XPO To Close Memphis Distribution Center Where Alleged Worker Mistreatment Took Place

Transport and logistics provider XPO Logistics Inc. (NYSE:XPO) will close a Memphis distribution center that had been the site of alleged worker mistreatment by the company, saying today it chose to shutter the facility after its sole customer, telecom giant Verizon Wireless (NYSE:VZ), decided to no longer fulfill product from there.

The facility, which employs 400 people, is expected to close in June, XPO said in a statement today. Layoffs will begin April 15 and be spread out over two weeks, according to an XPO letter to employees posted yesterday on the Teamsters union website. The Teamsters, who have tried, with limited success so far, to organize XPO drivers, have repeatedly crossed swords with the company over alleged job misclassifications of West Coast port drivers and over uncaring behavior toward its workers in general.

The Memphis facility became a lightning rod of controversy last October after the New York Times reported that pregnant workers had been subjected to excessively demanding working conditions, that supervisors paid no attention to doctors' written requests to be shifted to less strenuous work, and that being on their feet all day carrying heavy shipments had led to miscarriages. The Teamsters said today that the closure was in retaliation for workers exposing difficult conditions at the facility.

New York-based Verizon Wireless is shifting the Memphis distribution to "other facilities operated by new and existing partners," according to Rich Young, a company spokesman. "There is nothing unique about this transition," Young said in response to a question if adverse publicity surrounding the operations was a factor in its decision. The two companies will continue to collaborate, Young said, without providing specifics. XPO and Verizon will do business together, but not in Memphis, according to a source close to XPO.

XPO will typically close a facility if the only customer using it decides to leave. The company, which operates 11 facilities in the Memphis area – not including the one slated for closure – and is building a twelfth, will make positions available for displaced workers and expects most, if not all, to find jobs, the company said.

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According to the Times article, the problems began during the period when the facility was owned by New Breed Logistics, a contract logistics provider acquired by XPO in 2014. During the summer of 2017, workers in the facility began complaining about temperatures exceeding 100 degrees, and the heat and humidity making it hard to breathe, according to the article. That October, Linda Neal, a 58-year-old worker at the facility, died of a heart attack after collapsing on the floor.

The accusations stunned XPO, which said it didn't find a record of any incidents when it did its pre-acquisition due diligence, and hadn't been notified of any such problems during the four years it has run the location.

The story drew the ire of nine U.S. Senators, who in late November said they wanted XPO to "outline changes that will be made to improve working conditions and protect your employees throughout the country." The company subsequently retained a workplace expert to examine conditions inside the company. It also announced a program yesterday to offer free supplemental care for new parents and expectant mothers. The Teamsters said the fact that the program was made public the same day as the closure announcement added "insult to injury" to workers whose grievances forced the company to enact such a policy in the first place.

Brad Jacobs, XPO's founder, chairman and CEO, has made no secret of his animus towards the Teamsters. Jacobs has said XPO maintains peaceful relations with unions in Europe, where it also has a major footprint.

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