-tech companies. It also has had several dozen members at Amazon for more than a year. But until now, WashTech hasn't tried to form actual bargaining units to sign union contracts with a company.

NEW DAY. The warehouse drives are being mounted by the Prewitt Organizing Fund, an unusual freelance union-recruitment outfit founded by Stillwell. A second attempt comes from the United Food & Commercial Workers (UFCW), which represents supermarket workers. The UFCW had been working with Prewitt but broke off to push its own drive. It has organized several hundred workers at online grocer Peapod Inc., but that's because the company gets most of its food from unionized supermarket chains, giving the UFCW leverage.

Amazon workers say they are acting now because they are fed up with a giant that still acts like a startup. Service reps, who say they were attracted to Amazon in part because of its team spirit, are calling their group Day2@Amazon.com, because: "Bezos is always telling us, `It's Day One, we can't stop or rest,' and we think five years of Day One is generating lots of problems for us," says Zach Works, a 24-year-old rep in Seattle. He and others say management no longer listens to their problems. They routinely work 50-hour weeks, going up to 70 in the holidays, says Jennifer McDaeth, another Seattle rep. And managers change their shifts, sometimes on as little as a day's notice, making the job even more stressful, she says. "We're known as a customer-centric company, but all this makes it harder to do our job," says McDaeth.

Reps are also unhappy about their pay, especially since their much-vaunted options aren't worth what they once were. CEO Bezos counters that employees shouldn't expect to make quick money: "An obligation of ownership is long-term thinking," he says. But the stock plunge has hurt. Zach Works started at $10 an hour, $2 less than his prior job at a bottled-water company. He got promoted but says his current $13 an hour isn't competitive with other customer-rep jobs in Seattle. Works received options that now number 1,500 after stock splits. But the stock dipped below his $21 strike price last month before rebounding. "Most of my colleagues are under water, and we all know it will be many moons before we see any benefit from our options," he says. Employees say they also worry that the company will move their jobs to new offices in North Dakota and West Virginia, where Amazon pays as little as $7 an hour.

The warehouse workers pose the more serious threat of disruption. They fill all the orders, so a slowdown or walkout could damage the company's ability to get through these critical holidays. Still, warehouse employee turnover is high and many are newly hired, thus less willing to buck management, so organizing could prove more difficult.

Not that they don't have gripes. They earn $7.50 to $9.25 an hour, with skimpy benefits--considerably less than similar workers who belong to the UFCW or other unions, organizers say. Warehouse workers, too, often work 60-hour weeks, especially during the holiday rush. And unlike the reps, they get only 100 options, vested over 5 years. "I came here because I make 50 cents more an hour than I did as a nursing aide, but it's just not worth it to work so many hours every week," says a worker at Amazon's Campbellsville (Ky.), distribution center. Amazon declined to comment on specific allegations.

It's not clear yet how much support either organizing effort will garner. Prewitt, a nonprofit group that helps unions do organizing, has been talking to warehouse workers since last spring, says Stillwell. On Nov. 16, about 30 organizers fanned out to "blitz" Amazon warehouses, passing out petitions to hundreds of workers. Stillwell concedes that the effort won't succeed long-term unless a full-fledged union sponsors it. The 1.5 million-member UFCW has the muscle to mount a serious drive, but infighting between the two groups could undermine progress.

Even so, the union activity puts Bezos in a bind. The day the news broke, Customer Service Vice-President William Price called emergency meetings of all reps for the next day, where he warned against the dangers of unionization. But if the company responds with an all-out war, it could wreck the feel-good culture that has motivated many Amazon employees. Either way, the holiday madness Amazon has been gearing up for is likely to be even crazier than anyone thought.

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