Real Estate News

Amazon to close Coffeyville warehouse

The distribution warehouse is in an industrial park north of Coffeyville.
The distribution warehouse is in an industrial park north of Coffeyville. File photo

Amazon has announced that it will close its giant distribution warehouse near Coffeyville in February, after turning down a multimillion-dollar incentive package to stay.

Hundreds of employees worked at the 915,000-square-foot warehouse. Local officials are still trying to find out the exact number, but at one time it employed 1,000 full-time workers.

One of southeast Kansas’ largest employers, Amazon took over the warehouse in an industrial park north of Coffeyville in 1999, amid warm welcomes and generous financial incentives from state and local officials.

The company said Tuesday that it was closing the fulfillment center as it realigns its national distribution network, putting distribution centers closer to large cities.

In an e-mailed statement, company spokeswoman Ashley Robinson said: “This is not a decision we made lightly and we are committed to supporting our employees through this transition. We regularly evaluate our network to ensure we’re placing fulfillment centers as close to our customers as possible.”

The company did not respond to requests for additional information about the facility, its plans or what steps are being taken to assist affected workers.

The company has nearly 100 fulfillment centers around the globe. It is in the midst of opening 15 new fulfillment centers, called sortation centers, that allow the company to deliver goods more quickly, according to Amazon.

The local impact of this and other recent job losses is painful for the community, said Jeff King, R-Independence, vice president of the Kansas Senate and an attorney in Coffeyville.

“It’s devastating, especially for the families impacted,” he said. “There is not a resident of Coffeyville or Montgomery County that hasn’t been affected.”

A tough year

It has been a tough year for the Coffeyville economy.

In March, wire and cable maker Southwire announced that it would close its plant and lay off nearly 200 people. Fire hit the Coffeyville Resources oil refinery on July 29, injuring four workers and shutting down production for a month.

In mid-August, John Deere announced that it would lay off 38 people at its plant, as farm machinery makers everywhere ramped down production in reaction to falling farm incomes.

And now comes the closing of the Amazon plant and the loss of hundreds of jobs.

When Montgomery County landed Amazon in 1999, Site Selection Magazine dubbed it one of the top deals of the year.

Wichita investors Herb Krumsick, Dan Carney and Ken Wagnon had bought the building in 1999 from Golden Books, when it shut down, and helped land Amazon with the enthusiastic support of local and state government.

The company sought $20 million in industrial revenue bonds for the building expansion, and an incentive package worth about $4.5 million – $350,000 for up to 10 years if the company met employment goals and about $1 million toward improving access roads, water and sewer lines and other infrastructure improvements.

The state offered a $500,000 loan that would be forgiven if the company hit its employment goals. The state also awarded other incentives to Amazon under its IMPACT program, but the details of that award were unavailable Wednesday.

The incentives for Amazon expired after 10 years

Retention deal

Local and state officials said they had known for months that the company was considering the closure, said Aaron Heckman, executive director of Montgomery County Action Council, the county’s economic development agency.

They dug deep to come up with incentives to keep the operation.

King said state and local officials came up with a package of incentives “approaching eight figures,” or nearly $10 million.

“And Amazon turned it down,” he added. “They have made it clear they are not interested in rural America and that is an unfortunate position by Amazon.

“But state and local governments did everything they could to keep them and now we need to move on together to bring new companies and new jobs to Coffeyville.”

Montgomery County’s unemployment rate fluctuated between 5.5 and 6.5 percent over the last 12 months, which is above the state average. The number of people considered unemployed is about 1,100 people, a number that could rise dramatically with the newly unemployed.

Heckman said the next move is for local and state agencies to gather to see what can be done for the workers. That means talking to local employers about what jobs are open and what skills those jobs require and, perhaps, do some retraining.

Heckman acknowledged that it will take time to absorb hundreds of workers and to find a new occupant for the building.

“We’ve got work to do,” he said. “I think most people understand the challenge before us, but we will rally toward recovery.”

What’s next?

How long will it take to fill?

Krumsick, who sold the building to a California investor about five years ago, said buildings the size and height of the Amazon warehouse are the hot trend in national warehousing – and that they’re relatively rare.

That helps counter the fact that Coffeyville is small and far from major highways, he said. Finding a new occupant will be a problem in the short term, but not in the long run, he said.

“Is it the end of the world for Coffeyville? No,” he said. “Could I see it filled in two or three years by somebody who is a brand name? Yes.”

Reach Dan Voorhis at 316-268-6577 or Follow him on Twitter: @danvoorhis.