News Column

Amazon To Open 2 Distribution Centers in Virginia

Dec. 22, 2011

John Reid Blackwell

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Online giant Inc. is planning to open two distribution centers in the Richmond, Va., area next fall that would employ a total of 1,350 people, state and local officials announced this morning.

The $135 million investment in Chesterfield and Dinwiddie counties is Virginia's largest single economic development deal since 2004 in terms of jobs created.

In announcing the project, Gov. Bob McDonnell called the investment "a tremendous win for the Greater Richmond region."

Amazon, based in Seattle, plans to invest $85 million to open a 1 million-square-foot fulfillment center in Meadowville Technology Park in eastern Chesterfield. That site would employ about 1,000 people.

In Dinwiddie, the company plans to invest $50 million to open a center in the Dinwiddie Commerce Park that would employ about 350 people.

Fulfillment centers are where the company warehouses and ships products its customers order from Amazon's website. The local sites will serve customers nationwide.

"This is a big deal, and it is a deal we have been working on for a long time," Will Davis, Chesterfield's economic development director, said about the Chesterfield site.

"You can imagine the economic impact of this size operation," he said. "It really establishes Meadowville as a premier business park."

Meadowville Technology Park is owned by the Chesterfield Economic Development Authority and includes about 1,300 acres of land adjacent to Interstate 295 just south of the James River. The park's only occupant now is Northrop Grumman Corp., which is running its Virginia Information Technologies Agency operations from a $250 million facility.

A new exit from I-295 to the park, paid for with federal, state and local funds, opened Friday. In November, county officials filed preliminary paperwork for Planning Department approval for a 1 million-square-foot distribution center in the park.

One million square feet is about the size of eight Lowe's home-improvement warehouse stores.

A pioneer of online retailing, Amazon started as primarily a bookseller but now offers millions of products, including movies, music, games, electronics, toys, apparel, jewelry and tools. It reported more than $34 billion in revenue in 2010, about $18.7 billion of that in North America.

It generated $30.6 billion in sales in the first nine months of this year. In the current fourth quarter, the company expects sales to be between $16.45 billion and $18.65 billion, or an increase of 27 percent to 44 percent compared with the fourth quarter of 2010.

The timing of opening the fulfillment centers in the fall is important because Amazon wants to open them in time for next year's holiday sales season, when it typically generates 35 percent to 40 percent of its annual sales, according to its public financial reports.

The seasonal nature of Amazon's sales means the company's employment levels fluctuate. Its warehouses typically hire many seasonal workers during the last three months of the year.

State and local officials could provide no average pay or salary ranges for the jobs on Wednesday, and Amazon did not return a call seeking further comment.

"We look forward to opening two new Amazon facilities in the Richmond area next year, bringing tens of millions of dollars and hundreds of new jobs to the state," Dave Clark, vice president of Amazon's North American operations, said in a statement released by state officials Wednesday. "We're grateful to Gov. McDonnell and other state, county and local officials for their commitment to our investment in Virginia."

The new Amazon centers in Chesterfield and Dinwiddie will fulfill orders across the U.S., McDonnell said. "The establishment of these new operations is testament to the positive business climate and success the company has experienced in the commonwealth."

The 1,350 new jobs will have a significant economic ripple effect in the Richmond region and should reduce the unemployment rate, said Gregory H. Wingfield, president and CEO of the Greater Richmond Partnership, a regional economic development organization.

The region's jobless rate stood at 7.6 percent on a seasonally adjusted basis in October.

"Also, having a name like Amazon is going to give a lot of visibility to the Greater Richmond area," Wingfield said, adding that the group plans to use that in its marketing and outreach to other potential business prospects.

Logistics is one of five key industry groups that the Greater Richmond Partnership has been targeting to locate business operations in the Richmond area, he said. "This underscores that we are on the right path in being able to target very specific types of growth-oriented businesses."

Chesterfield is providing about $5 million in total incentives to attract the company, including infrastructure improvements at the site.

McDonnell approved a total of $3.5 million in grants from the Governor's Opportunity Fund to assist both Chesterfield and Dinwiddie with the project.

The Virginia Tobacco Indemnification and Community Revitalization Commission also is providing $850,000 in Tobacco Region Opportunity Funds for the Dinwiddie project.

Source: (c) 2011 the Richmond Times-Dispatch (Richmond, Va.)

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