What: The Economist reviews the consequences on local communities when Amazon decides to set up a fulfilment centre nearby.

Why it is important: All IADS members are investing in new warehousing and deliveries facilities. Dealing with local communities is key to secure their support and avoid any PR catastrophe.

The Economist reviews the impact of the creation of an Amazon warehouse and logistical centre in Birmingham, Alabama.

Amazon is already the 2nd biggest private employer in the US, just after Walmart, with 1.1m employees and plans to hire 125,000 more to staff the 400 fulfilment centres planned within 2024. Birmingham, once buoyant with steel factories, is the perfect example of ideal location for Amazon, with an available local workforce looking for jobs and the possibility to negotiate tax exemptions.

Reviewing the impacts of the opening of such fulfilment centres in the US, the Economist highlights that in the short-term, average wages in the county decreased by -10%. Any increase decided by Amazon have however a spill over effect and force all employers in the region to raise wages. In the long term, some studies show that such centres tend to reduce poverty and favour an increase of household income.

Another parallel effect is that the incentives granted by municipalities to Amazon to lure the company into investing in their cities rather than other imply that there is no benefit on a higher level for the community, as this does not imply a significantly higher income for the townhall. Critics tend to throw oil on the fire by mentioning that these incentives are not needed, given the fact that Amazon decides to set up a warehouse according to a geographical point of view including a review of the logistical infrastructures, and that cities could very well secure Amazon’s investments without giving too much away.

The impact of e-commerce warehouses on local economies