Amazon Defers Fresher Hiring To Control Costs, Draws Lawsuit From Supplier

Amazon.Com, Inc AMZN shelved the joining for some university graduates set to join the company in May, blaming the "macroeconomic environment.

Amazon postponed the students' joining until the end of 2023 and doled out a one-off payment of $13,000, the Financial Times reports.

One of the students was likely to join Amazon's campus in Sunnyvale, California, home to Lab126.

Also Read: Amazon's Cloud Eyes More Staff in 2023, Remain Invested In More Data Centers

Lab126, where Amazon developed the technology behind the Alexa voice assistant, has been a particular focus of Amazon's recent round of cuts, expected to number around 10,000.

Amazon faced a $280 million lawsuit from a Vietnamese manufacturer of warehouse storage systems for abruptly scaling back orders after online spending growth cooled this year, leaving the manufacturer saddled with excess production capacity and raw materials.

Gilimex Inc, a key partner of Amazon from 2014 to 2022, invested tens of millions of dollars in manufacturing facilities to build the steel-and-cloth storage pods used to organize inventory in Amazon warehouses. Those pods are carried by robots, speeding the fulfillment of online orders, Bloomberg reports.

The Vietnam-based company ramped employees to 7,000 across multiple factories to produce more than 1 million warehouse storage units annually. Production for Amazon increased 20-fold during the eight-year association. 

But the lawsuit alleged that Amazon in April and May abruptly changed and reduced the projected demand for the remainder of 2022 and 2023 to a small fraction of previous forecasts.

The dispute emphasized how the abrupt change in spending habits upon pandemic recovery trickled through global business relationships. 

Amazon was Gilimex's biggest customer, with orders totaling $146.6 million in 2021. Gilimex sidelined other significant customers, including IKEA and Columbia Sportswear, to meet Amazon's demand.

Meeting Amazon's needs during the pandemic required Gilimex to relocate production and packing facilities and navigate around government safety measures.

Price Action: AMZN shares traded higher by 0.11% at $92.59 in the premarket on the last check Wednesday.