Amazon arrives in rural America: Tech giant delivers hope and concern to Orland

Darrell Schonauer stands in his family’s orchard outside Orland, with the future Amazon Delivery Station behind him. He was surprised to learn from a reporter, not from the county or company, that as many as 200 trucks and delivery vehicles will travel in and out of the facility daily. 

 

“They are a company I’m sure you’re all familiar with. A large, national, international operator at the cutting edge of their particular field.”

That clue, offered by a real estate investor during a September 2020 meeting of the Glenn County Board of Supervisors, was the first sign that something big was budding amid the almond, walnut and olive orchards just beyond the city limits of Orland.

This mysterious company — its name officially unknown even to the county at that point — planned to open a package delivery facility in an existing industrial building next to Haigh Field airport southeast of town, covering the “last mile” to its customer’s doorsteps.

Using a non-disclosure agreement with the building’s owner, this company was able to keep its identity a secret even as Glenn County, which owns the underlying land, agreed to reduce the building owner’s payments on the ground lease, offsetting a portion of the cost of renovating the property, in the interest of economic development and jobs.

At least, its identity was supposed to be a secret. Word got around quickly, and people in Orland guessed correctly that it was Amazon.

“It doesn’t take long, especially when you’re talking about that many jobs and the effect that would have on the community and the region,” said Orland Mayor Bruce Roundy, recalling how rumors about the tech giant’s plans rippled through town.

Amazon made it official on Jan. 21, announcing plans for a new 75,000-square-foot Delivery Station at the Orland Airport Industrial Park. The company says it expects the facility to create 100 to 150 jobs, starting at $15 an hour with benefits. That would be two-to-three times the minimum of 50 jobs required for the building owner, BRT Enterprises, to qualify for the rent reduction under the renegotiated ground lease with Glenn County, according to public records.

But those are just the direct Amazon employees. The company says the facility will also host an unspecified number of Amazon Delivery Service Partner businesses, which hire their own employees and contract with Amazon to deliver packages in Amazon-branded uniforms and the company’s dark blue vans. These independent companies can employ up to 100 delivery drivers each, with 20 to 40 vans, under Amazon’s guidelines.

The site’s appeal includes its proximity to Interstate 5 and its location in the middle of the northern Sacramento Valley — ideal for receiving, sorting and delivering packages to the doorsteps of the region’s Amazon Prime members.

It’s a big deal in Orland, even if it’s a relatively small facility by Amazon’s standards. 

But the project is part of a much bigger story for Amazon — one that exemplifies the company’s ambitions under Jeff Bezos, who shook the business world with news that he will be stepping down as CEO of the company he founded more than 25 years ago.

Logistics and transportation experts say the e-commerce giant’s arrival in this agricultural community reflects a new phase in Amazon’s quest to extend its package distribution network across the nation. Amazon is creating its own delivery network to back up and complement — but not fully replace, at least not that Amazon is willing to say — the U.S. Postal Service and United Parcel Service for the delivery of Amazon packages.

That quest is now extending beyond U.S. cities and suburbs to orchards and fields. Amazon’s arrival in Orland, it turns out, is one of the first stops on its own last mile.

Amazon’s rural rollout

“They’re starting to fill out the hinterland,” said Marc Wulfraat, president of MWPVL International, a Montreal-based supply chain and logistics consulting company that tracks the expansion of Amazon’s fulfillment and delivery network.

The effort to build its own distribution network began in earnest after the 2013 holiday season, when bad weather delayed deliveries that were supposed to arrive before Christmas.

But even after investing huge sums to build out its delivery infrastructure in recent years, Amazon relies on partners such as the U.S. Postal Service and UPS for deliveries in many smaller communities and rural parts of the country.

“I believe, ultimately, their goal is to provide nationwide coverage … so that they can deliver anywhere in the United States, which is essentially going to give them equal capability as FedEx or UPS has today,” Wulfraat said.

Announcing its fourth-quarter results — including $7.2 billion in profits, more than double its bottom line from a year ago — Amazon said it has increased the square footage of its fulfillment and logistics network by 50% in the past year.

“We feel that control of the last mile is important to our ability to ratchet down delivery times and hit our increasingly tight delivery parameters,” said Brian Olsavsky, Amazon’s chief financial officer, on a conference call with reporters following the earnings report. “We will continue to expand that out into more rural areas, as well as increasing the number of Delivery Stations we have in more dense populations.”

Amazon Delivery Stations, such as the 75,000-square-foot facility planned at Orland Airport Industrial Park, are the final link in a chain that begins at Amazon’s large regional fulfillment centers, where products are placed into boxes and prepared for shipment. After arriving at a Delivery Station, packages are sorted and loaded into delivery vehicles.

The jobs planned in Orland are a small fraction of the nearly 1.3 million people who work for Amazon worldwide. But what happens in this community will echo across the country, making the project a case study for Amazon’s expansion into rural America.

So far, the biggest sticking point is the secrecy.

An unwelcome surprise

From Amazon’s perspective, non-disclosure agreements are a run-of-the-mill precaution, protecting its business interests when negotiating a contract, lest a competitor find out and jump in to steal the deal or at least drive up the cost.

Announcing the Orland Delivery Station two weeks ago, Amazon made a point of pledging to work with the community now that its plans are public.

“Amazon is excited to make this investment in Glenn County that will support local economic development and help ensure the company can reliably and efficiently deliver to its growing number of customers in the region,” said Xavier Van Chau, a company spokesperson, in a statement to the media. “The company is committed to being a good community partner and will engage with the city, county and community members as it develops this site.”

But two states and 650 miles from Seattle, in a tight-knit town where transparency breeds trust, unannounced details of the Amazon project are still catching people by surprise.

“Holy Jesus,” said lifelong Orland-area resident Darrell Schonauer, when a reporter told him recently about a Glenn County planning document indicating that there will be “approximately 200 truck load/deliveries per day” at the facility — just across Road P from the home and orchard that have been in his family for more than a century.

Like many others in town, the good-natured grower heard rumors that Amazon was planning an operation there. He joked with friends about the great delivery speeds he’d be able to get. But as reality sets in about his future corporate neighbor, Schonaeur has increasingly been questioning the lack of broader public notice or opportunity to give input.

The project didn’t go through a larger public approval process or formal environmental review because it is an accepted use within the existing zoning of the industrial park, said Scott De Moss, the Glenn County administrative officer. In addition, the project is a renovation of the existing facility, not new construction, lowering the requirements for review.

Hopes, dreams and jobs

Many business leaders, city officials and residents in Orland see Amazon’s arrival as a potential boon for the economy. They hope it will help to spark a more diverse commercial and industrial base, providing another economic engine in a county powered by agriculture, producing nearly $500 million annually in almonds, rice and walnuts alone.

Because the property is outside of the Orland city limits, in unincorporated Glenn County, Amazon won’t be paying taxes directly to the city. However, officials still anticipate a positive ripple effect for Orland, as workers spend part of their Amazon paychecks at Orland’s restaurants and other businesses.

“There’s a lot of reasons why the community would like to grow both commercially and residentially, and this could really be another catalyst for that,” said Pete Carr, the Orland city manager, citing the Pilot Travel Station on Interstate 5, plans for a new Honeybee Discovery Center, and a planned Butte-Glenn Community College facility as other examples.

Carr said he hopes the news of Amazon’s arrival, and the impending jobs, will convince homebuilders to restart projects in Orland, alleviating the city’s housing shortage.

Potential employees are also excited. The $15/hour starting wage is Amazon’s national minimum, and $1/hour more than the current California minimum wage of $14/hour for larger employers. Amazon says the jobs will offer benefits including medical and dental insurance and a 401(k) match from the first day of employment, plus the potential for career advancement.

“Yeah, I really want to work there,” said Nick Darling, an Orland High School senior who plans to apply for a job at the Amazon Delivery Station after graduating. He said the idea of unloading and moving packages inside an Amazon facility would be a better job than the farm and construction work he’s been doing for comparable pay.

He said he’s also intrigued by the company’s educational program, Career Choice, which pays for up to 95% of tuition for eligible employees toward certificates and degrees, whether or not they ultimately apply their new skills at Amazon or end up working elsewhere.

“I am very excited about it. I am hopeful, because it’s going to bring jobs to the community,” said

Carolyn Pendergrass, a member of the board of the Orland Area Chamber of Commerce, who owns bookkeeping, shipping and notary services at her business on Walker Street.

Pendergrass acknowledged that she’s setting aside some personal qualms about the tech industry in the interest of jobs and economic growth for the city.

“I am always wary of big tech, because I feel like they control more and more, and we don’t elect them. So that bothers me,” she said. “But I’m going to be hopeful.”

“It’s been done in secret”

But some of the same people who recognize the potential upside are also unsettled by the company’s initial secrecy; by the lack of opportunity for public input in the planning stages of the project; and by unanswered questions about the long-term impact on the labor market and local infrastructure, including some rough country roads surrounding the site.

“It’s been done in secret,” said Orland native Dr. Donald Barceloux, who owns property between the planned Amazon Delivery Station and Interstate 5. “So obviously, we’re concerned that they have something to hide, which would be the impact on the community.”

After learning Amazon’s identity, the Glenn County Board of Supervisors voted 3-1 on Nov. 17 to authorize the county to enter into the company’s non-disclosure agreement. Public records show the project going through a series of sign-offs by county and regional agencies, and permitting for the property upgrades, but De Moss said the time for broader public input and studies was when the industrial park was originally established.

That was in November 1992, when Orland Haigh Field Airport Industrial Park was created through an agreement between Glenn County and the City of Orland. The county Board of Supervisors order establishing the industrial park at the time cited Glenn County unemployment rates “consistently among the highest in the state” at the time, and “a need to pursue aggressive economic development” to create jobs.

“The industrial park is designed to be attractive, removing as many obstacles as feasible to the siting of businesses,” said the development policies that accompanied the Board of Supervisors order at the time. It outlined plans to offer fast-track permitting and financial assistance in exchange for jobs and economic development.

At the time, Glenn County’s unemployment rate had peaked at a record 22% in the recession of the early 1990s. As of last month, the county’s unemployment rate was 7.7%, compared with 9% statewide, according to the California Economic Development Department.

But nearly two decades after it was established, the 70-acre industrial park remains mostly undeveloped. County officials hope the Amazon project will help to change that.

“Here we have a national company coming in, and it is our hope and desire that, as they establish themselves, they will bring further light to our industrial park,” said De Moss, the county administrative officer. “And perhaps we will see additional opportunities there that will bring jobs and economic growth to our county.”

It’s common for companies to seek to operate under the radar, requiring confidentiality agreements when negotiating leases or other business agreements. That’s especially true in a competitive business sector, such as e-commerce delivery and logistics.

However, Amazon’s approach illustrates the imbalance of power between big companies and small communities, said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, an investigative advocacy group that has been critical of Amazon’s impact on communities.

“There’s a huge asymmetry between the personnel and expertise and strategy and knowledge on the side of Amazon, versus any of the local communities, especially small ones, that are on the receiving end of that strategy,” Mitchell said. “Instead of bargaining with the knowledge of the full worth and value of the community, they’re going in with a subordinate, subservient posture towards the developers and the corporations.”

A hint of more to come

Dialing in to the Sept. 15, 2020, meeting of the Glenn County Board of Supervisors, real estate investor Rick Abraham, of the building’s owner, BRT Enterprises, expressed optimism about the delivery facility’s economic impact, even though he wasn’t able to give more than hints about Amazon’s identity at the time.

The project “is going to be a win-win for all the parties involved, whether it’s the potential tenant, the county, Orland, and ourselves,” Abraham told the supervisors during the meeting. He said BRT planned to spend $3 million on renovating the property, which included improvements to the shell of the building and construction of the parking lot.

Under the revised ground lease, BRT’s monthly rent, normally $3,570, will be cut in half for six years and by 25% for the following six years, for a maximum cumulative reduction of $192,780 over 12 years of the 99-year ground lease. This type of offset is a common incentive used for economic development.

The amended ground lease also includes a hint of more to come. The language says that BRT may “wish to expand the leased property to include one or two parcels located north of the leased property.” The potential expansion parcels total about 22 acres, almost twice the size of the 12 acres designated for Amazon’s facility.

The company says the new Delivery Station outside of Orland will open “in the coming 12 months,” but that appears to be a conservative estimate. County officials say they understand that the timeline for the opening could actually be closer to 60 to 90 days.

Todd Bishop, who grew up in Orland, is a business and technology reporter in Seattle, and the co-founder and editor of the technology news site GeekWire. A 1996 Chico State University journalism and business graduate, he interned at the Chico Enterprise-Record in 1994 and 1995.

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