Amazon Hub in Newark canceled after union and local groups protest

For the second time, Amazon’s plans to substantially expand its footprint in the New York area were canceled after workers and community groups opposed it.

In 2019 Amazon suddenly canceled plans build a second headquarters in New York after facing a barrage of criticism that she didn’t expect. This time, the e-commerce giant was unable to complete a deal for a cargo hub at Newark Liberty International Airport.

The project, based on a 20-year lease worth hundreds of millions of dollars, drew opposition after the Port Authority unveiled it last summer.

“Unfortunately, the Port Authority and Amazon were unable to agree on the final terms of the lease and have mutually concluded that further negotiations will not resolve the outstanding issues,” Port Authority COO Huntley Lawrence said Thursday.

Advocacy groups and labor unions involved have said they cannot support the lease unless Amazon makes a series of concessions, including labor agreements and a zero-emissions benchmark at the facility.

“This win signals that if Amazon wants to continue growing in New Jersey, it will have to do so on our terms,” ​​said Sarah Callinane, director of Make the Road New Jersey, who questioned the deal.

Amazon, which expressed confidence in May that the deal would close, expressed disappointment in a statement, adding that “we are proud of our strong presence in New Jersey and look forward to continued investment in the state.”

Amazon has estimated that the project will create more than 1,000 jobs, although many of those jobs could still be created if the Port Authority outsources the lease to another company. Two other companies apply for participation in the project.

“Growing air cargo and renovating airport facilities in a way that benefits the region as well as the local community remains a top priority for the Port Authority,” he said. Lawrence, chief operating officer, added in a statement.

The bigger long-term impact could be on Amazon’s ability to deliver packages efficiently to the northeast it serves. hub airports near Allentown, Pennsylvania; Hartford, Connecticut; and Baltimore. “Newark was the obvious choice,” said Mark Woelfraat, an industry consultant who closely monitors Amazon properties. “It’s right on New York’s doorstep.”

mr. Wolfraat said that Amazon may be looking at other commercial airports in the region, even if their location is less than ideal, to support the growing volume of packages.

Part of the company’s prominence in the state created resistance to the project. A report prepared by groups seeking to block it indicated that the number of Amazon properties in New Jersey rose from one to 49 between 2013 and 2020, helping to nearly triple the number of warehouse workers in the state. During the same period, the average wage for these workers fell to about $44,000 a year from more than $53,000 a year, adjusted for inflation, according to the Department of Labor.

New Jersey is one of more union states in the country, while Amazon opposes unionization efforts at its facilities.

Amazon said the median starting wage for its hourly workers is over $18 nationwide. The median hourly wage in New Jersey was about 23 dollars last year. The company also mentioned its benefits, including full health coverage for full-time employees as soon as they start working; 401(k) plan with 50 percent company compliance; and up to 20 weeks of paid parental leave.

The Port Authority has announced a proposed lease from Amazon. in August, the day the board of directors voted to approve the deal. Authorities said they expect the lease to come into effect around November. 1, according to the minutes of the meeting.

“It was that they were trying to slip through without notifying the community, which was quite unfortunate,” said Kim Gaddy, executive director of the Southern District Ecological Alliance, which focuses on environmental issues affecting Newark residents.

Under proposed dealAmazon has tentatively committed to invest $125 million to renovate two buildings at the airport and pay the Port Authority more than $300 million over 20 years, including $150 million upfront.

By September, groups led by Mr. Cullinan and Mr. Gaddy, along with other advocacy groups and alliances such as the Teamsters and the Retail, Wholesale and Department Stores Alliance, began to coordinate their opposition. The groups distributed petitions that collected thousands of signatures from residents and staged public events such as rallies and marches.

The project appears to have stalled after the November lease completion schedule passed without any announcement.

In late March, Governor’s spokesman Phil Murphy, who initially praised deal, the statement said, “The Governor urges all who do business in our state to work in good faith with labor partners.” (The governor’s office declined to comment Thursday.) Other Policies the state appeared to be skeptical after the Amazon union’s election victory this year in a Staten Island warehouse, a result that Amazon disputes.

Amazon has opened air hubs in recent years to move goods through its own logistics network rather than relying on external suppliers. He prefers to fulfill customer orders using local inventory for cheaper and faster delivery, but when the product the customer wants is not in the nearest warehouse, he will ship the product to fulfill his delivery promises.

The expansion of its operations skyrocketed during the pandemic as e-commerce sales skyrocketed. “We have doubled our capacity built in Amazon’s first 25 years in just 24 months,” CEO Andy Jassi told investors in May.

But the company admitted that it had restructured, expanded and hired more than demand demanded, and in April published this is the first quarterly loss since 2015. Amazon has pulled back on some investments this year. “We are trying to delay construction work at sites where we simply do not need capacity for now, and we are also going to allow some leases to expire,” he said. Jassy said.