Amazon delays hiring at new fulfillment center in Clarksville – Nashville Business Journal – The Business Journals

Amazon delays hiring at new fulfillment center in Clarksville – Nashville Business Journal – The Business Journals

The newest local shipping hub for one of the world’s largest retailers will be finished this summer. But no one will work there right away.
Amazon.com Inc. (Nasdaq: AMZN) is delaying hiring at its 1.08 million-square-foot distribution facility in Clarksville, local officials said at a public meeting this month. The building is designed to move larger, bulkier objects such as furniture, kayaks, appliances, rugs and air compressors.
Amazon formally announced the $100 million facility in August 2021, pledging to hire 500 full-time workers in five years. For now, the company is holding off.
It’s a reflection of broader economic pressures such as the clogged supply chain and surging inflation that is changing consumer shopping habits. Amazon also is wrestling with internal imbalance: The company now has too much warehouse space and too many employees at those hubs, executives told analysts on the company’s most recent earnings call. The Wall Street Journal is reporting that Amazon will seek to sublease at least 10 million square feet of its national footprint while “exploring options to end or renegotiate leases with outside warehouse owners.”
That’s head-turning contraction for a company that easily is one of the largest users of industrial real estate in Greater Nashville. The company has more than 9.8 million square feet of space in operation or under construction in four counties, according to Business Journal research.
Amazon’s Clarksville building, on Guthrie Highway, will be done by Aug. 1, said Buck Dellinger, CEO of the Clarksville-Montgomery County Economic Development Council. But Amazon is “delaying their complete opening” by potentially eight to 10 months, Dellinger told the county’s Industrial Development Board.
“Because the world has slowed down with finished goods right now, they don’t want to go ahead and hire the 500 employees to open up that facility. They won’t go ahead and invest in the manpower to go ahead and fully open until they know they’ve got materials inbound,” Dellinger said, referring to Amazon by its project code name, “Alice.”
Amazon is leasing the building from an entity tied to New York-based Fortress Investment Group, according to public records. Those records show the lease initially lasts 15 years, with five potential five-year extensions.
Divina Mims, a spokeswoman at Amazon, affirmed that the company still plans to open and operate the Clarksville facility. She said she had no “definitive date” for when that might happen.
“The only thing that’s changed with our plans is the exact timing,” Mims said in a statement. “We are a dynamic business and we have dozens of fulfillment centers, sortation centers and delivery stations that are evolving and under construction across the country. It’s common for us to adjust launch timetables based on capacity needs across the network.”
The Clarksville-Montgomery County Industrial Development Board approved a new timeline for Amazon’s county-level tax incentives as a result of the hiring delay.
Last fall, the state approved a $1 million cash grant toward the project. At the time, the company said its jobs would pay an average of $15.41 an hour.
Officials at the state Department of Economic and Community Development have not had conversations with Amazon about the change in plans, a spokeswoman said.
Companywide, Amazon’s real estate footprint topped 387 million square feet at the end of 2021. Amazon posted a net loss of $3.8 billion in the first quarter — the company’s first quarterly loss since 2015 and a nearly $12 billion swing from its profitable first quarter of 2021.
“Capacity decisions are made years in advance, and we made conscious decisions in 2020 and early 2021 to not let space be a constraint on our business,” said Brian Olsavsky, chief financial officer at Amazon, during the earnings call. “During the pandemic, we were facing not only unprecedented demand but also extended lead times on new capacity. And we built toward the high end of a very volatile demand outlook.”
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