After a year of behind-the-scenes negotiations, city and county officials were surprised last Thursday when Amazon announced it would be making a $30 million investment here, opening its first Alabama sortation center in Mobile and bringing hundreds of jobs to the area.
On Friday, Mayor Sandy Stimpson and Mobile County Commissioners confirmed their involvement with the project, which will generate roughly 1,500 part-time and seasonal jobs.
According to Troy Wayman, vice president of economic development at the Mobile Area Chamber of Commerce, the bulk of those jobs would be available at the height of Amazon’s operations ahead of the Christmas holidays — one reason Johnson Development, of Greenville, South Carolina, is required to have the 362,000-square-foot facility operational by November.
As for location, the sortation center will be situated near 6735 Trippel Road, where Johnson Development owns lands in an existing industrial park through Mobile Industrial Properties LLC.
Even though the vast majority of the jobs are part-time, Wayman said they would have an economic impact equivalent to 250 to 300 full-time jobs and be a good fit for college students, young adults, retirees and those who are underemployed and looking to add a second job.
“We have to attract jobs for every segment of our citizenry in the community, and if you look at what this could mean for [those groups], it really fills some gaps that we don’t currently have,” Wayman said. “We think it has the potential to help lower our unemployment rate [7.1 percent in Mobile County] even further.”
News of the Amazon facility comes as big-box competitor Wal-Mart develops its own distribution center at Interstate 10 and McDonald Road, which is projected to generate 550 jobs and a 10 percent spike in activity at container terminals at the Alabama State Port Authority.Volume-wise, though, Amazon’s operation will be smaller. Unlike its larger fulfillment centers, where customer orders are picked, packed and shipped, sortation centers allow Amazon to sort packages so they can be shipped more efficiently to consolidated regions of the country.
As for Amazon customers in Mobile, a company spokeswoman said last week areas near sortation centers typically see “faster and expanded delivery options, like Sunday delivery and later purchase cutoff times.”
Incentives, tax abatements
According to Mobile County Attorney Jay Ross, city and county officials have agreed to split the cost of constructing a $1.3 million secondary access road at the facility. If the cost exceeds $1.25 million, though, the developer has agreed to make up the difference.
A spokeswoman for Mobile County said outside of agreeing to help with the cost of that road construction, commissioners haven’t signed anything with Amazon yet. Calls to Stimpson’s office about the extent of the city’s contribution have so far gone unreturned.
Ross was able to confirm Amazon would receive a 10-year tax abatement from the city’s Industrial Development Board — meaning all the sales and use taxes related to the construction of the facility will be waived, as will a decade of the company’s non-educational property taxes.
While those abatements will be valuable for Amazon, they aren’t as extensive as what’s been offered to other large developments in the past. Alabama law permits the abatement of ad valorem taxes for up to 20 years — an incentive the county has recently used in agreements with APM Terminals and in the Wal-Mart deal.
However, Commissioner Jerry Carl — in whose district the facility will be located — said he was upfront, when discussions with Amazon first began, that a tax abatement on the county level just didn’t seem appropriate for this project.“At some point, the abatements have got to go away, but right now, they’re part of it. Using them to get businesses in are necessary, but not in every case, and I truly didn’t feel like this was one of those cases,” Carl said. “Historically, I think some of our leaders have given the farm away in some of these abatements, and I’m trying to bring some of them back.”
Though Wayman said money forgone in abatements wouldn’t exist if companies receiving them weren’t successfully recruited, he agreed with Carl, adding that “20 years is a long time” and packages offering that level of tax incentive are best saved for “mega projects” like Wal-Mart.
A history of winning
Public officials were quick to tout the “hundreds of jobs” that the deal will bring to the Mobile area, but Wayman said the cachet attached to companies like Amazon can have intangible benefits down the road.
Wayman said in its sector of the business and economic development world, Amazon is the standard-bearer — the next household name on a list that includes Airbus, Continental Motors, FedEx and other companies that have set up shop in the Mobile area over the past decade.
“One term we use a lot is, ‘marquee names,’” Wayman said. “Amazon is a marquee name, and together with Wal-Mart, two of the largest retailers in the world now have a presence here.”
In a historical context of economic development, Wayman said the past decade has been unprecedented for Mobile, and economic development statistics kept by the chamber of commerce seem to support his claim.
From 2006 through 2016, the Mobile area has seen the creation of 14,726 new jobs with an average salary of $46,019, recruited 34 new businesses while expanding 64 existing companies and enjoyed $8.2 billion of capital investment — figures that don’t include Wal-Mart or Amazon.
As Wayman puts it, Mobile has “a history of winning” that has created a momentum for recruiting economic development, adding that project activity has “already spawned from the Wal-Mart project,” and he “expects the same from Amazon.”
“It is remarkable the way things continue to happen for this community,” he added. “We’re blessed with a lot of great infrastructure and resources that make us an attractive location for companies, but it’s not blind luck. It takes strong elected leadership, strong work out of this organization and from our other partners that are part of Team Mobile.”