‘A dark legacy’: unions voice fears over global logistic firm’s spinoff

‘A dark legacy’: unions voice fears over global logistics firm’s spinoff

US-based XPO Logistics has boomed during the pandemic but its reorganisation is causing concern

Warehouse operator
The pandemic has been a boon to XPO Logistics, the transport giant that delivers the goods for a global companies including retailers from Asos and Walmart. It reported record revenues of $5bn (£3.6bn) last quarter as it helped to ship everything from washing machines to frozen fruit around the world.

To make the most of the boom, the US-based multinational has just completed the process of dividing itself in two, with the warehouse and e-commerce arm becoming a separately listed corporation called GXO Logistics. But the road ahead does not look trouble-free. Union leaders in the UK and US are sounding the alarm, pointing to the “dark legacy” of a corporate culture they fear will taint the reorganised businesses.


In the UK, where the company delivers an estimated 40% of the beer consumed in British pubs, the trucking division narrowly avoided a strike last month over a below-inflation pay offer, which was later increased. While XPO accepted £100m from the government’s job support scheme during the pandemic, its furloughed workers effectively took a pay cut, because the scheme covers 80% of wages and managers rejected requests to top-up the final 20%.

Disputes were further inflamed by XPO’s decision in May to override objections from shareholders and approve a long-term incentive award for the company’s founder, the billionaire dealmaker Bradley Jacobs, which could be worth up to $80m.

Last week, workers gathered at an online seminar organised by unions on both sides of the Atlantic to discuss plans for tackling social and governance issues at the two sister companies.

“XPO Logistics has a dark legacy when it comes to the issues of workers,” said Louis Malizia, assistant director of capital strategies at the International Brotherhood of Teamsters union. “And I think that’s the carryover that’s coming into GXO Logistics.

“Many of the management teams, both at the corporate level as well as the actual operational levels at the warehouses were all brought over. The human resources philosophy, as well as the actual people who are implementing these human resources policies and practices, have moved over between XPO to GXO.”

A serial entrepreneur, Jacobs built XPO with a suite of mergers starting in 2011 that left the company well positioned to benefit even before the pandemic sped up the already supercharged shift to online delivery.

He now has a net worth of $3.6bn, according to Forbes, and the separation is likely to add more millions to his fortune because the companies are worth more separately than they were combined. Investors have received one share of GXO for every XPO share they held. Jacobs remains non-executive chairman at GXO, has stayed on as chairman and chief executive of XPO, and owns just under 18% of the latter company, which is valued at nearly $10bn.

XPO organises transportation for brands including Nestlé, Nike, Ikea, Home Depot and the supermarket chains Morrisons, Co-op, Waitrose and Iceland. Before the split, more than 25,000 workers were employed by XPO in the UK. The spin-off company, GXO, has about 94,000 employees at 869 sites globally.

But the company also has a long history of labour disputes and its treatment of workers during the pandemic has triggered concern from unions.

They point out that corporate executives were paid $6.4m in bonuses in 2020, while warehouse staff in Swindon and Bellshill in Scotland had to battle through Covid outbreaks. The company was criticised for a sick pay policy which docked the first three days of wages for any absence at Bellshill, although it pointed out at the time that the GMB had played a full part in negotiations over the sick pay provision.

An XPO Logistics lorry with silo trailer on motorway

Those disputes are likely to grow more heated as GXO executives tout the benefits of warehouse automation and new technologies to investors. One of the flagship UK sites is a new facility for Nestlé at the East Midlands Gateway industrial park near Derby. Unite signed a recognition deal with the company there in July, which the union said would help guard against any attempt to “reduce workers’ rights and weaken health and safety laws”.

With innovations such as robotic arms and wearable scanners, GXO’s facilities are undoubtedly state of the art. But unions are wary of automation being used as a means to drive down wages.

“XPO Logistics, especially in the UK, were very guilty of bidding and winning contracts on low margins,” said Matt Draper, national officer for drivers and warehouse staff at Unite. The union has pushed for technology agreements, which ensure any new automation is introduced in discussion with workers.

“It’s about progression from a highly manual workforce to a fully automated workforce, driving the wages down,” said Draper. “The impact of that is going to rub off on workers and communities.”

A spokesperson for GXO said: “We’ve always believed that spinning off our logistics business as GXO was the most effective way to unlock significant value for all our stakeholders. For our employees, this means continuing to offer market competitive pay and benefits, cross training for skills development and opportunities for professional growth. We’re also developing new ways of managing supply chains for our customers using the latest technology, notably with automation that helps our team and improves safety in operations.”

Last week’s seminar builds on years of collaboration by unions representing XPO drivers and warehouse staff around the US and Europe, who have joined forces on protests, picket lines and strikes. Last year, 11 unions came together to publish a report detailing allegations of controversial wage practices, poor Covid-19 responses, health and safety violations and anti-union efforts.

Responding at the time, an XPO spokesperson rejected the claims, saying: “The report repeats wholly inaccurate allegations that have been entirely debunked.”

In January 2018, a judge in the US ordered XPO Logistics to provide back pay to unionised workers for raises they were denied, but that were given to non-union workers. XPO Logistics has paid more than $47m in fines and penalties related to employee-related offences in the US since 2000.

In the US, only 231 out of 35,000 employees at XPO Logistics were unionised compared with Europe, where about 75% of the company’s employees are represented. The Teamsters secured their first union contracts among XPO Logistics employees a few weeks before the spin-off.

Greg Chockley, national campaign coordinator for the International Brotherhood of Teamsters, said: “Bradley Jacobs is still holding the reins at both companies. The money flows to the top.”

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