Industry observers: Loveland Amazon facility not likely affected by slowdown

LOVELAND — Work continues apace on the construction of the massive Amazon warehouse facility in northeast Loveland, with no sign that the international, online retailer will delay the opening.

National reports — Bloomberg, and others — have fed the speculation mill, often referencing Inc.’s first-quarter financial report in which the company admitted that it was overbuilt given current economic conditions. 

Consulting firm MWPVL International Inc., which tracks Amazon (Nasdaq: AMZN) building activity, estimated in a Bloomberg report that Amazon would shutter or kill plans for 42 facilities in its international network and delay opening an additional 21 locations. Locations that could close are likely to be older facilities with older technology. in a June report listed 13 locations affected by closure or delays. Only a couple of them were shown as “plans canceled.” None of the 13 locations were in Colorado.

Amazon embarked on a massive building spree during the pandemic because of huge increases in online retail sales. The shorter the distance between customer and product, the more that the company can save on delivery costs. 

Warehouse operations, whether run by Amazon or other national retailers, follow similar systems of attempting to predict what retail demand will be years into the future, because a large facility like the one under construction in Loveland requires a couple of years to build.

CEO Andy Jassy has been quoted as saying that Amazon deliberately chose to build to accommodate the most aggressive prediction of sales in order to avoid having too few resources.

Marc Wulfraat, founder of MWPVL, told BizWest in June that the 3.87-million-square-foot warehouse and fulfillment center at the end of Byrd Drive is unlikely to be impacted by company reductions elsewhere. 

“I highly doubt it,” he said then. “This is a fairly standard five-story Amazon Robotics small sortable facility, and the planning of these buildings occasionally changes but typically the sizing is determined well in advance of permitting and construction.” 

Wulfraat said a reduction in size could be possible, but called it “a low probability event.”

When contacted Monday, Wulfraat said he stands by what he told BizWest earlier. “My position on this has not changed. I’m on vacation overseas but no change on this one,” he wrote in an email.

Wulfraat said earlier that delayed openings, when they occur, enable the company to avoid payroll expenses until sales catch up with warehouse capacity.

Kelly Jones, city of Loveland economic development director, when contacted for this report said, “I have not heard anything about Loveland’s project being put on hold.”

Source: BizWest

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