What Seattle's tech layoffs mean for the region and the industry

It's been over 50 years since the Boeing Bust. These are very different times, but news today that Amazon will lay off 10,000 white collar employees is significant. It would be the largest round of job cuts in the company's history.

To find out more about what this means locally and nationally, KUOW’s Kim Malcolm talked to GeekWire reporter and co-founder Todd Bishop.

This interview has been edited for clarity.

Kim Malcolm: Amazon has around 1.5 million employees around the world. Do we know what parts of the company are going to feel these cuts?

Todd Bishop: Yes. According to reports from The New York Times, the company will be cutting in areas including its devices division — which makes the Echo smart speakers and the Alexa voice assistant — and some of its retail operations and human resources. Those are the three areas that were named.

Do you have any idea how many of those cuts would be here in the Seattle area?

This is a little bit squishy. It was described to me by a person familiar with the matter this morning as “fluid.” Overall, it looks like the cuts globally will be in the range of 10,000 people, but the company is leaving that to each division. They will not be shooting for a target of 10,000. That's simply an estimate of where they may end up.

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The announcements internally could start this week. And then they'll roll out for quite a while after that. In the Seattle region, Amazon employs about 75,000 people. Most of them are corporate and tech workers. The assumption is that the disproportionate number will be here in the Seattle region of those 10,000 people.

And this could have implications for HQ2 in Virginia as well, right?

That's correct. Amazon has expanded not just into Bellevue, Wash., locally, but across the country, with many of these corporate and tech jobs.

About those areas that most likely are going to be feeling these cuts, does any of that surprise you?

Actually, yes. The devices division was a surprise. This has been an area of deep investment for Amazon over the past five years or so. I think it may speak to the fact that they may see a limit to this market, or at least in this environment of the economic downturn, and more cautious consumer spending, not as much demand for as many devices as they've been producing.

Has Amazon made any official statements yet?

Not yet, but we can read the tea leaves. Brian Olsavsky, Amazon's chief financial officer, said on their recent earnings call that they would be slowing hiring, at least. He cited foreign currency headwinds, unfavorable exchange rates, inflation, fuel prices, and overall rising energy costs. And it's really an example of just how much Amazon has expanded, not just its headcount, but its footprint into a variety of different areas of the economy. There's not that many tech companies that are impacted by rising fuel prices to the extent that Amazon is, just because of its delivery infrastructure.

You have documented how Amazon just exploded in size during the pandemic. And of course, business conditions are quite different now. How do you see this playing out as Amazon's trying to plan for the future?

We've seen the company make some specific bets on certain areas that they know they're going to see growth in. Amazon Web Services, the e-commerce operations at the company, and even Amazon Prime. And in the midst of all this, you're seeing continued advertising for Amazon's Lord of the Rings adaptation and for Thursday Night Football. So you can see they're really betting on specific areas, and continuing to invest in those.

With these job cuts, we can see that Alexa and devices may be an area where they won't be investing as much. Perhaps that means that rather than dozens of new products at their annual fall device unveiling, maybe we'll see only a dozen or a handful. You can see where they're doubling down in some areas, but cutting back in others.

We did see Twitter's workforce get slashed last week, and then we saw them have second thoughts about that. They tried to hire some of their people back. Given the competition that there is out there right now for tech workers, is there a chance that Amazon might change its mind about some of these decisions?

I don't think so. And the reason is, in part, because of what I mentioned earlier about the fact that Amazon is allowing these decisions to be made within many of its divisions. The fact that they're effectively delegating the decisions to those managers means that they're being made relatively close to the actual teams that are being impacted. That would imply at least that in an organization with good communication, that they would know at this point, with some visibility for the months ahead, how many folks they need, where they're going to be focusing.

It's not as if Andy Jassy, the Amazon CEO, is waving his wand from the Day 1 tower to do this and might realize tomorrow, as Elon Musk did in Twitter's case, that he made a big mistake.

What kinds of repercussions are you seeing here in Seattle that we should be watching for?

Seattle saw a huge boom over the past 12 years. Amazon, Microsoft, the arrival of the Silicon Valley tech giants, including Meta/Facebook, and Twitter. I think the risk here is that you could see a reversal of some of those trends. And frankly, reversing some of those trends would be a good thing for the region. We've already seen housing prices retreat to some extent, because of the larger economy. Certainly, you don't see new Amazon recruits going out with cash to outbid all the locals.

But at the same time, this is in some ways, unprecedented for the tech industry in the region, to have this many people suddenly searching for work. It is such a dramatic reversal from just the past few months. And I think we're still waiting to see how far this is going to go and what the long term impacts will be.

Listen to the interview by clicking the play button above.