Online juggernaut Amazon.com is aiming to open a second metro Detroit distribution center, this one in Romulus, that would create at least 1,600 jobs and expand the Seattle-based retailer's Midwest distribution network in Michigan.
The company is asking for a $5-million grant from the state, which could help offset the cost of new roads and infrastructure improvements that would be needed. The new center could be built and open within a year.
The request is on the agenda of the Michigan Strategic Fund board's meeting Tuesday morning in Lansing. It follows an Amazon announcement six months ago that the retailer is building an automated distribution center in Livonia near the intersection of I-96 and I-275 that would employ about 1,000 workers.
Michigan Strategic Fund officials declined to discuss the deal in advance of the meeting. Generally, items that make it on to the agenda for consideration and discussion are approved.
Amazon is expected to spend an estimated $140 million to build the center in Romulus, bringing the total amount it is spending on the two centers in Southeast Michigan to about $230 million.
Amazon's regional distribution centers — which it calls fulfillment centers — are a significant part of the retailer's strategy as it seeks to reduce the time it takes to ship items to customers amid competition with traditional brick-and-mortar shops and other online sellers.
Walmart, for example, has been investing more in its e-commerce efforts and has acquired companies such as Jet.com and smaller, specialty companies such as Michigan-based outdoor retailer Moosejaw.
The intensified competition is leading the companies to out-do each other on which company can offer the lower minimum price for free two-way shipping.
At the same time, Amazon is experimenting with what it calls an Amazon Go store in Seattle. Groceries are tracked electronically with a smartphone app and customers can pick up what they want, pay for it without checkout lines and walk out the door.
Amazon now has more than 70 distribution centers in the U.S., which employ more than 90,000 full-time workers, according to the company's website.
The average pay in these jobs, the company said, is 30% higher than the pay in traditional retail stores. The jobs, the company said, include health insurance, retirement savings, bonuses and the potential to own company stock.
The Amazon center in Livonia, which is expected to be completed in October or November, is expected to create least 1,000 jobs, with potential for up to 1,500. For that center, the Michigan Strategic Fund approved a $7.5-million grant.
The money, the Michigan Economic Development Corp. staff said at the time, would help Amazon with recruiting and ensure the project would be in the state. The company, state officials had said, also was considering locations in Ohio and Indiana.
Amazon started by selling books in 1994 and now sells a variety of items, from electronics to jewelry to clothing.
Earlier this month, Amazon offered $13.7 billion to buy Whole Foods, an organic grocery chain, and is expected to leverage its distribution network to food. The proposed Whole Foods acquisition is far from a done deal, and other suitors also may bid.
Last week, a report from JPMorgan surfaced that Walmart — which already has the largest share of the U.S. grocery market with more than 26% — may be interested in Whole Foods, too.
Amazon's distribution centers — which also have been built in Arizona, Delaware, Illinois, Indiana, New Jersey, Texas and Wisconsin — are a combination of warehouse and shipping facility.
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