World’s Largest Online Retailer to Build Fulfillment Center in Wisconsin
JANUARY 21, 2014
Working with an Internet giant like Amazon.com to open a new facility in Wisconsin isn’t the kind of deal that gets completed over a business lunch.
Negotiations with the company, the world’s largest online retailer, were complex and lengthy—involving countless hours, late-night meetings, and closed-door discussions.
That lengthy process paid off in November when the company—after more than a year of talks—broke ground on a 1-million-square-foot fulfillment center in Kenosha, a project that is expected to create 1,100 new jobs by 2015.
The Wisconsin Economic Development Corporation (WEDC) has agreed to provide Amazon with up to $7 million in tax credits. The company is eligible to earn tax credits through 2024 based on the actual number of full-time jobs created and the level of capital expenditures at the fulfillment center.
With the Kenosha facility, Amazon now has fulfillment centers in 20 states—as well as three continents and 14 countries.
When It Began
During the fall of 2012, conversations began between WEDC and Amazon’s economic development director, Mike Grella. Shortly after the initial call with Amazon, Grella and WEDC began working together, under strict confidentiality, to draft a non-disclosure agreement, file an application, and get the ball rolling for a fulfillment center in Wisconsin.
Finding a site to fit Amazon’s significant needs was critical to the decision-making process. Amazon has an ongoing strategic growth plan, which includes a search for sites throughout the nation. This particular site search included more than a dozen states, including Washington D.C., Connecticut, Texas and Ohio. There are currently 50 fulfillment centers in the United States; eight in Kentucky; five in Tennessee; and five in Arizona.
Why Amazon Chose Kenosha, Wisconsin
Initially the project was outlined to include a 1-million-square-foot build-to-suit fulfillment center, with a project budget of $117 million and the creation of 486 jobs.
Amazon was considering two Wisconsin locations—one in Kenosha and one in Racine County. With a long list of criteria to be met, Kenosha made the final cut for a variety of reasons—the size of the contiguous land parcel; its easy access to I-94; the potential for future expansion; and the site’s close proximity to Chicago.
With these advantages, Amazon officials decided on Kenosha as the site for the fulfillment center, and Grella was able to share the significant change in the overall project with WEDC—it had morphed into a larger development with a budget of almost $250 million and the potential to create 1,100 jobs.
How Wisconsin Will Be Impacted
The expansion of Amazon to Wisconsin has many advantages:
- The fulfillment center will bring 1,100 jobs with an average starting wage of $16.93 by 2015. Most positions will be for fulfillment center associates that pay between $13 and $14 per hour, as well as IT/office jobs starting at $15 per hour. Approximately 181 jobs will pay more than $30,000 per year. At the facility, Amazon employees will pick, pack and ship small items to customers like books, electronics or consumer goods.
- A capital investment of $248 million—with $141,000,000 coming directly from Amazon (the balance is through leasing arrangements with the landlord and equipment leasing companies).
- Amazon fulfillment center jobs pay on average 30 percent more than traditional retail jobs, not including the stock grants that full-time employees receive. Amazon employees receive comprehensive benefits, including healthcare starting on day one, 401(k) and company stock awards.
The Role of WEDC
WEDC’s extended enterprise—including the Kenosha Area Business Alliance, the city of Kenosha and other state agencies—impressed Amazon decision-makers. When they asked for support, the state showed a united front and provided viable solutions. WEDC continues to participate in critical project update meetings that include the developer, the general contractor, the Wisconsin Department of Transportation (DOT), traffic consultants, utilities and others. As issues arise, either DOT or WEDC provides support and options to overcome obstacles.
Grella has repeatedly noted how well WEDC and state agencies have worked together, and how the Wisconsin Department of Natural Resources (DNR) and others have been terrific to work with.
Acknowledging the warm welcome Amazon has received in Wisconsin, the company’s vice president of North America operations said, “We appreciate the state and local elected leaders who have supported Amazon coming to Wisconsin and we look forward to bringing jobs and investment to the state.”