Amazon’s post-Covid cutbacks draw ire of Vietnamese supplier

Bloomberg

Amazon.com Inc faces a $280 million lawsuit from a Vietnamese manufacturer of warehouse storage systems that alleges the e-commerce giant abruptly scaled back orders after online spending growth cooled this year, leaving the manufacturer saddled with excess production capacity and raw materials.
Gilimex Inc said it was a key partner of Amazon from 2014 to 2022, investing tens of millions of dollars in manufacturing facilities to build the steel-and-cloth storage pods used to organise inventory in Amazon warehouses. Those pods are carried by robots, speeding the fulfillment of online orders so workers don’t have to race around the sprawling facilities on foot.
The lawsuit provides a rare glimpse into Amazon’s relationships with suppliers needed to fuel its rapid expansion during the pandemic and how those suppliers often took big risks. The Ho Chi Minh City-based company said it swelled to 7,000 employees across multiple factories to produce more than 1 million warehouse storage units annually. Production for Amazon increased 20-fold during the eight-year relationship. The partnership was built around “trust,” according to the 32-page complaint, with Gilimex relying on the accuracy of Amazon’s forecasts to make adequate investments to meet demand.
Gilimex said it had a long-standing agreement with Amazon regarding transparency about anticipated demand so that it could procure materials, factory capacity and employees to fulfill Amazon’s growth, which soared during the pandemic as many people sheltered at home and spent money online. But Amazon in April and May “immediately changed and reduced the projected demand” for the remainder of 2022 and 2023 to a small fraction of previous forecasts, according to the lawsuit.