Ripple effects of a retail giant

Impacts of Amazon’s pending physical presence in

region pondered

Amazon's 640,000 square-foot fulfillment center being built near Spokane International Airport will create more than 1,500 full-time jobs.

What Amazon taketh away from Kootenai County merchants it might at least partly giveth back to workers.

"The impact of an Amazon presence here will be felt in the labor market rather than on the sales side," said Sam Wolkenhauer, Idaho Department of Labor regional economist.

"Amazon's presence in the (local) market is already so enormous that local retailers are already feeling the force of that competition."

The minimum wage for all Amazon employees in the United States is $15, Lauren Lynch, company spokeswoman, told The Business Journal of North Idaho. It also offers health insurance, a retirement program, immediate company stock awards and up to 95 percent of tuition for courses related to in-demand fields regardless of whether the skills are relevant to a career at Amazon.

Kootenai County's median wage is $15.46 per hour, which means Amazon’s minimum wage will be competitive with the current pay of about half of the Kootenai County employees.

"Twenty-five percent of employees in Kootenai County work for $11.13 per hour or less, so there is a significant share of our workforce that could see substantial raises if they went to work for Amazon," Wolkenhauer said. "That's certainly something that we need to be aware of."

What isn't as clear, he said, is how many people from Kootenai County will actually commute to the other side of Spokane to fetch that wage.

Gynii Gilliam, president of Coeur d’Alene Area Economic Development Corporation — also known as Jobs Plus — said that based on a survey of Kootenai County companies Jobs Plus works with, businesses that may pay $14 to $16 per hour are not struggling to fill vacancies with the exception of nationwide shortages in certain fields such as truck driving.

The Census Bureau estimates that nearly 10,000 Kootenai County residents already commute to Spokane County for work.

"Clearly, it isn't something that our residents are totally averse to," Wolkenhauer said. "With that said, the location west of Spokane may make local residents less likely to make that commute than those who live in Liberty Lake or Spokane Valley.

"We just don't know to this point what those numbers will look like."

Wolkenhauer said Spokane's labor market has had overall impacts in Kootenai County with its higher wages, and Amazon will increase those.

"The presence of a massive new employer paying competitive wages will only put further strain on our tight labor market," he said.

Kootenai County's unemployment rate in November, the latest data available, was 3 percent.

The rate has fallen below 3 percent only once in the past 30 years — in the spring of 2007, when it briefly fell to 2.9 percent.

Gilliam agreed that Amazon will increase labor challenges but it should also attract people to the area to soften that blow.

"For Kootenai County residents, it increases options, whether that means working directly for Amazon, one of its suppliers or any other businesses that spring up," she said. "When an industry grows, there is always the possibility of growing the supply chain."

Gilliam cited packaging materials as one example of a type of business that could result from Amazon's facility.

Gilliam believes the biggest advantage of having the fulfillment center next door will be increased awareness in the region about service industries, including transportation, distribution and warehousing.

"Having a Fortune 100 company pick our region elevates our area as a location," she said.

Lynch declined to comment on any possible ripple effects in Kootenai County of Amazon's new center.

"That's not something we can speak to," she said.

The center rises

The four-story facility on an 80-acre site at 10010 W. Geiger Boulevard on the West Plains will pack and ship small items such as books, electronics, housewares and toys. Larger items are shipped out of Amazon's other fulfillment centers.

Goods will be shipped to the new fulfillment center by truck and plane. Working alongside a robotic system, employees will fill worldwide orders.

Construction should wrap up this fall, but an opening date or month hasn't been pinpointed.

"We truly do not have a date to announce," Lynch said. "We'll begin hiring a few months before."

Lynch said the construction project, which is providing more than 300 jobs with more than 90 percent of those involving Inland Northwest firms, is on time.

More than 80,000 cubic yards of concrete — enough to fill an Olympic-sized pool more than 34 times — is being used. It will also have 25,000 tons of steel, more than 400 miles of electrical wire (the distance from Spokane to Bozeman, Mont.) and more than 9,000 light fixtures.

Amazon already employs more than 50,000 people in Washington, including its headquarters in Seattle and facilities supporting customer fulfillment in DuPont, Kent and Sumner.

Lynch said multiple factors are considered before deciding where to build a new fulfillment center.

"We are responding to customer demand," she said. "We're building capacity to support that demand. We also want to make sure our fulfillment centers are close to customers so we can offer great 'Prime' service and fast shipping speeds."

Lynch said fulfillment centers help bolster Amazon meeting fast-shipping goals. All Amazon Prime customers — there are more than 100 million worldwide — receive free two-day shipping and sometimes one-day shipping. That promise will continue with the new facility, she said.

Such centers allow the company to meet the shipping goal as market share increases.

"Having a facility nearby means we can deliver (on time) to more customers," she said.

Gilliam said Amazon's increased presence in this region may spur more customer service changes at existing retailers.

"If it starts to make a difference (with Amazon nearby), our stores may respond and provide a similar service," she said.

Impacts near center

Amazon's facility is being built southwest of the airport's primary runway.

Todd Woodard, airport spokesman, said both of the airport's existing runways have enough capacity to handle any additional traffic Amazon's presence will generate.

However, he added that the airport does not have projections from Amazon regarding air cargo activity — or how that might impact the availability of parking spaces for airport visitors.

"Without knowing the extent of the Amazon effect on air travel, it is difficult to calculate anticipated parking demand," he said. "While we have had a number of conversations with Amazon's commercial Realtor and general contractor regarding the construction of the fulfillment center, we have not been engaged in any manner with Amazon from an operational perspective."

Lynch said Amazon does not release business projections such as air cargo activity.

Spokane County was recently awarded a $14.3 million federal grant to upgrade Geiger Boulevard to a three-lane road, improve two high-traffic interchanges near the airport, improve signalization and install utilities for future industrial and commercial development.

The two primary interchanges that will be used by Amazon employees for deliveries will be Geiger Boulevard and Medical Lake. Funding to rehabilitate both of the interchanges, including add roundabouts, was secured before Amazon's announcement to build a center.

Woodard said most of the airport's passenger traffic originates east of the airport and uses Highway 2 (Exit 277). Amazon's center is several miles west of that exit.

Ryan Overton, Washington State Department of Transportation spokesman, said that agency hasn't received any funding from Amazon for road improvements. Construction for the Medical Lake improvements has been pushed up to this year rather than in 2020 as a result of Amazon coming online, while the Geiger project will be 2020.

Overton said his agency didn't seek financial help from Amazon for the projects because they were previously funded.

Lynch declined to comment when asked how much funding Amazon is providing for infrastructure improvements near the facility to mitigate the traffic impacts and instead referred to the number of jobs the company will create.

Woodard said having an Amazon center in the region will be a positive addition overall. It sends a strong message to the world about this area's economic vitality and transportation capabilities.

"These dynamics are a win for Spokane, Coeur d'Alene and the entire region," he said.