Region not after distribution centers, but they’re coming
Pittston, PA - Regional economic developers are not purposely wooing distribution centers, but they are being built.
And there will be more of them as e-commerce strives to achieve one-day delivery for its customers, the president of Penn’s Northeast says.
John Augustine, who worked in economic development for the Wilkes-Barre Chamber of Business and Industry for a decade before taking the reins of Penn’s Northeast — the regional marketing arm whose m ission is to bring new employers to Northeast Pennsylvania — a year ago, gave a peek into the future when he recently addressed the board of directors of CAN DO Inc.
Augustine stressed that today’s distribution center jobs are good jobs.
“What we are going after is industries we are strong in — food, plastics, advanced manufacturing, bio,” Augustine said. “But e-commerce is driving half of all deals above 250,000 square feet. Companies want to be next to their customer. As populations shift and technology changes, we are seeing large distribution centers, based on the products and the markets they are hitting. Ninety-five percent of the population can be reached within a two-day delivery. It is the goal of these companies to reach them within a day.”
One example is Chewy.com, which Augustine described as one of the fastest-growing pet supply companies in the United States. Chewy.com will employ 600 at the 800,000-square-foot distribution center its building in Hanover Twp.
E-commerce is the future of commerce, Augustine said.
“When you look at retail sales, and how they’ve remained relatively flat over the last few years, and you see something like Amazon alone starting to surpass growth in retail sales, it goes to show you when was the last time people were at a mall, versus purchasing something online,” he said.
The magnitude of technological changes is amazing, he said.
“Amazon has acquired their own fleet of airplanes,” he said. “In California and New York, there is mail delivery on Sunday. The Post Office delivers on Sunday because of Amazon. They have single-handedly brought back the U.S. Postal Service. We don’t see that yet, but you will see it soon.”
While Amazon and other U.S. companies are large, there are larger ones that are going to do even more global business.
“Alibaba is China’s Amazon. They are much, much bigger than Amazon,” he said. “Amazon will sell five billion items a year; Alibaba will send 12 million packages per day.”
The technological race will create jobs as the U.S. exports its goods, he said.
“By 2020, we will look to sell $486 billion in goods, and buy $10 billion,” Augustine said. “That says, from an economic development standpoint, 160 new e-commerce centers of 800,000 square feet or larger to be built in large, urban markets, and 110 to get that product to market quicker.”
This demand for next-day delivery is causing large businesses to call on more and more innovative ways of delivering their goods.
“Amazon has a blimp,” Augustine said. “The concept is that it flies over sporting events, and delivers product to you. Drones will leave the blimp and deliver. In Chicago, they are talking about flying drones at different levels on the streetscapes delivering different products. You are going to see drones all over the place at all different levels.”
Robotics are also beginning to be used in distribution centers, he said. It can cut the workforce in these facilities by 90 percent when implemented, he said.
We all remember the Jetsons,” he said of the futuristic 1960s cartoon. “Robots are not real, they are not taking over the world. Well, yes, they are real, and they’re going to (take over the world). They just replaced 60,000 workers with robots in China. It is suspected there are millions of jobs at risk from automation as we move forward. Wal-Mart just announced (on March 20) a new incubator for their new retail concept to talk about virtual reality — stores being run by robots. It’s coming.”
Some businesses are helping deliver those goods by being more innovative, Augustine said.
“Uber is a taxi-type service that is getting into the business of delivering groceries,” he said. “So when they are waiting to pick up a fare, they’re going to the store, picking up your order, and they are dropping it off at your house.”
People shouldn’t be too shocked because automation has been steadily creeping into society.
Dino, Jim "Region not after distribution centers, but they're coming." Standard Speaker, April 4, 2017 http://standardspeaker.com/news/region-not-after-distribution-centers-but-they-re-coming-1.2178802. Web.
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