Amazon now encircles the Philadelphia region with over 50 warehouses
Amazon doubled the number of warehouses across the Philadelphia region during the pandemic, in part to take on arch rival Walmart. No other company can match the scale of Amazon's expansion here.
An Amazon warehouse is shown in South Philadelphia, Friday, April 2, 2021. It opened last year. Amazon now has more than 50 warehouses in the Philly region. This warehouse has 283,500 square feet. It is the largest of six Amazon facilities in the city but small by Amazon standards. (JOSE F. MORENO)
When Connor Lord first arrived at the Amazon Fulfillment Center in West Deptford Township, he was staggered by the sheer size of the place. After driving through the traffic light to the north of the warehouse, its massive bulk dwarfed everything else in this stretch of suburban South Jersey.
“It’s intimidating at first seeing this big building, it looked twice the size of the Linc,” said Lord, who worked as an apprentice carpenter at the Eagles stadium.
By square footage, none of Amazon’s facilities in the Philadelphia area can match Lincoln Financial Field. But the company has infrastructure under construction in the region that comes close to the stadium’s size, like a forthcoming mega-warehouse in New Castle, Del., or the new fulfillment center in Carneys Point, New Jersey, down the river from the West Deptford facility.
Both of these warehouses will be well more than a million square feet once completed and are among nine new Amazon facilities that the company has announced for the region in the next year, with more in the works. That’s in addition to 14 sites added in 2020 across the Lehigh Valley, South Jersey, northern Delaware, Philadelphia, and its collar counties.
According to the CoStar Group, Amazon now has 57 buildings online or underway, across this greater Philadelphia region. Real estate and industry analysts say they have never seen anything like the company’s explosive expansion.
“They’ve been gobbling up distribution space for more than five years in a big way, but the pandemic really accelerated that growth,” said Adrian Ponsen, director of analytics with CoStar Group in Philadelphia. “There’s no single company that’s anywhere near on the scale of what they’re doing.”
Amazon’s expansion in Philadelphia is part of a worldwide hiring spree sparked by the pandemic. The company added roughly 500,000 employees in 2020, according to company filings with the Securities and Exchange Commission, including 400,000 in the United States. Amazon hired nearly 175,000 people from October through December alone, far more than in any prior fourth quarter. The e-commerce giant employed 950,000 Americans as of last year, a company spokesperson said.
Meanwhile, the company has grown its real estate footprint by 50% year-over-year in 2020, company executives told investors in February. Amazon now has more than 800 warehouses across the United States.
It’s not hard to see why the company is expanding. Amazon has done phenomenally well during 2020. Its already strong share price grew steadily throughout the early months of the pandemic, reaching its highest-ever level in September, as its fleets of trucks and legions of workers kept stay-at-home Americans well-supplied. In addition to delivering items, Amazon is the nation’s largest cloud computing company and has a leading video streaming service. Already the world’s wealthiest man, the company’s CEO, Jeff Bezos, saw his net worth grow by more than $60 billion in the last year, to $190 billion, Forbes estimated this month.
Amazon’s warehouse jobs start at $15 an hour, while the company’s coveted high-paying positions are massing in other locations on the Northeast corridor. The second headquarters is being opened near Washington and 7,000 highly paid white-collar Amazon jobs are now located in Boston. In New York City, the company purchased the former Lord & Taylor flagship on Fifth Avenue as a hub for tech workers.
In the Philadelphia region during the pandemic, Amazon began hiring for tens of thousands of jobs in its vast network of warehouses. The ecommerce giant posted more than 35,000 job openings in 2020, by far the most of any employer in the metropolitan area, according to the nonprofit University City District. The next closest were Lowe’s and Penn Medicine, which posted about 5,000 jobs each last year.
Amazon’s presence in the local labor market has grown exponentially. The 35,000 job postings were a roughly 1,600% increase from 2019. The University City District used data from Burning Glass Technologies, a Boston software firm that scrapes the internet for public job postings. Amazon does not make regional-wide breakdowns available but said that it now has 25,000 full- and part-time workers in Pennsylvania. Most of its infrastructure is concentrated in the southeast corner of the state.
Amazon's Growth in the Philadelphia Region
Amazon has been building its network in the region since 2010. Much of the growth occurred between 2017 and 2020. With 14 warehouse and distribution centers developed in 2020 alone, over 35,000 jobs were posted in the region.
The company’s regional strategy is partly focused on I-95, with the great majority of warehouses laced around the Northeast corridor highway. Many of Amazon’s earliest locations in the greater region were million-square-foot fulfillment centers in farther-flung locations like Easton, Pa. and Robbinsville.
These enormous warehouses are where workers pick products for particular orders from vast subsections, like toys or books, and pack them for shipment to “sortation centers.” There, they are arranged (“sorted”) by final destination and consolidated onto geographically targeted trucks.
From there, packages go to the final-mile delivery centers, like the warehouses in King of Prussia and South Philadelphia, which are smaller and send out fleets of small vans to make direct deliveries.
Siting the warehouses along I-95 also allows the Philadelphia-area infrastructure, especially the hulking fulfillment centers, to help serve even larger markets to the north and south.
“From these centers, they can serve not just Philadelphia, but it’s pretty easy for them to hit either New York or Baltimore-Washington,” says Ponsen. “It makes sense for them, because it’s much cheaper to locate out there in Lehigh, Bucks, or South Jersey, and those areas have big blue-collar population bases for them to hire.”
Amazon has opened 54 warehouses in the greater Philly region, with about half opening in the last year. This Logan township New Jersey location, which opened in 2017, is one of the region's largest. (STEVEN M. FALK)
Amazon relied on shipping companies to deliver many items until about 2019, said Subodha Kumar, a marketing and supply-chain professor at Temple’s Fox School of Business. Now, the e-commerce giant is building the nation’s largest logistics firm to ship its own packages, a sign of how much business it was giving its former partners FedEx and UPS. Amazon, which also fulfills orders for third-party sellers using its platform, will eventually ship more packages than its former partners, Kumar said.
“This is where Amazon has really cracked the game or at least done an outstanding job compared to other companies,” he said. “Initially they had some hiccups, but now they have almost perfected the system.”
Amazon expects a surge in sales to continue this year and wants to move more shipments to two-hour delivery, Kumar said. That combination of growing sales while slashing delivery times requires many more fulfillment and distribution centers close to customers.
”They have a grand agenda of going to 30-minute delivery as well,” he said. “So that’s where we are going to see some big growth, and this whole Northeast region is a big market for them.”
Philadelphia and Amazon have much to offer each other
Amazon’s rapid growth in the region is not just a reflection of the increased demand for deliveries, said economist Joel Naroff, president of Naroff Economic Advisors in Bucks County. The Philadelphia area had been underserved by Amazon and was not a major distribution center.
“I think Amazon needed some catch-up in this area and that need was just accelerated by the pandemic,” said Naroff.
The region also needs a fair share of the growing distribution sector, calling warehousing “the new manufacturing job,” he said. These jobs could be a good fit for Philadelphia, which has a significantly underskilled workforce, he added. Philadelphia trails other big East Coast cities like Boston and Washington in educational attainment, according to Census estimates.
“Is $15 an hour with benefits a good job for an unskilled worker? I think the answer is ‘It’s a real good start,’” Naroff said.
But many others want more despite the fact that Amazon this month handily defeated a concerted campaign to unionize workers at its Bessemer, Ala., warehouse.
Some Amazon workers here have criticized their compensation and working conditions, including one Philadelphia woman who claims she was fired for speaking up. Courtney Bowden, 31, has a pending case against Amazon through the National Labor Relations Board.
Bowden was a package sorter at Amazon’s King of Prussia facility and an advocate for better working conditions. To campaign for paid time off, she’d hand out red buttons reading “Amazonians United for PTO.” She’d also point out problems to management, such as when Amazon was behind on paying workers for time spent on shuttle buses, she said.
The King of Prussia facility did not have parking available for employees, so the company picked up workers from a parking lot about five miles away, she said, and they were not paid for that travel time.
Amazon fired her in March 2020, just as the coronavirus started to sweep the country.
“They fired me because they knew that I was getting ready to start a coronavirus [safety] campaign,” Bowden said. “I think they said, ‘Courtney is definitely going to give us a problem.’” Amazon did not respond to questions about the case.
Some workers report the warehouse work to be dull, with four 10-hour shifts a week that require near constant exertion. Nicholas Raymond Cicerone worked at the King of Prussia facility from May to November of 2020 but quit despite being upgraded from part-time worker to full-time.
“Honestly, it was one of the worst jobs I ever had,” said Cicerone, who worked at Walmart on the weekends making $11 an hour while going to the Amazon site on weekdays for $15 an hour.
“At Amazon, everything was nonstop but also the exact same every day,” said Cicerone. “I liked working at Walmart a lot better. They were more accommodating and tried to make their employees happy.”
Amazon maintains that its attrition rate is on par with the industry average but did not provide numbers for the region.
Amazon’s technology
Other warehouse workers say that Amazon compares favorably with other jobs they’ve had in the sector, citing its technology.
Since October, Doun Yang has been working at the new Amazon last-mile delivery warehouse on 2400 Weccacoe Ave. behind the South Philadelphia Ikea. Yang says that the warehouse -- the largest of Amazon’s six facilities in Philadelphia but still small by the company’s standards -- is clean, well-ordered, and features up-to-date technology that makes the work less difficult and safer than a similar job he held at a UPS warehouse.
“I left UPS because the technology wasn’t up-to-date and I didn’t enjoy doing it as much because it’s not as organized,” says Yang. “Amazon has their own system they follow and better equipment, which makes the job a little easier.”
The warehouse where Yang works used to house a Hyundai-Rotem factory that manufactured train cars for public transit agencies in cities such as Philadelphia and Boston. Many of Amazon’s new facilities are similarly sited on old industrial sites like the former Fairless steel mill in Bucks County or the company’s forthcoming project in Wilmington where General Motors closed a factory in 2009.
CoStar’s Ponsen says these sites are useful both for their scale and because they virtually guarantee vast reserves of labor nearby, which the company’s business model demands.
“One of the reasons that Harrisburg, Lehigh Valley, Bucks County have attracted so many of these distributors is because there needs to be some density of blue-collar labor where they’re going,” says Ponsen.
With pay beginning at $15 an hour, and health and retirement benefits included for full-time workers, Amazon’s jobs can easily compete with most nonunion jobs though they don’t pay as much as traditional manufacturing jobs.
“It’s been decades since anyone was trying to rapidly expand in places like Lehigh Valley and lower Bucks County, hiring thousands of non-college-educated workers,” said Ponsen. “These are not as family-sustaining jobs as a lot of manufacturing sites that they’re filling in, but it’s still a significant difference from companies leaving and nothing coming in.”
Amazon’s future growth in the region will depend on the extent to which brick-and-mortar retail can bounce back from the pandemic. It will also depend on the profitability of last-mile distribution centers.
“Amazon is a dynamic business and we are constantly exploring new locations,” said Andre Woodson, a Amazon spokesperson, via email. “We weigh a variety of factors when deciding where to develop future sites to best serve customers. However, Amazon has a policy of not commenting on our future roadmap.”
Amazon’s big rival is Walmart
During the pandemic Amazon has been competing with Walmart for the home-delivery market. The two companies are the largest private employers in the nation, and Walmart is one of the few that operates at similar scale to Amazon.
“Amazon is grabbing all this customer base and they are at war with Walmart,” says Richard Gorodesky, senior managing director with Colliers International. “They have two different models, Amazon doesn’t have stores for pickup -- at least not yet -- while Walmart has stores and has started home delivery. Assuming the consumer pie remains the same, it’s a question of how the pie will be divided.”
In Amazon’s hunger for growth, Gorodesky says it has been paying above-average industrial rents as it consumes ever more space.
“The question is ‘Do the last-mile delivery centers make money for them?’ If the answer is yes [long term], then they’ll continue to grow,” says Gorodesky.
At the West Deptford Fulfillment Center, Connor Lord said he liked working for Amazon at first. While physically exhausting, it was relatively easy and he enjoyed getting to know his coworkers in the brief moments he had time to talk with them.
After the holiday crush, however, Lord grew increasingly disillusioned and compared Amazon’s culture unfavorably with his time in the National Guard.
“Coming from the Army, officers always talk down on soldiers, but they try to get acquainted with them, too,” says Lord. “But the bosses at Amazon, they wouldn’t really care. They would think of you as more of a number or a robot.”
Lord ended up quitting in mid-March after four months, confident that he can find a better-paying and less alienating job.
Where is Amazon headed?
Reflecting on his time at Amazon, Lord feels something needs to change. He’d been following the Amazon unionization drive in Alabama, where 6,000 warehouse workers opted not to organize in the face of intense opposition from the company.
In an interview before the election results were known, Lord said that unionization might actually make Amazon’s jobs sustainable as a longer-term career. His relatives have jobs as electricians, carpenters, or nurses. Many belong to unions.
“My family members, their jobs, the time they put in, it definitely pays,” said Lord. “Whereas with Amazon, it’s more of a short-term job for someone who needs a few months’ wages to get by.”
Labor leaders in the Philadelphia region would not comment on whether they have plans to organize any Amazon facilities. But they do note that warehouse work has been unionized historically and that many jobs in the area still are, especially in companies like UPS.
“There are talks about it,” said Richard Hooker, president of Teamsters Local 623, which counts many warehouse workers among its members. “We have to talk about how to stop this antilabor company from dominating all aspects of work. They are a grocery, a delivery, warehouses, they are in everything. It’s not over. This is just the beginning.”
Labor sympathizers note that it took unionization campaigns to turn the manufacturing jobs of earlier decades into the family-sustaining positions that are eulogized today.
President Joe Biden, at least, seems to like the idea. In a precedent-breaking move, he issued a video reminding workers in Bessemer that it was their right, not the company’s, to decide if they want to unionize. Although labor supporters cheered the statement, it did not sway the outcome of the vote, which Amazon won by more than a 2-1 ratio.
Bezos, famous for keeping a ‘day-one’ start-up mentality at Amazon, isn’t satisfied with the victory. “It’s clear to me that we need a better vision for how we create value for employees — a vision for their success,” he wrote to shareholders last week.
For his part, Lord said Amazon “might turn into a better place. But we got to see how Amazon plays it. They’re a powerful monopoly and they’re very intimidating. Time will tell with that.”
