Archive for Wednesday, October 1, 2014

Amazon closing distribution plant in Kansas

October 1, 2014, 12:09 p.m. Updated October 1, 2014, 5:02 p.m.

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— Amazon.com plans to close a distribution center in southeast Kansas in February, a move that will affect hundreds of workers in this rural area, the online retailer said Wednesday.

The Seattle-based company said it regularly evaluates its network to ensure the business is placing fulfillment centers as close to customers as possible.

"This is not a decision we made lightly and we are committed to supporting our employees through this transition," Amazon spokeswoman Ashley Robinson said in an email.

Amazon said it employs hundreds of workers in Coffeyville, but gave no specific numbers. Employees were notified Tuesday afternoon.

Wedbush Securities analyst Michael Pachter said the retailer has reached deals with California, Texas, Pennsylvania and New York in which it would receive a holiday for a limited period of time on collection of sales taxes in exchange for building distribution centers and employing people in those states. They are among the most populous states in the country.

Another factor behind the move to the more populous states is Amazon's Prime service, which offers a guaranteed two-day delivery, Pachter said. The company was finding it inconvenient to ship to out-of-the-way distribution centers in places such as Kansas and then transport those packages hundreds of miles to the customers, he said.

Having a distribution center in Kansas was beneficial when the company was trying to avoid collecting sales taxes in those more populous states. But now that it has tax deals with those states, it is setting up centers closer to customers, which will save time and money for shipping.

"Locating a distribution center in Kansas didn't make sense from a business perspective because you have a low population, but it made sense from a tax perspective," Pachter said. "Once you neutralize the tax law, they didn't need to be there anymore — that is what happened."

Coffeyville is a rural Kansas town about 70 miles north of Tulsa, Oklahoma. Amazon is one of the area's largest employers, though its workforce fluctuates widely.

"Obviously losing a large employer like that will definitely impact our entire area," Coffeyville Chamber of Commerce executive director Stacia Meek said.

The Parsons Sun first reported the closure plans and noted the company recently celebrated its 15th year anniversary in Coffeyville.

"I would say on balance that Amazon is still investing aggressively in its businesses, so I would assume that closing fulfillment centers like Coffeyville are the exception, as they add significant new capacity elsewhere," R.W. Baird analyst Colin Sebastian said in an email.

Amazon can save a lot of money on shipping expenses and improve service with fulfillment centers that are closer to places with larger populations, he said.

Comments

Lawrence Freeman 3 years ago

Brownback says brownbackistan is business friendly! Strange how none seem to want to move in and we can't even hold on to the ones we have.

David Gregory 3 years ago

Seriously Larry? Talk about cynical. Have you ever been to Coffeyville? It's not close to anywhere! Amazon.com doesn't give a crap about what's going on in Kansas.

Joe Blackford II 3 years ago

At one time, KU & KSU were close to nowhere.

In 1940, Coffeyville had a population of 17,355 & Independence, 11,565 (both in Montgomery Co.); compared to only 14,390 for Lawrence, & 11,659 for Manhattan.

http://www.ipsr.ku.edu/ksdata/ksah/population/2pop33.pdf

Dorothy Hoyt-Reed 3 years ago

I'm sure those hundreds who are losing their jobs really appreciate your concern. Hope you aren't planning on running for office, whoever you are.

Greg Cooper 3 years ago

And you think that the issue here is really how close they are to "anywhere"? The issue is sales taxes and tax burdens. Kansas didn't pass muster and lost the deal. Has nothing too do with population and everything to do with dollars. We can not compete, in this age of next to no income taxes and a crumbling state economy. That's it.

Lawrence Freeman 3 years ago

" Amazon.com doesn't give a crap about what's going on in Kansas." That's exactly my point! Obviously brownback's "shot of adrenalin" means nothing to them.

David Gregory 3 years ago

Brownback's policies I doubt have little effect on the Amazon.com empire. I think your claims are a bit exaggerated Lawrence.

BTW: not a big fan of Brownback either, but I don't think he nor the Koch brothers are responsible for all the problems in Kansas.

Dorothy Hoyt-Reed 3 years ago

Then please fill us in on all of the companies dying to get into Kansas and be a part of this new business friendly Kansas experiment. Just admit, it's not working. Brownback needs to be sent packing. Do you really think he will stay in Kansas once he is voted out in November?

David Gregory 3 years ago

Dorothy...corporations have been stock-piling cash and in a holding pattern since Obama was elected. This isn't just another Kansas experiment. No body is doing anything because of the policies in Washington.

Kansas is a blip on the Amazon balance sheet.

Lawrence Freeman 3 years ago

I knew it! It's Obama's fault! LOL!!!

Philipp Wannemaker 3 years ago

Absolutely, every total screw up of brownie is Obama's fault. After all brownie's "god". better known as the the Koch brothers can never lead him astray.

James Howlette 3 years ago

So how come growth in Kansas is slower than that of nearby states? Obama has the power to make the economy in Kansas slow down that much more? Man, he's good.

Scott Burkhart 3 years ago

The Kansas economy, generally speaking, is centered around agriculture. Kansas does not grow, economically, like other states. It never has. I always wondered what moron placed a distribution center in Coffeyville, KS in the first place. Hays would have been a better choice than that. There is and has always been real estate available, especially 15 years ago on the Hwy 10 corridor in Johnson County. This move wasn't Brownback's fault or Obama's for that matter. It was a smart, fiscally responsible business decision by someone that woke up and smelled the "Coffey-ville" one day. Hahahahaha!

James Howlette 3 years ago

In other words, Brownback's "shot of adrenaline" tax cut idea is a bunch of hogwash. Thanks for proving my point.

Dorothy Hoyt-Reed 3 years ago

So this is the true tea party colors coming out. All that talk about caring about Kansas always did seem shallow. This is pretty much how your hero governor feels too. I think I'll send this link to a friend of mine in Coffeyville, so she can pass it around to those who are losing their jobs. The GOP could care less, because you are just a hick town. Thanks for the honesty, Scott.

Dorothy Hoyt-Reed 3 years ago

So, you admit it. Corporations are willing to destroy the economy unless we elect a president they can control? If that's true, let me know who they want us to vote for, so I can vote for the other candidate.

Greg DiVilbiss 3 years ago

CTP Transportation Products to invest in multiple Kansas facilities KMT Waterjet Systems will invest in Kansas manufacturing operations AIG hosts grand opening of expanded operations in Olathe Parnell expands headquarters in Overland Park Inclusion Technologies selects Atchison for headquarters Alliance Data announces plans to create 530 new jobs in Kansas Governor Brownback joins officials in announcing U.S. Soccer National Training Center in Kansas City

Joe Blackford II 3 years ago

Brownback's Director of the Budget, Shawn Sullivan, should have a statement shortly about whether Amazon will continue to collect sales tax on purchases Kansans make from Amazon.

Lawrence Freeman 3 years ago

The answer will be no. Taxes can only be collected IF a company has a physical presence in Kansas. Kansas sales tax is just too damn high!

Philipp Wannemaker 3 years ago

And as Amazon's move shows, brownies tax cut fiasco shows brownie is totally clueless on how to keep companies in Kansas much less attract new ones. Another outstanding example of his of brilliant leadership and policies is Boeing pulling out of Wichita after many, many years there.

Steve Jacob 3 years ago

Not sure if you can blame this on Brownback. I think Amazon's business plan for the future is customers on there phones buying groceries and deliver them to your door that day.

Lawrence Freeman 3 years ago

Of course we can, he will take full credit for any company coming in, by corollary he gets the blame if they leave.

Ira Rott 3 years ago

Online shopping is basically a brick and mortar store in your living room with self-check out. It's not like in the old days when you couldn't expect people to calculate the price for sales tax themselves when making orders out of a catalog and mailing in the payment, it can all be calculated automatically by the website software. Eventually state governments will probably try to reclassify the point of sale so that it is not where the servers are located, but the store front in the customer's living room, especially as online shopping inevitably becomes more popular.

Steve King 3 years ago

Yep. They are moving. Out of Kansas. Peroid. Not just Coffeyville. Kansas. If the climate was so good here they could relocate near I70 and I35 for a central hub. Metro area. So calling Coffeyville a dump is rude and wrong about why they are leaving Kansas.

For a reality check. I too am considering moving my business out of Kansas.

Arnie Bunkers 3 years ago

Reading the article and other articles, it seems that maybe Kansas didnt cut taxes enough. Looks like they are going to states where the business climate (ie lower taxes) are more attractive to creating shareholder value.

Philipp Wannemaker 3 years ago

How do you propose to cut more? Start giving rebates for taxes they don't pay in first place? Or simply cut them a check every year for staying around?

James Howlette 3 years ago

You know that Florida has no personal income tax, but it does have a corporate income tax, right? And Washington, where Amazon is headquartered, doesn't have an income tax but it does have a business and occupation tax based on gross receipts. Yet businesses still locate there, where they are taxed, yet they move away from the state that is lowering their income taxes to zero. Why is that? My guess is because the tax rate has diddly squat to do with where a big company like Amazon wants to be.

Lawrence Freeman 3 years ago

Big companies have big shots who like their comforts and perks. What does Kansas offer? A religious wacko as a governor and a bunch of right-wing, holier than thou nut-cases who think a lap dance is a sin. :/

James Howlette 3 years ago

I think I'll take the Pacific Northwest given that choice. BRB, gotta book a flight and buy a rain jacket.

Lawrence Freeman 3 years ago

I had one foot on the airplane for Hawaii until my two grandsons came to live with me. I should be sitting on the beach in Hawaii drinking Lava Flows and Marguerites, ogling pretty young women in bikinis. I'm too darn old to be a single mom!!!

Richard Heckler 3 years ago

Brownback and Kobach are trying to steal the election all the while the state is going broke.

Maggie Morrissey 3 years ago

It has to make sense to have a distribution center in the middle of the nation, for ground shipping and transfer of merchandise? It's half way to everywhere! Give them all the perks they are requesting and save those jobs! That many loss of jobs in that area will be crippling! They vote in Coffeyville too! "We the people" of Kansas are screaming for leadership that is working FOR THE PEOPLE!!!!!!!!

Ralph Reed 3 years ago

Hmmm, It strikes me that the main reason for Amazon closing in Coffeyville is The Guv's cutting corporate taxes.

(snip) "Locating a distribution center in Kansas didn't make sense from a business perspective because you have a low population, but it made sense from a tax perspective," Pachter said. "Once you neutralize the tax law, they didn't need to be there anymore — that is what happened."

Coffeyville is a rural Kansas town about 70 miles north of Tulsa, Oklahoma. Amazon is one of the area's largest employers, though its workforce fluctuates widely." (end snip)

I attribute this directly to The Guv's failed policies. He has not only caused a business to leave Kansas, but he has also caused a loss of several hundred jobs in Kansas.

How can you Tea Party people believe his lies? Don't you even think?

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