Amazon.com (AMZN) may be coming to a city near you. The largest U.S. online retailer -- North American revenue jumped a whopping 40% last year -- is expanding its fleet of fulfillment warehouses across the country to meet growing demand for its goods.
For the online shopper, this means you could receive your Amazon-purchased packages even faster. For states, it clearly means more jobs. Amazon has targeted Delaware, South Carolina, Indiana, California, Virginia, Tennessee and New Jersey for its new warehouses, many of which are set to be 1-million-square feet and employ anywhere between 400 and 1,500 full-time workers. The issue of additional tax revenue, which for many cash-strapped states would help close up budget shortfalls, will help certain locales sooner than others.
While this might seem like a win-win for everyone, Amazon has come under some scrutiny in recent years for the working conditions in its warehouses. The most notable instance was the well-documented case of extremely hot temperatures in its Allentown, Pa., warehouse during a heat wave when some workers fainted and were rushed to the hospital. According to an investigation by The Morning Call in Allentown, Amazon paid ambulances to sit outside the warehouse in the event of more heat-related sicknesses.
After that disturbing news broke, Amazon installed a new $52 million air conditioning system to help keep its Allentown workers cool. The online retailer is making this a standard practice for all of its warehouses. The company told The Daily Ticker via email:
"Safety is our top priority. Since we ship hundreds of millions of packages a year, employ tens of thousands of associates, and record millions of work hours, it isn't possible to accurately portray the effectiveness of our procedures with anecdotes.
From January 1, 2006 to December 31, 2011, our U.S. fulfillment network had an annual average recordable incidence rate ranging from 2.2 to 4.2. These rates are lower than for auto manufacturing, the warehousing industry, and even for department stores. To put it simply, it's safer to work in an Amazon fulfillment center than in a department store. In addition to our focus on safety, we also pay fulfillment center associates 30 percent more than traditional physical retail store employees.
In recent years, we've built our new fulfillment centers with air conditioning units installed. This year, we are also investing $52 million to retrofit our other fulfillment centers with air conditioning. This is very unusual in the warehousing and distribution business."
In the accompanying interview, New Jersey Assemblyman Albert Coutinho (D-Essex) joined The Daily Ticker to discuss Amazon's agreement, which he helped craft for the Garden State.
"This is a great deal for the state of New Jersey," he says. Amazon will invest between $130 million and $300 million in the state to build two 1-million-square-foot order-fulfillment centers that will generate 1,500 full-time jobs, as well as many part-time jobs and seasonal jobs, Coutinho says. There will also be a need for many construction jobs to build the new facility, which is slated to break ground next year. He says the company has made assurances that it will protect all its workers in the warehouses.
The deal will also "begin to level the playing field" between Amazon and brick-and-mortar stores, says Coutinho. Currently, online retailers have a competitive advantage over traditional stores because they do not have to charge sales tax, which makes it cheaper to purchase goods online. Amazon has agreed to collect a 7 percent sales tax on New Jersey residents starting in the summer of 2013, which could generate an additional $30 million to $40 million in tax revenue for the state each year.
In Virginia, Amazon will collect sales tax from residents starting in 2013. In South Carolina, the date is set for 2016, and in Tennessee and Indiana the new practice will take hold in 2014.
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