H&M Cuts Jobs in Germany
H&M is laying off staff and reducing capacity at its 1.2-million-square-foot distribution center in Hamburg, Germany as part of a plan to shift fulfillment activity to an automated logistics center in Stryków, Poland. The move is part of a larger effort to expand its automated warehousing capabilities across Europe and get more products closer to the consumer in the eastern part of the continent.
The fast-fashion giant is reportedly cutting “several hundred” jobs at the Hamburg distribution center over the next few months, according to a report from German daily newspaper The Hamburger Abendblatt.
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The Swedish fast-fashion giant did not confirm the number of layoffs to Sourcing Journal.
H&M plans to move to the Poland site in the first half of 2024, according to the Sweden-based retailer.
The relocation will not end there. H&M described the shift to Poland as an interim solution, until it opens a new automated logistics center currently under construction in Czechia, better known in English as the Czech Republic. Expected to open in 2025, the Czech facility will be one of H&M’s largest distribution centers and the largest warehouse space in the country at 2.7 million square feet.
“H&M logistics processes are continuously analyzed and adjusted as necessary,” an H&M spokesperson told Sourcing Journal. “The primary goal is to constantly improve assortment availability in the sales channels and to ensure store delivery in a flexible and forward-looking manner in order to optimally meet today’s customer-oriented fulfillment requirements.”
H&M has remained relatively quiet about the Czech Republic facility, but the company said in a January earnings call that it was one of two logistics centers being built that were aimed at creating additional capacity, flexibility and speed between sales channels.
The other location is a 717,000-square-foot automated warehouse recently opened in Ajax, Ontario, Canada, which consolidated operations at H&M facilities in Brampton, Ontario, and Delta, British Columbia. This facility complements the retailer’s U.S. coastal automated logistics centers in Perris, Calif. and Robbinsville, N.J.
H&M opened the Poland distribution center in 2018, but expanded the facility in recent years as online orders grew during Covid-19. More than 800,000 square feet of space is available across two levels, including a mezzanine and a high-bay warehouse with storage capacity totaling 420,000 cartons.
“Flexible responses to specific market conditions are basically standard practice in our logistics network,” the H&M spokesperson said.
Employees use self-propelled reach trucks to pick cartons from the racks, which have shelves as high as 28 feet. These move along a 14,400-foot-long induction track through the high-bay warehouse.
The more than two-mile-long conveyor system is powered by automated processes that include sorter systems, self-propelled industrial trucks, dynamic warehouse replenishment and a SAP S4/HANA ERP system.
Arvato Supply Chain Solutions helped the global retailer expand the center from 430,000 square feet, increase H&M’s annual outbound capacity increasing by around 30 percent, and creating faster process flows for regional logistics.
Online orders for customers in Poland, Czech Republic, Hungary, Bulgaria and Slovakia are picked, packed and dispatched from the Stryków warehouse.
As many as 1,300 employees are expected to work in the Stryków facility to handle peak orders through the holiday.
According to a recent survey from Gartner, over 75 percent of companies will have adopted some form of cyber-physical automation—mechanisms controlled by computer-based algorithms—within their warehouse operations by 2027. Fifty-nine percent of the respondents said labor availability constraints are their primary motivation for investing in automation.
H&M said it has no plans to close the Hamburg facility, which processes and delivers H&M brand products to shops in several European markets. The company also said it does not expect that the planned moves of parts of the operations will impact the property lease.
The fast-fashion retailer said it has already negotiated the planned move to the Czech Republic with the local works council in Hamburg, where H&M maintains its German headquarters. Similar to a trade union, a works council represents a company’s employees, except it adjusts national labor agreements to local circumstances. Works councils in Germany must be informed of terminations ahead of time.
H&M launched a voluntary separation program to manage the Hamburg downsizing.
The retailer has already eliminated 60 jobs there since the end of last year. While 790 people are currently employed at the Hamburg distribution center, that number was about 850 to close 2022, H&M said.
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