Amazon.com, Inc. (NASDAQ:AMZN) announced Tuesday it will hire 70,000 new seasonal workers in the U.S. to meet the holiday season demand. In contrast, drug-maker Merck & Co., Inc. (NYSE:MRK) announced it will slash 8,500 jobs to cut its expenses by $2.5 billion a year. Like many pharmaceutical firms, Merck & Co., Inc. (NYSE:MRK) is under intense pressure as patents on its key drugs expire.
Amazon challenges its competitors
Last year, Amazon.com, Inc. (NASDAQ:AMZN) had hired 50,000 seasonal employees. A 40 percent increase in hiring over the previous year suggests that the e-commerce giant expects much stronger sales during this holiday season. Amazon.com, Inc. (NASDAQ:AMZN) currently has more than 97,000 employees. Seasonal workers will be eligible for health care benefits, said a company spokeswoman.
Amazon.com, Inc. (NASDAQ:AMZN) said it will also hire about 15,000 seasonal workers in the U.K. Seasonal hires have become a ritual for retailers. Recently, Wal-Mart Stores, Inc. (NYSE:WMT) announced it will hire 55,000 seasonal workers this year. Target Corporation (NYSE:TGT), which added 85,000 seasonal workers last year, expects to hire 70,000 this year. The 20 percent decline in seasonal hires indicates the willingness of full-time employees to log more working hours, says Greg Bensinger of The Wall Street Journal.
The Seattle-based online retailer is rapidly expanding its network of warehouses to speed up the delivery process. Amazon.com, Inc. (NASDAQ:AMZN) has also launched a new initiative, Amazon Fresh, to provide groceries to customers. It will give the company an edge over competitors Wal-Mart Stores, Inc. (NYSE:WMT) and eBay Inc (NASDAQ:EBAY) that have started offering same day delivery in certain parts of the country.
Seasonal hiring crucial for Amazon
Amazon.com, Inc. (NASDAQ:AMZN) has 89 warehouses across the globe. The company spokeswoman said that seasonal workers receive 6 percent less than the starting salary of full-time employees, which is about $11 per hour. Many of the seasonal workers will be offered permanent positions after the holiday season. The company said today that it has converted about 7,000 temporary workers into full-time employees in the U.S. so far this year.
Fourth quarter sales account for more than 35 percent of Amazon.com, Inc. (NASDAQ:AMZN)’s annual sales. Finding sufficient seasonal workers to meet the holiday demand is crucial for its business. Amazon.com, Inc. (NASDAQ:AMZN) shares have gained 24 percent this year so far as investors expect the company’s sales to rise further.
Amazon.com, Inc. (NASDAQ:AMZN) shares rose 1.23 percent to $316.46 at 9:44 AM EDT.
Merck shifts focus to R&D
The New Jersey-based pharmaceutical company has already announced 7,500 job cuts. The latest announcement takes the total figure to 16,000. Merck & Co., Inc. (NYSE:MRK) said it will take $2.5 billion to $3 billion in restructuring charges. Patent on its blockbuster diabetes medicine Januvia will soon expire, opening the way for cheaper generic drugs.
Merck & Co., Inc. (NYSE:MRK) said it will focus more on developing drugs that have strong sales potential. The company chief executive Ken Frazier said he will put more emphasis on large economies such as the U.S., Japan, China, Russia, India and Brazil.
Merck & Co., Inc. (NYSE:MRK) shares jumped 1.28 percent to $48.21 at 9:56 AM EDT.