After years of rapidly expanding its warehouse operations across the country, Amazon.com said it plans to shut down one of its oldest facilities.
The online retail giant will shutter its 1 million-square-foot warehouse in Coffeyville, Kan., early next year. According to a regional planning group, Amazon employs between 600 and 700 full-time workers there, about 70 miles north of Tulsa, Okla.
Back when Amazon opened the warehouse in 1999, it was seeking sites in sparsely populated states. That way, the company could avoid a so-called “tax nexus,” business operations that would allow states to collect sales taxes.
As Amazon has grown, its priorities have shifted. These days, speedy delivery trumps tax avoidance. So Amazon has busily built warehouses close to urban centers in states with large populations, such as one opened last year in San Bernardino, Calif., even if it means paying state taxes. Proximity to cities makes it easier for Amazon to get the books and binoculars, toasters and toothpaste, and everything else it sells to the vast majority of its U.S. customers within a day or two.
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The thing that made Coffeyville so appealing 15 years ago — its location in a state with a small population, resulting in fewer sales that could be taxed — is the key reason Amazon is closing it down now.
“We regularly evaluate our network to ensure we’re placing fulfillment centers as close to our customers as possible,” the company said in a statement.
Amazon declined to give any other details about the closure, except to say that it didn’t make the decision “lightly” and that it would support employees “through this transition.” It notified workers Tuesday about its plans, and said the facility will shut its doors next February.
Aaron Heckman, executive director at Montgomery County Action Council, the regional planning group, said Amazon is one of the area’s largest employers, along with the Coffeyville Resources refinery, a Cessna Aircraft plant and a John Deere factory. In addition to the 600 to 700 employees who work at Amazon full time, the company has hired hundreds more for temporary jobs during the holiday shopping season.
“Anytime that this many jobs leave the community, it’s going to be tough,” said Stacia Meek, the executive director of the Coffeyville Area Chamber of Commerce. “But we will rebound.”
The closure comes as Amazon has been on a warehouse-building tear. In addition to adding giant warehouses, which cost about $100 million each, Amazon has started opening “sortation centers,” where it sorts parcels by ZIP code, sent from its own warehouses, and sends them to individual U.S. post offices for delivery in that day’s mail. It plans to open more than 15 sortation centers, near urban centers, by the end of the year.
Though rare, it’s not the first time that Amazon has shuttered a warehouse. In 2011, Amazon closed a warehouse in the Dallas suburb of Irving, in order to avoid paying state sales taxes. At the time, Amazon’s vice president of operations, Dave Clark, told employees in an email that the facility was closing because of Texas’ “unfavorable regulatory climate.”
Two years earlier, in the depths of the economic crisis, Amazon closed warehouses in Indiana, Nevada and Pennsylvania.