'This is capitalism': The stark reality of Amazon's supply chain

An Amazon warehouse in Tijuana, Mexico, with a fresh newly-built face on one side and deteriorating shacks with cardboard roofs on another was shown in a series of images that went viral on social media on September 7.

The images captured by photographer Omar Martines were a stark display of globalisation and capitalism, some users commented. One drew a comparison to an image from the science fiction movie “Idiocracy” that showed characters looking into a dystopian image of shacks surrounding a giant warehouse, just like Amazon. 

Amazon’s founder Jeff Bezos is the world’s wealthiest person. He recently travelled to outer space in a rocket and thanked his employees for making his space trip possible.

The way Amazon sees their expansion across the world, with its latest addition in Tijuana, is to generate jobs in the areas they enter.

“Since our arrival in Mexico, Amazon has created more than 15,000 jobs throughout the country, creating employment opportunities with competitive salaries and benefits for all of our employees. Our wages and benefits strengthen local communities, and these investments help these areas to grow and to build better futures,” Marissa Vano, an Amazon spokesperson said.

Mexico as a replacement to direct China-US trade

“These photos of a new Amazon warehouse in Tijuana, Mexico have been going viral as the "This is capitalism" picture of the year. But there's a lot more going on here than the picture can tell you,” Charmaine Chua, a professor at the Department of Global Studies at the University of California, said in a tweet chain. 

Chua says understanding the Tijuana distribution center’s relation to the larger delivery network is essential to understand how Amazon’s supply chain works.

She says, while the Inland Empire, a source of cheap land and labour, has been the most crucial store for Amazon’s delivery network, it started to change since former US President Donald Trump’s trade war that led to a total increase of about $200 billion in tariffs from China.

“This means direct China-US trade has become too expensive. The solution? Mexico,” Chua said, adding that the Tijuana fulfillment center is not there to serve locals. 

Noting that at the end of former President Barack Obama's term in 2016, NAFTA Section 321 was extended to allow the duty-free import of goods up to $800 in reference to a dissertation by Spencer Potiker, Chua argued that for Amazon, this duty-free clause, set against the increase in China-US tariffs, provides a loophole.  

“They will ship Chinese goods into Mexico, bring them to the Tijuana facility to process and break apart, then truck them in tote-bag sized, sub-$800 bundles to Otay Mesa FC (fulfillment center),” she said. Otay Mesa FC, located in San Diego country, is less than a 25 min drive from the new Tijuana center in Mexico, so goods can be easily disassembled for import.

Notorious work conditions

A 2018 report by the Economic Policy Institute in 2018, had found that Amazon’s warehouse openings didn’t always end up with an overall increase in employment in the areas the company expanded, even though warehouse and storage jobs saw an increase.

The company’s pay rates start at $15 an hour at the US warehouses and it takes pride in what it calls competitive health insurance and retirement benefits. Minimum wage in Mexico, paid warehouse workers, meanwhile is $9USD per day.

But subcontracted labor, forced overtime work, and denying severance upon layoffs are some of the issues that Amazon’s warehouses have, Reuters has reported.

The giant company was blamed for the abuse of its employers in other locations too. Working in shifts for more than 10 hours, some of the workers experience homelessness, workplace injuries. Notorious working circumstances that at one point pushed its drivers to urinate in bottles while working.