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Amazon Hub in Newark Is Canceled After Unions and Local Groups Object


For the second time, plans by Amazon to substantially expand its presence within the Latest York area have been abandoned after labor and community groups mobilized in opposition.

In 2019, Amazon abruptly canceled plans to construct a second headquarters in Latest York City after facing a barrage of criticism that it didn’t anticipate. This time, the e-commerce giant was unable to finish a deal for a cargo hub at Newark Liberty International Airport.

The project, which hinged on a 20-year lease value a whole bunch of tens of millions of dollars, attracted opposition after the Port Authority disclosed it last summer.

“Unfortunately, the Port Authority and Amazon have been unable to succeed in an agreement on final lease terms and mutually concluded that further negotiations won’t resolve the outstanding issues,” Huntley Lawrence, the Port Authority’s chief operating officer, said in a press release on Thursday.

Advocacy groups and unions involved had said they may not support the lease unless Amazon made a set of concessions that included labor agreements and a zero-emissions benchmark at the ability.

“This victory signals that if Amazon desires to proceed growing in Latest Jersey, it’s going to must do it on our terms,” said Sara Cullinane, director of Make the Road Latest Jersey, an advocacy group that had questioned the deal.

Amazon, which expressed confidence in May that the deal would close, expressed disappointment in a press release, adding that “we’re happy with our robust presence in Latest Jersey and look ahead to continued investments within the state.”

Amazon had estimated that the project would create greater than 1,000 jobs, though lots of those jobs could still be created if the Port Authority awards the lease to a different company. Two other firms bid on the project.

“The expansion of air cargo and the redevelopment of airport facilities in a fashion that advantages the region in addition to the local people remain a top priority of the Port Authority,” Mr. Lawrence, the chief operating officer, added in his statement.

The larger long-term impact could also be on Amazon’s ability to deliver packages efficiently within the Northeast, which it serves with airport hubs near Allentown, Pa.; Hartford, Conn.; and Baltimore. “Newark was the apparent alternative,” said Marc Wulfraat, an industry consultant who closely tracks Amazon’s facilities. “It is correct there on the doorstep of Latest York City.”

Mr. Wulfraat said Amazon could search for other industrial airports within the region, even when their locations were less ideal, to support the growing package volume.

It was partly the corporate’s prominence within the state that attracted opposition to the project. A report produced by groups searching for to dam it identified that the variety of Amazon facilities in Latest Jersey grew to 49 from one between 2013 and 2020, helping to almost triple the variety of warehouse staff within the state, to about 70,000. Over the identical period, the common wage for those staff fell to about $44,000 per yr from over $53,000 per yr, adjusting for inflation, in keeping with Labor Department data.

Latest Jersey is certainly one of the more unionized states within the country, while Amazon has opposed unionization efforts at its facilities.

Amazon said that average starting pay for its hourly staff is greater than $18 nationally. The median hourly wage in Latest Jersey was about $23 last yr. The corporate also cited its advantages, including full health coverage for full-time employees as soon as they begin working; a 401(k) plan with a 50 percent company match; and as much as 20 weeks of paid parental leave.

The Port Authority revealed the proposed lease with Amazon in August, the day its board voted to authorize the deal. The authority said that it expected the lease to take effect on or around Nov. 1, in keeping with minutes of the meeting.

“It was something that they were attempting to slip in without notifying the community, which was quite unlucky,” said Kim Gaddy, executive director of the South Ward Environmental Alliance, which focuses on environmental issues affecting Newark residents.

Under the proposed deal, Amazon tentatively committed to investing $125 million in renovating two buildings on the airport, and to paying the Port Authority greater than $300 million over 20 years — including $150 million up front.

By September, the groups led by Ms. Cullinane and Ms. Gaddy, together with other advocacy groups and unions just like the Teamsters and the Retail, Wholesale and Department Store Union, began to coordinate their opposition. The groups circulated petitions that collected 1000’s of signatures from residents and staged public events like rallies and a march.

The project appeared to stall after the November timetable for finalizing the lease passed with none announcement.

In late March, a spokeswoman for Gov. Phil Murphy, who had initially praised the deal, said in a press release that “the governor encourages anyone doing business in our state to work collaboratively with labor partners in good faith.” (The governor’s office declined to comment on Thursday.) Other politicians within the state appeared to grow skeptical after the Amazon Labor Union’s election victory this yr at a Staten Island warehouse, a result Amazon is contesting.

Amazon has opened air hubs in recent times to maneuver products through its own logistics network, fairly than depend on outside providers. It prefers to meet customer orders with local inventory, for cheaper, quicker delivery, but when the product a customer wants is just not in a close-by warehouse, it should fly the product to satisfy its shipping guarantees.

Its operations expansion went into overdrive in the course of the pandemic as e-commerce sales boomed. “We doubled our capability that we inbuilt the primary 25 years of Amazon in only 24 months,” Andy Jassy, the chief executive, told investors in May.

But the corporate has acknowledged that it overbuilt, expanding and hiring greater than demand required, and in April it posted its first quarterly loss since 2015. This yr Amazon has pulled back from some investments. “We’re attempting to defer constructing activity on properties where we just don’t need the capability yet, and we’re going let some leases expire as well,” Mr. Jassy said.

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