The “Amazon Effect” on Spokane’s business community

Fulfillment Center
Spokane businesses are excited that Amazon will be constructing a fulfilment center, where orders are received, processed and filled, near the Spokane International Airport and stakeholders say they believe this is a huge opportunity for the community. Photo: Urs Kuester

Although Spokane was not chosen as the location for Amazon’s HQ2, the city’s efforts were not in vain. The company has announced it would be building a fulfilment center, a warehouse where incoming orders are received, packaged and delivered, west of Spokane slated for a fall 2019 opening. Local business advocates say the move will create 1,500 jobs initially and then later up to 3,000 spots when factoring seasonal workers and will attract more businesses to the area which will boost economic activity for the local community.

Larry Krauter, CEO of the Spokane International Airport, told Lens it is still unclear what the exact “Amazon effect” will be with the new center coming to Spokane, however it will be a welcome change. He is also chair of the West Plains/Airport Area Public Development Authority (PDA)

“We think there is a possibility for up to a dozen businesses to locate around the fulfilment center that we will have either direct or indirect support and indirect or direct benefits.”

One selling point for the fulfilment center’s location near Spokane International Airport is the existing air and road infrastructure that is complementary for business.

The airport can support the needs for air cargo using existing carriers such as Fed Ex and UPS. There is also the potential for Amazon Air to locate to the airport as well.

The airport has been expanding rapidly over the last few years. Krauter said it grew 10 percent in 2017 and an additional 14 percent this year.

“There’s a lot of positive things going on with the economy here and the available infrastructure…these are jobs that are going to have a real beneficial effect on the variety of skills and types of jobs required.”

The city also has the unique relationship with county, which ended up collaborating to create a joint PDA which had not been done before in the state. The PDA board is made of city and county elected officials, airport staff and members from the business community.

As part of the Amazon project, PDA will work in a complimentary way with the county to provide infrastructure such as roadways or the utilities that go along with that, said Krauter.

“I think there’s going to be a lot of potential organic growth that Amazon will influence with existing businesses in addition to new growth that occurs with complimentary businesses that could locate here.”

The influx of jobs will also have an economic multiplier effect via direct and indirect effects from Amazon moving in, which would increase direct and indirect economic activity by about three times, and when factoring in the complimentary businesses moving in would increase that effect by up to 10 times.

Amazon’s new center is also likely to increase direct and indirect business travel and will end up increasing the possibility that members of the community will have more disposable income to travel for leisure.

“The momentum is really going to cascade through the community,” said Krauter.

Krauter added the partnership within the community between government entities, the PDA, the county, the city, the airport and various business entities on the Amazon project will prove that community can band together to get a project of this magnitude done in a short period of time, which hopefully will attract other private sector entities.

Greater Spokane Incorporated (GSI) CEO Todd Mielke agreed that it is important for the city to get the attention of companies around the country by hosting a Fortune 500 company. GSI is a business development organization and a regional economic development entity.

“That’s one of the effects that matters is did we get the attention of a significant business in this nation that decided this was a good community to do business in.”

Mielke added that Spokane was one of the cities vying for the spot for Amazon’s HQ2. The intent there was to get on Amazon’s radar screen as they are frequently starting operations with a few hundred to a few thousand employees.

“Now that we have our foot in the door we need to look at how to grow that potential down the road.”

One benefit of the fulfilment center being built in Spokane is that other companies look at the facility as a magnet for their operations. The city needs to do its research to find which companies would stand to locate in Spokane because of the fulfilment center being near and prepare.

“As a community, not only do you want a good diversification of business sectors and a number of companies in your region, at the same time you want a good diversification of jobs available for people of all different skill levels, backgrounds and education levels.”

Distribution centers tend to appeal to those in the middle realm and the locations also offer benefits not afforded by smaller businesses. Amazon also offers an educational benefit if employees wish to go back to school and expand on their skills or training which would help increase the educational attainment of the local community.

Spokane is an attractive location because of more tame housing prices for the younger population and a more consistent commute compared to the Puget Sound region, said Mielke.

“One thing that is a challenge for any community is that there will be an influx of people and we have to make sure we are building the capacity int his community to make sure people can find housing options.”

The move is an opportunity to adapt to other challenges and anticipate the future needs of the community, he added.

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