Amazon watch: Putting a number to the unionization push
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Morgan Stanley dove into the implications of the unionization vote at an Amazon (NASDAQ:AMZN) facility in Staten Island.
Analyst Brian Nowak noted the financial impact is not finalized and there are steps Amazon (AMZN) can pursue before entering directly into bargaining with the labor union.
Nowak and team also tackled the big question on if the unionization efforts will spread.
"It is likely that additional unionization efforts by employees will need to be done on a facility-by-facility basis across AMZN's estimated hundreds of US fulfillment and distribution centers. These processes are long and uncertain."
It was also observed that Amazon (AMZN) has been a leader in increasing worker compensation and it could increase the pace at which it invests and integrates robotics and labor alternatives into its warehousing efforts if unionizations efforts were to ramp up.
By itself, the New York unionization is estimated to represent a ~$200M or less hit to AMZN's Opex tally or a ~0.4% reduction to 2023 EBIT. While a rapid trend towards unionization is not anticipated, if applied to AMZN's broader 750,000 U.S. fulfillment/transportation workforce, every 1% of employees that unionize is estimated to add an incremental ~$150M to annual opex.
Amazon's (AMZN) statement on the development: "Weâre disappointed with the outcome of the election in Staten Island because we believe having a direct relationship with the company is best for our employees. Weâre evaluating our options, including filing objections based on the inappropriate and undue influence by the NLRB that we and others (including the National Retail Federation and U.S. Chamber of Commerce) witnessed in this election."
Amazon (AMZN) rose 0.39% premarket.
Read about the growing unionization push at Starbucks.