Amazon faces $280 million suit for ending deal with tech supplier

A Vietnamese manufacturing company is suing Amazon for an alleged breach of contract after the retail giant terminated an agreement to produce components for its robotics division.

Gilimex produces fabric pod arrays, a storage structure industrial robots often use to allow for more efficient packaging and shipping to customers, according to the New York Post. The firm is seeking $280 million from Amazon after it ended their contract in May and has alleged "negligent misrepresentation, unfair trade practices, breach of contract and breach of fiduciary duty."

The firm was unable to convince Amazon to keep the contract in place for even a temporary period while Gilimex could refocus its operations, according to the outlet. Though Gilimex executives reportedly travelled personally to Amazon Robotic's headquarters, they were not allowed to even enter the building, they claim.

The company alleges that Amazon had encouraged it to produce an ever-increasing volume of FPAs during the COVID-19 pandemic, but broke off their agreement after Gilimex had invested considerably in expanding its capacity to make more. They further claim that Amazon had promised them sufficient advance notice prior to any termination, which they say they did not receive.

Kasowitz Benson Torres is representing Gilimex in the suit. Name partner Marc Kasowitz told the Post that "Gilimex has been critical to Amazon.com's unprecedented success, including during the COVID-19 pandemic... As alleged in our complaint, Amazon Robotics' egregious conduct caused Gilimex to invest substantially in its factories and what is now worthless inventory and raw materials."

In the suit, Gilimex contends it sold 518,000 FPAs to Amazon in 2019, a figure that rose to 936,000 in 2021 and was set to rise to 1 million in 2022. The company further says it cut ties with other customers to focus on meeting Amazon's production needs, but that the firm's termination of the agreement had significantly injured the manufacturer after its costly restructuring effort.

Gilimex has 7,000 employees in Vietnam, nearly all of whom have suffered "hardship" as a result of the deal's termination, the suit alleges.