Jeff Bezos speaking at an event in 2018. Seattle City Council via Wikimedia Commons
Experts assure Jeff Bezos’s departure from CEO position will not affect the local economy
Retail giant Amazon announced that its founder Jeff Bezos would be stepping away from his CEO position. The corporation stated that the official change would occur in the third financial quarter of the year and that Amazon Web Services CEO Andy Jassy would assume Bezos’s role. Bezos plans to stay with the company as an executive chairman.
The news of the transition comes as a surprise to many worldwide but rings especially pertinent in Orange County, California. Amazon operates a major fulfillment center in Irvine, centrally serving many of its three million county residents. Business experts believe that the shakeup will not cause any negative impact on the local economy.
“Irvine has a diverse economy because of the Irvine Master Plan set in place 60 years ago,” said Laura Perdew, vice president of Marketing & Communications, Greater Irvine Chamber. “That plan ensures that Irvine remains economically stable, regardless what leadership changes take place in even the largest corporations. The hundreds of workers employed by Amazon at its Irvine facilities will continue to have jobs here as the city is the economic center of Orange County and is geographically positioned to serve all of Southern California and the world.”
Amazon plans to expand its logistical influence in the county, as the company made a $63.2 million purchase of the former Orange County Register printing facility in Santa Ana in October 2020 to be used as another fulfillment center geared towards the heavily populated North Orange County. Amazon furthered their intentions the following November, as the Orange County Business Journal reported a $112.5 million sale of Irvine Spectrum land to upgrade their operations in the area to a hub for their distribution network in the Southland.
“The project includes the development of the Alton Parkway Logistics Facility Project, which involves removing the existing agricultural uses, parking and RV storage lots, and sports fields, and constructing an approximately 145,500-square-foot, 43-foot tall, single-story tilt-up concrete logistics and delivery facility in the northern portion of the project site,” said Kristina Perrigoue, a spokesperson for the City of Irvine. “Delivery van parking would include 735 11-foot by 27-foot van parking spaces, and 240 loading and queuing spaces for delivery vans would also be provided. Semi-truck parking would total 12 spaces.”
An Amazon facility in Scotland near the time of its opening. Scottish government via Wikimedia Commons
With the ability to hire hundreds of more workers at the upcoming facility, Amazon’s expansion will undoubtedly impact the Orange County economy. The facility’s plans could only imply that the company seeks to increase its number of employees and interns in the area. The change will potentially provide young people in the county with opportunities, such as those involved with the Economic & Workforce Development and Business Science school at Saddleback College.
“We expect the location and development of Amazon’s distribution and transportation centers to provide opportunities for our students and will support their learning and experience through jobs, internships, and apprenticeships,” said Dr. Barbara Cox, the Chair of Saddleback College’s business department. “The EWDBS division of Saddleback College is already building partnerships with employers in our region to offer students internship and apprenticeship opportunities. Furthermore, the Business Department of Saddleback College will be offering a new certificate and a degree in Logistics and Physical Distribution with courses in supply chain management, transportation/traffic management, warehousing, inventory, fulfillment, just-in-time distribution, logistics, customer service, and their related technologies.”
While the prospect of a company expanding and providing jobs can sound optimistic on paper, there are possible negative factors to consider as well. With the expansion of massive corporations comes pressure on small businesses to keep up with their low prices and high volume.
In 2014, Brookings published a report that showed a decline of entrepreneurship in America, with the firm entry rate declining over time to be surpassed by the firm exit rate. With a decline in small business, experts believe that large corporations and small businesses must work together to coexist.
“I’m not going to drive 30 minutes into Irvine or Mission Viejo to find what I want at a store that doesn’t either have it or doesn’t have my size, and it won’t get it for me,” said Dr. Scott Fredrickson, a business and entrepreneurship professor at Saddleback College. “So I’ve become an Amazon embracer. I buy from Amazon strictly because the stuff comes tomorrow, and it’s exactly what I want at a decent price.”
While the earliest convenience is often convincing to buyers, some have become concerned about the welfare of small, local businesses. Many have found themselves buying from Amazon, but their desire to support small businesses is not lost.
“So here’s what I’m having to layout is: do we destroy the mom and pop stores with the Amazons of the world, the same that Walmart comes into small communities and destroys the mom and pops?” Fredrickson said. “So, this is something in business that we as a culture need to balance out.”
In February 2020, Amazon had over 250 job listings posted for their Irvine operations. In 2017, the City of Irvine reported that Amazon employed 1,200 people in the city. Irvine showed their keenness for the company with their 2017 proposal for Amazon’s second headquarters, nicknamed “HQ2.”
Multi-billionaire owner of the Irvine Company Donald Bren even offered to finance the construction expenses of HQ2 in an attempt to court Bezos. Irvine ultimately missed on the proposal, as Crystal City, Virginia, was chosen instead. Despite the rejection, both Amazon and Irvine seem to have a mutual interest in expanding their economic influence in the area, with factors like their COVID-19 hiring splurge and the upcoming logistics hub project.