Amazon Brings Jobs With New Robbinsville Facility
By Greta Cuyler
Illustrations by Jorge Naranjo
In July Amazon.com opened the doors to its new warehouse and fulfillment center in Robbinsville, bringing hundreds of jobs to Mercer County and millions to state and local coffers.
Amazon is a Fortune 500 company based in Seattle, Washington, offering an online marketplace where customers can browse and buy millions of new and used items, including books, movies, electronics, toys, clothes, jewelry, sporting goods, home and garden and much more.
The 1.2 million-square-foot facility in Robbinsville is located at the Matrix Business Park off Interchange 7A on the New Jersey Turnpike. Here, employees pack and ship smaller items— books and DVDs and the like—to customers.
“Amazon was looking for a place where they could locate…where they could have easy access to the New York and Philadelphia markets,” Mercer County Executive Brian Hughes said. “The fulfillment center is at the corner of Route 195 and the New Jersey Turnpike and that’s a place that offers access to major roadways.”
Few consumers may realize that under federal tax law, online companies without a physical location in a given state do not have to collect applicable local sales tax. Instead, customers are supposed to claim their online purchases on their annual taxes and pay a “Use Fee” equivalent to the sales tax incurred. Experts say few customers claim these purchases.
As part of its negotiations with New Jersey officials, Amazon began collecting New Jersey’s 7 percent sales tax from customers in July 2013. A conservative estimate at the time of the announcement put Amazon’s annual New Jersey sales tax collection at approximately $40 million, although some believe it will be much more.
A 2011 study—Estimates of New Jersey Sales and Use Tax Losses Resulting from E-Commerce commissioned by the New Jersey Retail Merchants Association and conducted by Rutgers University’s Edward J. Bloustein School of Planning and Public Policy—estimated that online business to consumer sales tax loss could reach at least $310 million by 2015. Now some of that money will make its way into state coffers.
“Amazon is clearly the largest player in the online market, but to what extent, I don’t know,” said John Holub, president of the NJRMA.
ROBBINSVILLE WINS THE BID
Robbinsville was one of a handful of municipalities from across New Jersey that was invited to pitch its location to Amazon, Robbinsville Mayor David Fried said.
What set us apart was our history of building very large buildings, on time and on budget,” Mr. Fried said. “Amazon had a very, very tight deadline in terms of opening this building.”
Gov. Chris Christie touted the Robbinsville deal in press release on January 8, 2013. “Amazon’s multi-million dollar investment in this one facility alone is expected to result in the creation of hundreds of full-time jobs in addition to temporary, seasonal and construction jobs. Today’s announcement represents the strength of our successful partnership with Amazon and I want to express our sincere thanks for their continued commitment to investing in our state and bringing these job opportunities to our residents.”
As an incentive, project developer KTR Capital Partners agreed to a 20-year Payment in Lieu of Taxes, which will bring approximately $1 million annually to Robbinsville Township, Mercer County and the Robbinsville Public School District. The total value of the PILOT is $22 million.
According to Mr. Fried, the PILOT payment in 2013 brought $650,000 to Robbinsville, $300,000 to Mercer County and $300,000 to Robbinsville schools. Robbinsville Township has been using its share of the money it’s received so far to make a dent in its $13 million debt.
“As we pay down debt it will allow more money in the operating budget, which is very important for the town because we’re opening with the 2 percent cap,” Mr. Fried said.
The Township also reduced its annual property taxes by about $0.02 per $100 of valuation for 2013-14.
“Amazon was a great business to add to the Township,” Mr. Fried said. “We probably would have had to raise taxes had it not come along.”
Over the past several years, Robbinsville has successfully lured several large companies to town, companies that needed warehousing space for their products—Mercedes-Benz, McKesson Corporation, Green Mountain Coffee.
“Robbinsville had to make a decision years ago about what we could be great at,” Mr. Fried said. “Most of the real estate had been developed on the retail side, so we had to think of something else. We have a great location with Turnpike and Route 195, so we decided that we could be good at warehousing.
“It’s clean and it has good rateables,” Mr. Fried continued.” We spent a couple of years getting good at creating a good process.”
PROJECT PROGRESSED QUICKLY
Before construction could begin on the barren land where Amazon’s facility now sits, the site had be cleared of contamination from pesticides from its prior farming use, Mr. Fried said. Contaminated dirt was removed and new fill was trucked in.
The Robbinsville fulfillment center opened in July. “This place is busy,” Mr. Hughes said. “They estimate that they will be able to move 1 million products a day.”
Described by Mr. Fried as a “state of the art” facility using a “significant amount of robots” to do the the heavy lifting, Amazon’s Robbinsville location is expected to employ 1,000 employees, increasing to about 1,500 during peak holiday season.
According to Amazon, these positions have benefits and pay on average 30 percent more than traditional retail jobs, not including stock grants. Mr. Hughes said an education is required to operate the high tech equipment inside the warehouse and fulfillment center. “There are very few jobs that are bending your knees and lifting packages up,” he said.
Mercer County officials worked to help workers connect with open jobs at the fulfillment center. They also worked with Amazon and other retailers, Robbinsville officials, Greater Mercer Transportation Management Association and NJTransit to fund and establish the ZLine, a free, daily bus line that delivers employees directly to the Matrix Business Park.
“Before that, people would have to take three buses from downtown Trenton to get out to the site,” Mr. Hughes said. “Now you can take a shuttle bus directly to the Hamilton Marketplace.”
UNINTENTIONAL TAX SCOFFLAWS?
Although online customers are legally required to claim applicable online purchases on their taxes and pay a “Use Fee” equal to the sales tax owed, only a fraction of New Jersey customers do so, said Mr. Holub. “We did a study a few years ago that shows only about 1 percent of consumers claim those online purchases,” he [Mr. Holub] added, referring to the Estimate of New Jersey Sales and Use Loss Taxes Resulting from E-Commerce. “These companies are unknowingly making the customer a tax scofflaw and a lot of consumers don’t even realize it’s happening.”
But local retailers are all too aware of the issue, especially when it comes to shoppers who are comparison-shopping on big-ticket items.
“Customers feel that they have saved 7 percent on a $2,000 order and that’s a lot of money to a lot of people,” said Debbie Schaeffer, the third generation owner of Mrs. G TV & Appliances in Lawrence Township, Mercer County. She would like to see a federal solution that will even the playing field between online retailers and brick and mortar stores. “Once laws close that gap and I can bring that (formerly online) customer back into my business, then I can grow my business and bring on another two to four employees–more sales people, more support staff,” Mrs. Schaeffer said. “It’s all about the jobs.”
The U.S. tax policy doesn’t reflect the 21st century marketplace, according to Mr. Holub. “For us, it’s about leveling the playing field and making sure we’re all playing by the same rules. Our members are ready, willing and able to compete any day of the week on a level playing field, but that 7 percent it’s a very small margin,” Mr. Holub said. “And if you’re operating on a very small margin, you can’t give away products at a loss.”
AMAZON TO OPEN ADDITIONAL NEW JERSEY LOCATIONS?
A Gloucester County freeholder confirmed to NJ.com in September that Amazon is preparing to open a distribution center in Logan Township that could bring 500 jobs to South Jersey. Other reports speculate that Amazon will open another location in Avenel, Middlesex County, which would offer the Amazon Fresh online grocery delivery to customers in New York City.