Reference no: EM133093699

Unions have slammed Woolworths as "heartless" for deciding to replace 1,350 warehouse workers with robots after employees put in extra effort to see the supermarket giant through the coronavirus crisis. The company on Tuesday revealed plans to cut 1,350 warehouse jobs at the same time as admitting to a blowout of at least $90m in the cost of backpay for other workers it has underpaid. Woolworths, which has enjoyed bumper sales during the coronavirus outbreak as Australians stockpiled essentials including toilet paper, told the stock exchange it planned to close three warehouse sites in Sydney and Melbourne and replace them with two more highly automated distribution centres at Moorebank in Sydney's south-west. The three existing sites employ 1,350 people but the new ones, which Woolworths expects to cost between $700m and $780m, will employ just 650. It expects to pay workers who are made redundant about $176m. "The announcement by Woolworths to replace our members' jobs with robots is particularly heartless given the back-breaking work our members did to support Woolworths through covid and make them massive profits," Matt Toner, the director of logistics at the union representing workers at the Sydney warehouses, the United Workers Union, said. "Big companies can't keep irresponsibly hollowing out good jobs and good wages and conditions. "Woolworths and Coles should pay to upskill and train their existing warehouse workers in the jobs of the future rather than hiring new workers. Future jobs must maintain dignity in wages and conditions." Woolworths also said that it now expected to spend $390m on backpay for a different group of employees, who worked in its stores and were underpaid for up to nine years. . This is a blowout of at least $90m from the previous estimate of between $200m and $300m in what was already believed to be Australia's biggest wage underpayment case. The actual cost will be higher again because Woolworths has not included interest or the cost of running the remediation program in its estimate. "We know that capitalism is sick when companies have to cut their relatively low-paid workers' wages by $5 per hour and attempt to get away with stealing $390m from them to make their bottom lines look better to shareholders," Toner said. Woolworths' warehouse closures are part of a move towards automation that last year saw the group open a fully automated facility in Melbourne that handles fast-moving dry goods that don't require refrigeration. It plans to build a similar fully automated warehouse at Moorebank, plus a semi-automated centre next door that will handle groceries that sell more slowly. The Woolworths chief executive, Brad Banducci, said the new facilities will hold 30% more stock and streamline getting products into stores. He said Woolworths was "committed to supporting team members at sites that will close". "It will be a number of years until the closure of our existing facilities, which will provide the opportunity to explore meaningful redeployment opportunities for our team," he said. "We are also committed to a long-term investment in supporting all of our teams with the skills and training required for the workforce of tomorrow." Meanwhile, the chain said that food sales surged 8.6%, and sales at its discount chain Big W were up a whopping 27.8%, in the 10 weeks to 14 June. This came on top of healthy increases in the previous three months, but profit has been dampened by costs due to the coronavirus lockdown including the closure of the group's hotels and increased restocking of shelves. Woolworths said it expected to spend up to $275m extra on coronavirus costs for the quarter. "As the operating environment continues to normalise, these higher operating costs, which primarily relate to store hygiene, social distancing and increased supply chain flexibility, are gradually and cautiously being wound back," it told the ASX

Drawing upon a suitable change model, explain the drivers for change at Woolworths, and discuss what you think are the main issues behind the need for further change in Woolworths' present operating environment