Amazon looks for giant 'footprint' in Pa.
Pennsylvania has emerged as one of the top employment centers for Amazon.com's giant retail warehouses, with help from millions in state aid and tax forgiveness.
Pennsylvania has emerged as one of the top employment centers for Amazon.com's giant retail warehouses, with help from millions in state aid and tax forgiveness.
The online retail and internet services giant runs 13 fulfillment warehouses and distribution centers in the commonwealth, covering nine million square feet.
That's the same number of facilities and about three-quarters as much space as Amazon uses in California, which has triple Pennsylvania's population. No other state has as many, according to data collected by MWPVL, a Montreal-based logistics consultant.
Amazon's Pennsylvania warehouses cover twice as much floor space as Philadelphia's two Liberty Place high-rises, plus Comcast's current and future headquarters towers, combined.
The Seattle-based company has at least 8,200 workers in Pennsylvania and is heading for 13,000. If it keeps adding warehouse workers, bosses, and support staff on schedule, it will in a few years employ more Pennsylvanians than now work at each of Comcast, Vanguard, Merck, and Wawa - at least until robots take over picking and packing the millions of boxes that Amazon ships daily.
Amazon facilities are clustered in the Lehigh Valley, the Harrisburg-Carlisle area, and Luzerne County; there are others built or planned in Burlington and Gloucester Counties, South Jersey. The first Amazon "fulfillment center" opened in New Castle, Del., in 1997; one of the largest is in nearby Middletown. Delaware is one of the few states without a retail sales tax.
More than half of Amazon's Pennsylvania centers have opened since the fall of 2011, when Gov. Tom Corbett's administration agreed not to collect back sales taxes that Amazon and its customers hadn't paid.
The state Revenue Department estimated uncollected taxes from Amazon sales in the state at $380 million for 2011 alone. Amazon agreed to begin collecting Pennsylvania sales taxes starting in September 2012.
Last month, Pennsylvania's Department of Community and Economic Development offered Amazon $5 million from the Pennsylvania First program, $15 million in job-creation tax credits, plus $2.25 million in employee training - so long as Amazon creates 5,000 more jobs over the next three years. Amazon is expected to collect profits of more than $5 billion on sales of $138 billion this year, according to analysts polled by Bloomberg LP.
If Pennsylvania's grants sound like a lot, consider: At about $4,500 a job, that's cheaper than the hundreds of thousands per job that New Jersey has given companies in tax breaks to move jobs to Camden.
The latest expansion is part of Amazon's "Prime Now" fast delivery service. The company is looking for "multiple new sites," Jeffrey Sheridan, spokesman for Gov. Wolf, told me. Amazon officials had no comment for this column.
To keep the tax breaks and cash, Amazon "must then retain those new jobs, and the existing jobs, for an additional four years," Sheridan said. The state says Amazon has committed to spending at least $150 million on new facilities, including a newly leased warehouse in Palmer Township, near Easton.
Wolf was following the path of Ed Rendell, who as governor gave Amazon $1.25 million in exchange for a promise to invest nearly $20 million, add 1,121 jobs, and keep 84 existing jobs at its first Pennsylvania warehouses - which the company did, said state spokeswoman Lyndsay Kensinger.
By Pennsylvania's count, Amazon now employs 8,200 people at a string of its "logistics-distribution centers." Amazon gets the $22.5 million in combined grants if it employs 13,200 at those centers and new facilities by 2019.
The company has added thousands of temporary workers to meet the Christmas rush. Jobs start at around $12 an hour.
Pennsylvania's job target doesn't count one of Amazon's largest centers here, the 1.2 million-square-foot warehouse at Gouldsboro, Luzerne County, which Amazon inherited when it bought Quidsi, owner of Diapers.com, from founder Mark Lore and his partners three years ago. Other Amazon warehouses that size employ more than 1,000 each.
Lore, a Bucknell graduate, went on to found another online retailer, Jet.com, which has a warehouse near Swedesboro, before selling the company to Walmart last month.
Marc Wulfraat, the Montreal logistics consultant who owns MWPVL, which tracks Amazon's global warehouse network, says he's surprised to hear that Amazon plans to keep expanding here so rapidly.
To be sure, Pennsylvania's large supply of "cheap soil and plentiful labor" along free interstate highways convenient to major East Coast ports and urban areas with twice the population of California makes it a natural warehouse center, Wulfraat added.
But Amazon has also committed to automating much of its warehouse production, Wulfraat noted. Already, the work of loading pallets on and off trucks is mechanized. Investors in digital controls are working on robots that can replace humans in "grasping basketballs, marbles and pills" with varying grips, and Amazon "is leading the way," Wulfraat noted.
As automation progresses, "a lot of those 5,000 new people may not be needed anymore," he concluded.
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