Amazon is planning more smaller distribution centers in smaller communities around Oregon

Amazon has plenty of huge warehouses around Oregon to get goods to online shoppers quickly, including one that’s 3.8 million square feet in Woodburn, its biggest in the entire Northwest. But the giant retailer has started moving toward smaller facilities in more communities around the state, like Hood River, Eugene and Redmond. Amazon says this will provide better service for rural and smaller communities. But some people aren’t so keen on this idea. We hear more from Mike Rogoway, who covers business and technology at The Oregonian/Oregonlive to hear more about Amazon’s strategy and the variety of reactions it’s getting from residents.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Amazon’s biggest warehouse in the Northwest is in Woodburn. It spans nearly four million square feet. To put that in perspective, that’s about the size of five Moda Centers. But the giant retailer has started moving towards smaller facilities in more communities around the state. It currently has plans for new distribution centers in Hood River, Tillamook, Redmond and Eugene. Amazon says this will help it provide better service for rural and smaller communities, but some Oregonians and Eugene residents in particular have been pushing back. Mike Rogoway covers business and technology at the Oregonian. He’s been writing about Amazon’s plans and he joins us now. It’s good to have you back on the show.

Mike Rogoway: Yeah, thanks for having me.

Miller: How has Amazon explained its current push for smaller centers called delivery stations that would be sprinkled around Oregon?

Rogoway: The idea is that Amazon’s distribution network grows in stages, like the huge facility that you see driving down I-5 in Woodburn, that’s sort of a big clearing house. They bring things in from all over and it can stay there for a long period of time. The idea with the smaller distribution centers, these delivery stations, is that they get much closer to the customer and so you can get your package in a day or maybe even quicker. It’s a service that’s already available in big cities like Portland, but the idea is starting to offer it in smaller cities, you know, that are still fairly large like Eugene or sometimes even much smaller communities like Hood River.

Miller: We asked folks on Facebook how they feel about this transition from large warehouses to these distribution centers in smaller cities. Tom Scott wrote: “Smaller is better, less impact driving distances, etc. The public who orders demands speed and efficiency, and they’ve figured out how to deliver on what the customer wants.”

Brennan Swan wrote: “Decentralization is more efficient. Even the most ruthless and cold-blooded capitalist can see the value of cutting waste.”

You noted in your article, I mentioned briefly, that Eugene has really been the city with the most organized pushback to these plans. What form is that pushback taking?

Rogoway: Well, all kinds, but what struck me is, when Amazon went into, for example, with the really large facility that you described going into Woodburn, there was a little bit of concern about that in Woodburn, but not a lot, and I talked to people afterwards and people are like, yeah, it’s mostly fine.

In Eugene, they had dozens and dozens and dozens of people testify last winter to the City Council, and there have also been letters to the city and complaints online in things like Facebook groups, just concerned about having this big company open on this piece of industrial land near the airport.

Miller: About traffic, we actually got a couple of comments, again on Facebook. Ryan Hooper wrote: “In Woodburn, we have a giant facility, and I don’t notice an increase in traffic or pollution. This is a regional hub though, not a fulfillment center. They keep their property clean.”

And Beth Parsons said: “We’re expecting a lot more traffic in Eugene after they build here.”

So what exactly are opponents saying about traffic?

Rogoway: Well, traffic is part of people’s concern, and I’m not going to pretend to know Eugene’s traffic patterns very well, but people are concerned about this area out by the airport where the facility will be, and they’re concerned with delivery vans coming and going that it’s going to add traffic to what they consider a fairly dangerous stretch already.

Amazon says in response that they’re going to be moving sort of off-peak traffic. They don’t want to drive at rush hour either. They’re going to be going at other times, because they can deliver pretty much any time. They don’t have to be doing it at eight to nine in the morning or five to six in the evening. So they feel that they won’t be adding significantly to the traffic congestion there.

Miller: Another issue that people are talking about is jobs. Ted Fountain wrote: “Bring jobs to smaller cities.” April Johnson wrote, “If it’s better for their employees, I’m all for it. Amazon seriously needs to improve their worker safety.”

Now I should say that according to an Oregonian article from last year, the immense facility in Woodburn which operates 24 hours a day has 6,000 robots and about 1,500 human employees. What kinds of employment promises is Amazon making for its proposed smaller distribution centers?

Rogoway: Well, I don’t know what they’re thinking in Hood River specifically, but Eugene should probably give us a pretty good indication. The facility they’re talking about in Eugene, I think it’s 150 to 200 people, so it’s not a huge impact, but Eugene, like everywhere, is looking for more jobs now. I think the concern some people have is that if you add more people in the distribution center, in the delivery station, that perhaps that means fewer people working in the local retailers, and we’ve certainly seen that in Oregon over the past five years or so.

Retail employment is down about 5% during that period, and part of the reason at least is that online shopping is up. We don’t have data for online shopping in Oregon, but since the pandemic, online shopping has gone from about 11% of all retail sales nationally to about 16%. It’s a pretty significant increase, and I think that’s the trade-off that some people are concerned about.

Miller: That’s a really important point. I mean, it might have been the case that because of the pandemic and in the most lockdown-y months or years, e-commerce would go up and then come back down, but it seems like it’s went up and then it has just kept going up.

Rogoway: Yeah, it’s stuck. It changed the way we shop, the way we order food, going out to restaurants less frequently. So it’s definitely changed that. I think what Amazon would say, and I don’t want to speak for them, but they’re coming into these communities because they believe this is what people there want, that people will order more of these products from them if they can get them faster and more efficiently.

And my guess is that Amazon, having done this in many communities and having spent a great deal of money to study these patterns, I think they probably have good reason to believe that. Doesn’t mean that everyone in the community wants them, but given the option, I think there is reason to believe people will order from them.

Miller: That’s an important point, because you talked to a longtime Eugene resident named Christy Schneider who calls herself both an environmentalist and a pragmatist, and she said that she personally boycotts Amazon. But I guess I wonder how many people in the area, in Eugene or in Lane County, are taking a similar stance and, as you say, that the company seems pretty savvy about its growth; and if they want to build these new centers all across the state that will cost them significant capital and without certain kinds of tax breaks that they used to have access to, I assume it means that they’ve done their research and they know they have customers sprinkled around Oregon.

Rogoway: Yeah, well, Eugene’s a good example, depending on the day, it’s the second or third largest city in Oregon. And they don’t have this facility there now. Salem has one. Salem has a larger warehouse, much larger, I think it’s a million square feet there, but this one is supposed to serve just Eugene and Lane County. It’s a large population base. If you go to the University of Oregon, they’ve got Amazon lockers taking up a better part of the floor of a freshman dorm. People order the heck out of the stuff, I guess.

I think the concern people have is that you’re taking some away from what’s available locally, and whether or not Amazon really fits the vibe of Eugene. Eugene is a distinct place, the culture there is, we’ll say anti-corporate to a degree, and so I think people maybe feel differently about Amazon’s arrival than they would do over in Redmond, where I really haven’t heard much in the way of concern. People are excited about the idea of faster deliveries in the Bend area.

Miller: We talked about some of the specific issues people have brought up: labor questions, traffic questions, more just sort of “cultural fit” questions, anti-corporate sentiment that is certainly strong in some quarters in Eugene. Can you tell us about an FAQ put out by the City of Eugene that responds both to some of these specific points but makes a broader argument to city residents?

Rogoway: Well, as I say, the city of Eugene got an earful from residents about this, and Eugene’s point is that this is industrially zoned land, it’s designed for just this kind of thing. And Amazon, when they bought the land, and the previous owners sought permits to occupy it, they were complying with the city’s rules, and the city says they don’t have the authority to pick and choose who operates on that land.

I think some residents are concerned that when the city set aside this industrial land, they envisioned high-paying manufacturing jobs, and they feel like this was perhaps not what the city leaders envisioned when they allocated this land. There’s jobs that pay maybe $18 an hour to start, maybe on average $23 an hour, Amazon says. It’s a job for sure, and every community in Oregon needs one. I think some people thought that if anything were ever built there, that it might be a higher paying job, a more productive job for the community than just a retail distribution center.

Miller: I mentioned that Amazon is not going to get certain kinds of tax breaks that they might have gotten in the past. Can you explain what happened recently?

Rogoway: Yeah, I may get the year wrong, I’ll say it’s 2023, but about that time, about three years ago, many years ago, Oregon offered what they call Enterprise Zone tax breaks to encourage development in communities that needed more economic activity, and they gave them property tax exemptions.

Amazon got them to go into Troutdale and places like that, saved the company something like $15 million over a few years, but independent retailers weren’t happy about that. They wondered why Amazon was getting tax breaks but they were paying full freight. And so we and others wrote about that, and the legislature took those tax breaks away.

It hasn’t slowed Amazon up. They’re still building, building, building, as you noted at the top of the show, without the tax breaks. but they’re no longer available. Now they have to pay full freight when they come in.

Miller: How long before some of these new delivery stations are up and running?

Rogoway: Amazon hasn’t said about Eugene or Hood River, I don’t believe. The Tillamook one is now operating, I think, and the Redmond one will open later this year. That’s well on its way. So I think typically covering these smaller ones, once they get going, it’s maybe a year or a little bit more to build and start operating them.

It took a few years to get the Woodburn facility going, just because it is so very large. And then just after they’d finished the shell, Amazon changed its robotics system inside, so they put a pin in it and said OK, we’re going to take some time and redesign how it operates internally. It didn’t open until last June.

Miller: Mike, thanks very much.

Rogoway: Yeah, glad to be here.

Miller: Mike Rogoway reports on business and technology for the Oregonian. He joined us to talk about Amazon’s plans for new smaller distribution centers in Eugene, Hood River, Tillamook, and Redmond.

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