Amazon arrives in rural America: Tech giant delivers hope and concern to California town (2024)

“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, Calif., about 100 miles north of Sacramento.

This mysterious company — its name officially unknown even to the county at that point — planned to open a new package delivery facility in an existing industrial building next to the rural 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, as it does in a small town, and people in Orland, population 8,200, 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.

Those numbers alone would be 2-to-3 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 independent Amazon Delivery Service Partner companies, 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.

Amazon arrives in rural America: Tech giant delivers hope and concern to California town (1)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 Tuesday 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

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“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.

Illustrating the potential, a map from Wulfraat’s firm shows large swaths of the country yet to be reached by Amazon delivery trucks. 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 of these locations.

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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.

Bloomberg News reported in September that Amazon is putting 1,000 Delivery Stations in cities and suburbs, seeking to fend off competition from Walmart and Target, which are leveraging their national retail footprints to provide same-day delivery in many parts of the country.

But as the Orland project shows, Amazon isn’t stopping at the suburbs.

“If you look at these yellow blobs, they’re starting to attack markets where they have enough demand to justify a delivery station,” Wulfraat said. “I believe, ultimately, their goal is to provide nationwide coverage, so that these blobs on the map go away and that they can deliver anywhere in the United States, which is essentially going to give them equal capability as FedEx or UPS has today.”

One of the goals is to continue to speed up delivery times to Prime members. The company shifted the core Prime benefit from two- to one-day free shipping last year. In larger cities, it’s not uncommon to see same-day delivery of items. The pandemic has fueled a 32% increase in Prime members in the past year, now topping 142 million individual members in the US, analysts at Consumer Intelligence Research Partners estimate.

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Amazon also wants to take its delivery destiny into its own hands. The effort to build its own distribution network began in earnest after the 2013 holiday shipping debacle, when bad weather delayed deliveries that were supposed to arrive before Christmas.

Long term, there could be even more going on. In a September report, analysts with RBC Capital Markets speculated that Amazon could be positioning itself to launch a global “Shipping With Amazon” service, handling even non-Amazon packages using its excess distribution and logistics capacity. That would be similar to the way the company turned its internal cloud computing and storage services into the Amazon Web Services public cloud.

The theoretical parallel to AWS is even more notable now that Andy Jassy, the longtime Amazon cloud leader, has been tapped to succeed Bezos as Amazon CEO.

Announcing its fourth-quarter results on Tuesday — 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.

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“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 Tuesday 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.”

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. (Orland is also my hometown. See personal notes below.)

So far, the biggest sticking point is the secrecy.

An unwelcome surprise

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From Amazon’s perspective, non-disclosure agreements are a run-of-the-mill precaution, protecting its business interests while 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 I told him recently about a 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.

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Like many others in town, the good-natured grower heard the rumors that Amazon was planning to put 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 scratching his head over the initial 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 was determined to be an accepted use within the existing zoning of the industrial park, explained Scott De Moss, the Glenn County administrative officer.

In Orland, the county’s largest municipality and self-proclaimed “Queen Bee Capital of North America,” many business leaders, city officials and residents 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.

The $15/hour starting wage is Amazon’s national minimum. That’s $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 401k match from the first day of employment, plus the potential for career advancement.

Hopes, dreams and jobs

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Although Amazon hasn’t yet started advertising positions for the Orland facility, people in town are already thinking about applying. The nature of the work is a big part of the appeal.

“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 sounds better than manual labor.

When I laughed and pointed out that many people would consider the Amazon job manual labor, he described his work on his family’s ranch and in construction, often working 10 to 12 hour days for comparable hourly pay. The day before we spoke, for example, he and his uncle unloaded three large trailers full of gravel with shovels and two wheelbarrows.

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.

For the City of Orland, the Amazon facility’s location means there will be little to no direct financial upside. Because the property is outside of the Orland city limits, in unincorporated Glenn County, Amazon won’t be paying any taxes directly to the city.

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.

Orland approved the construction of thousands of new homes in the mid-2000s, before the recession undercut those plans, and the higher price of homes in nearby Chico has made it difficult to convince builders to come back. Median prices for homes sold last month were $436,750 in Chico vs. $322,000 in Orland, according to Redfin’s most recent data.

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“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 does everything from bookkeeping and shipping to printing out emails for customers at her business on Walker Street, the main east-west drag through town.

At the same time, 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.”

Her biggest requests of Amazon: join the Chamber, and embrace Orland’s community spirit.

“This little community gives more than any community I know,” Pendergrass said, describing the extraordinary efforts made by people in Orland to not just host but to find solutions for people displaced by the devastating Camp Fire in Paradise, Calif., 45 miles east, in November 2018. “Every time something happens, Orland is always right there.”

‘It’s been done in secret’

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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.

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.

“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.”

For many residents, the big question is which roads the tractor-trailers and delivery vehicles will use to travel to and from the facility. While established truck routes provide some clues, Amazon hasn’t disclosed its plans publicly. De Moss said the county didn’t require a larger traffic study.

In addition to the potential impact on roads, Barceloux said he is concerned that the facility will make it tougher to find workers in what is already a tight agricultural labor market. He acknowledged that any large project will have positive and negative impacts on the community. But regardless, he said, a public process would have given the community a chance to understand the project and potentially shape the outcome with their input.

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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, promising 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.

Jobs and economic growth

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.”

Another factor that allowed Amazon’s plans to avoid a more public review process: the project is considered a renovation of the existing facility, not new construction.

Blueprints on file with the county show plans for a canopy outside the facility, where delivery vans will line up to be loaded. A large parking lot, with more than 250 spaces, has already been poured and striped to the north of the future Delivery Station. In addition, new docking portals have been added for semi-trucks to back up to the building. But the building itself is not new.

The biggest change in the plans, after the review by county agencies, appears to be a reduction in the size of the planned canopy from 18,407 square feet to 14,700 square feet, to ensure that the structure will be the required distance from the property line.

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.

Amazon made non-disclosure agreements a standard part of its search for a second headquarters, known as “HQ2,” requiring cities and regions to agree to keep key details confidential to be considered. The practice drew criticism and even protests in some cities.

The 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.”

Dialing in to the Sept. 15 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.

A hint of more to come

In the context of that investment, the rent reduction the county gave to BRT, in exchange for the project creating at least 50 jobs, could be considered a nominal amount — especially compared to the economic incentives Amazon sought in its HQ2 search. 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 more notable detail in the amended ground lease with the county is a possible 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 referenced parcels total about 22 acres, almost twice the size of the 12 acres designated for Amazon’s facility.

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As part of the new agreement, the county committed not to enter into a long-term ground lease with anyone other than BRT on those additional properties through September 2022.

Excitement over potential economic development is not a new phenomenon in Orland, which got its start as a cattle ranching community in the 1840s and was incorporated in 1909.

“Orland has always been an agricultural area and so the newspaper editors, especially L.W. Wigmore, would report any prospective idea and plan that would build up the local farmers and the community,” says Dr. Gene “Doc” Russell, a retired Orland High teacher, and town historian.

In the early 1920s, for example, enthusiasm over the economic potential of Kadota figs resulted in the planting of thousands of trees and the construction of a cannery in the Orland area, but the dreams never came to fruition.

Wigmore, who owned the Orland Register newspaper, was wistful about the outcome. “I love Wigmore’s comment about figs as being ‘reminders of another false rainbow,’ ” Russell says.

One-hundred years later, Amazon is being careful not to overpromise.

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.

Personal Notes

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A project of this size might not normally catch the attention of a Seattle-based tech news publication, even one that tracks Amazon as closely as we do. But in addition to serving as an example of Amazon’s larger ambitions, Orland is where I grew up. My family moved there when I was 2 years old, and I lived there until graduating from Orland High School in 1991.

As a teenager, I worked odd jobs in the orchards and fields on the outskirts of town, and spent a summer stacking cans and cleaning the processing lines at the Musco Family Olive Co. plant. It took me years to adjust to the fact that the area’s signature nuts are not pronounced “ammons” outside the region. (The local joke is that the “L” gets knocked out of the almonds when they’re shaken off the tree.) In college, I worked the early morning shift at a UPS hub in Chico, similar in concept to Amazon Delivery Stations.

I wrote my first real newspaper story for The Sacramento Valley Mirror, a profile of an Orland blacksmith. Tim Crews, the late editor and publisher of the Valley Mirror, would have been bothered by the secrecy surrounding the Amazon project, and proud that his newspaper broke the story on its front page on Dec. 26, weeks before it was announced.

I know Orland Mayor Bruce Roundy as Mr. Roundy, my high-school history teacher. I worked with Chris Kaufman, the photographer who took the photos for this story, at The Orion student newspaper at California State University, Chico, and as a college intern at The Chico Enterprise-Record.

In Seattle, I’ve been a business and technology journalist since 2000. We’ve chronicled Amazon’s rise in its hometown and the world on GeekWire since starting this news site nearly 10 years ago. My parents still live in Orland, and when they mentioned the Amazon rumor on the phone a few weeks ago, I couldn’t help but look into it.

Apart from the fun of catching up with people I knew growing up, and requesting public documents from officials in my hometown, what I’ve found in Orland is a microcosm of Amazon’s larger approach, and a new perspective on the company. I hope to revisit and continue reporting on the project as it unfolds in the months and years ahead.

As a seasoned logistics and transportation expert with a deep understanding of Amazon's strategies and the broader e-commerce industry, I find this article particularly fascinating. It sheds light on Amazon's expansion into rural areas and its efforts to build its own delivery network, marking a new phase in the company's quest to enhance its package distribution capabilities.

Firstly, the article discusses the mysterious arrival of Amazon in Orland, California, highlighting the secrecy maintained by the company through non-disclosure agreements during negotiations with the building's owner. This secrecy, while a common business practice, has sparked local concerns and raised questions about the long-term impact on the community.

The establishment of a 75,000-square-foot Delivery Station in Orland is presented as a part of Amazon's broader strategy to extend its delivery network beyond urban centers to more rural areas. The article emphasizes that Amazon's entry into Orland is one of the initial steps in its "rural rollout," as the company aims to fill gaps in its delivery coverage across the nation.

Logistics and transportation experts, such as Marc Wulfraat of MWPVL International, provide insights into Amazon's nationwide ambitions, highlighting the company's goal to achieve equal delivery capabilities as major players like FedEx or UPS. The article suggests that Amazon's expansion is not limited to cities and suburbs but extends to previously underserved regions, exemplified by its presence in Orland.

The significance of Amazon's Delivery Stations is discussed, serving as the final link in the distribution chain that starts at the company's regional fulfillment centers. These stations play a crucial role in sorting and loading packages for the last mile delivery to customers' doorsteps. The focus is on Amazon's commitment to control the "last mile," contributing to faster delivery times and meeting customer expectations.

The article speculates on Amazon's long-term goals, including the possibility of launching a global "Shipping With Amazon" service. Analysts from RBC Capital Markets suggest that Amazon might leverage its distribution and logistics capacity to handle non-Amazon packages, akin to how the company transformed its cloud services into Amazon Web Services (AWS).

Amazon's financial success and the company's increased square footage in fulfillment and logistics networks are highlighted in the article. Amazon's Chief Financial Officer, Brian Olsavsky, emphasizes the importance of controlling the last mile to meet delivery parameters, hinting at further expansion into rural areas and denser populations.

Local perspectives from Orland residents and officials are included in the article, showcasing the mixed reactions to Amazon's arrival. While some see it as a potential economic boon, others express concerns about the lack of transparency, the impact on local infrastructure, and the potential disruption to the labor market.

In conclusion, this article provides a comprehensive overview of Amazon's expansion strategy, emphasizing its move into rural areas and the establishment of Delivery Stations as a critical component of its logistics network. The piece also touches on the challenges and controversies associated with Amazon's approach, making it a compelling read for anyone interested in the intersection of e-commerce, logistics, and community development.

Amazon arrives in rural America: Tech giant delivers hope and concern to California town (2024)
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