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November 14, 2018 2:00 PM, EST

Nashville Chosen for Amazon Operations Hub

Amazon operations hub An Amazon Prime truck. (John Sommers II for Transport Topics)

The decision by online retail giant Amazon.com to open corporate facilities in Long Island City in Queens, N.Y., and Crystal City in Arlington, Va., is expected to net each city at least 25,000 jobs by 2030, as many as 37,850 by 2034, and will provide a boon to the economies of both regions, experts said.

READ MORE: Amazon selects Washington, New York metro areas for coveted ‘HQ2’ sites

But the more significant development related to trucking was Amazon’s announcement that it will build a $230 million operations hub in Nashville, Tenn., that will house 5,000 employees over the next 10 years. In exchange, Amazon will receive up to $102 million in “performance-based direct incentives.”

Julie Niederhoff, an associate professor of supply chain management at Syracuse University’s Whitman School of Management, told Transport Topics that the Nashville center will be integral to Amazon’s logistics structure.

“Nashville definitely is going to be critical when it comes to developing their next series of decisions for where the fulfillment centers are going to be, the trucking, the logistics, how we get this job done effectively and creatively,” she said. “The Nashville facility will probably decide how Amazon’s infrastructure will be growing and changing, driving where new facilities are being built and figuring out new shipping lines. It’s a different kind of talent and a different-sized team, but a really important part of the Amazon system.”

Amazon said it will begin hiring for all three facilities in 2019.

Trucking industry consultant Randy Mullett told TT that Amazon’s decision to split its new headquarters makes sense for several reasons.

“I think it’s good for both communities, and it’s really smart for Amazon,” Mullett said. “It puts a semi-headquarters in two, what are really key areas for them. One, the power of government [outside Washington] and the financial markets in New York. When you think of the two things that will have the biggest impact on Amazon’s future, it’s government and probably financial markets as they continue to grow.”

Mullett said it is unclear what impact Amazon’s announcement will have on the trucking industry, even as the company is buying more Amazon Prime trailers and contracting with trucking firms to move their freight. However, Mullett said as Amazon’s business increases, the company will want to continue expanding, especially when it comes to getting packages to its customers.

These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.

Jeff Bezos

Bezos

“What they are adding now, as power units, are local delivery units. So it’s going to add capacity in that last-mile sector, so I think it has more to do with competition with the Post Office and that sort of thing, than it does with regular trucking companies,” Mullett said. “Unless they’re going to add a fleet of Class 8 tractors, they’re not going to change that dynamic very much.”

“Amazon in Arlington is a win for D.C.,” Washington Mayor Muriel Bowser said in a statement.

Amazon is based in Seattle, and the company’s expansion means Amazon soon will become an economic engine in two new talent-rich cities.

Professor Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, told TT that Amazon’s decision to expand in suburban Washington, D.C. and New York City means the company will face little direct competition from tech companies seeking highly educated, tech-savvy talent. “This is all about where you can get the people,” Dhawan said. “They’re also not going to be in Silicon Valley or Seattle, where there is a big supply of the right people.”

“We are excited to build new headquarters in New York City and Northern Virginia,” Amazon founder and CEO Jeff Bezos said in a statement. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.”

The company said the new jobs will come with salaries that average $150,000 a year.

The selections of Arlington and Queens come with a price tag. Virginia Gov. Ralph Northam and local leaders are pledging at least $550 million in tax incentives. There also are expected to be significant transportation upgrades and educational improvements, including the building of a tech-focused, satellite campus of Virginia Tech in Northern Virginia. The campus could cost as much as $1 billion, with much of the money expected to come from university fundraising, but the commonwealth of Virginia has pledged $250 million.

“The Virginia Tech Innovation Campus in Alexandria will be a source of talent, research, partnerships, discoveries and economic impact,” President Tim Smith said. “This is the right vision, the right place, the right time, and Virginia Tech is the right university to advance the commonwealth as a global leader for the next generation.”

New York Gov. Andrew Cuomo said the state and city pledged more than $1.55 billion in incentives and other financial assistance. Just days before the Amazon announcement, it was made public that Long Island City was in line to receive $180 million from New York City for several development projects. No mention was made of Amazon at the time. “New York City is about to get tens of thousands of new, good paying jobs and Amazon is about to meet the most talented workforce in the world in one of the most diverse places on the planet,” Mayor Bill de Blasio said on Twitter.