THE AMAZON IMPACT
Inside facility’s numbers
$1.90 plus tax at retail
n$2.38 in outlying areas
Given the sheer scale and continuing growth of Amazon, it was only a matter of time before the electronic commerce Leviathan made a serious move into the National Capital Region.
This is a $177.9-billion global juggernaut (2017 revenues) that last year spent $25 billion operating its fulfilment and data centres and another $22.6 billion on technology and content. (All figures U.S.) The amounts earmarked for each of these key items were up in excess of 40 per cent year over year.
There’s no real puzzle about why Amazon took as long as it did to spread its warehouse network to the capital region where, the firm revealed Tuesday, it plans to build a major facility for sorting, storing and shipping customers’ products. It’s simply a matter of population and geography. Fulfilment centres in Vancouver, Calgary and multiple sites around greater Toronto had greater priority. Amazon, headquartered in Seattle, also took its time coming east, at least when it comes to warehousing.
Just three months ago Amazon revealed plans to add 3,000 R&D jobs to its operation in Vancouver. Last October the tech giant said it would build a 600,000 square foot warehouse north of the Calgary airport, which will support 750 Amazon workers.
Amazon’s proposed warehouse on Ottawa’s Boundary Road just south of Highway 417 is expected to employ 600 workers by year-end 2019.
Amazon is familiar enough with the capital region but until now its public profile has been negligible.
For the past couple of years, several dozen Amazon employees in Kanata have been developing new features for the company’s automated assistant known as Alexa (which powers the Echo speaker).
A separate group of employees, associated with Amazon Web Services, are also busy marketing their data services to the federal government. (Amazon recently built some data centres near Montreal to take advantage of the province’s cheaper electricity, but that’s a separate story.)
The Boundary Road operation will be a sizable one locally, but in Amazon terms it’s really below average in scale. Even at a million square feet of space it will add just 0.5 per cent to Amazon’s global infrastructure.
For more context, the Ottawa facility will be less than twothirds the size of the Department of National Defence’s new headquarters in the city’s west end. Of course, the DND complex will eventually accommodate 8,500 workers, giving some idea of the extreme automation built into the Amazon fulfilment operation.
At one level there’s much to like about this project, which is pulling jobs into the eastern part of the region — the perennial also-ran when it comes to tech employment.
Most of the area’s 50,000 tech jobs are anchored in and around Kanata, with a new cluster forming downtown around the headquarters of e-commerce specialist Shopify.
Of course, many of the jobs at Amazon’s new warehouse will be at the lower end of the pay scale. Glassdoor, a website that allows employees to rate companies they work for, suggests the average hourly wage for Canadian warehouse associates or fulfilment workers is about $14 per hour, which likely
excludes benefits.
The jobs are straightforward: employees are responsible for inspecting, packing, storing and shipping goods. There will also be higher-paying assignments in management and some software development.
Unknown, of course, is what impact Amazon’s fulfilment centre will have on other retailers in the Ottawa area. By rights, many of the goods ordered through Amazon should be delivered more quickly to homes and offices in Ottawa and Gatineau, after the fulfilment centre begins operations. More generally, Amazon is making it easier for consumers to bypass conventional retailers by making online shopping — and shipping — easier to do.
Of note, that is Shopify’s mission as well. It sells technology to smaller merchants, allowing them to set up online storefronts quickly and relatively inexpensively. Shopify is thus helping many retailers withstand the Amazon onslaught.
For how long is the real question. Amazon is massively larger than Shopify, which only this year is expected to top $1 billion in sales. The consensus estimate for Amazon in 2018 is about $238 billion in revenues. Yes, the Seattle firm, which had 560,000 full- and part-time employees at year’s end 2017, is growing that fast.
In fact, Amazon is hiring as many new employees in its Vancouver offices as Shopify had in total earlier this year. And the Vancouver jobs — unlike the vast majority of the Amazon assignments going into the Ottawa region — are high-paying ones involving machine learning, cloud computing and other types of software development.
Perhaps these will come here, too. In the meantime, the region’s politicians will count Amazon’s new facility in the win column, even if the consequences of the firm’s massive worldwide infrastructure rollout aren’t yet entirely clear.