The Fight In Delaware
Amazon.com (NASDAQ:AMZN) revolutionized book buying in the 1990s and 2000s and has recently made inroads into the original content business. For all of the company's innovation, however, it is still subject to unions attempting to organize its workers at fulfillment centers around the country. On January 15, 2014, twenty-seven technicians at the company's plant in Middletown, Delaware voted to reject organizing into a union in a 21-6 vote.
Ongoing Employee Dissatisfaction
The company has been the target of a number of allegations by workers about poor working conditions, lack of professional development opportunities, and low wages. The company's German division experienced a worker strike right before the Christmas rush period, with workers in Seattle and other facilities supporting the efforts overseas.
In recent years, Amazon has been able to depend on the generally poor state of the economy to bolster arguments against union control of the workforce; however, as the economy improves and more quality jobs become available, the company may have a hard time keeping disgruntled employees on their side.
Resisting Union Influence
Amazon has been fighting the influence of unions since 2000. Unions attempted to gain control over the company's workforce at a customer-call center in Seattle; however, Amazon took stringent action against this uprising, closing down the center in the chaos of the dot.com bust. Since then, Amazon has taken an aggressive approach against unions, meeting with employees to explain how unionizing would hurt both the company and their jobs.
Amazon has had to struggle against union control particularly at their European facilities; yet the company's overall efforts have been so successful that one thousand German workers signed an anti-union petition, convinced that unionizing would cause their jobs to disappear.
What Should Growth Investors Consider
Although in Middletown, Delaware the International Association of Machinists and Aerospace Workers (IAMAW) lobbied long and hard for support, Amazon employees eventually balked at challenging company decision-making.
Amazon has been successful in making the case against unions to workers, who are nervous about losing their jobs should the company decide to go elsewhere. The most recent vote in Middletown could clear the way for Amazon to continue its strategy for active cost-cutting and aggressive revenue growth, making it a powerhouse stock for growth investors.
We also believe consumers will continue to "visit" stores like Best Buy (NYSE:BBY) and hhgregg (NYSE:HGG) but use them as showrooms but ultimately buy their goods at Amazon. The recent devastating earnings news and stock collapse of Best Buy supports our view. See BBY holiday transcript here.
We continue to admire Amazon's growth and expense control and rate the stock a buy for 2014.