< Previous28 MAY 2021 S I T E S EL E C T I O N Q&A: AMAZ ON The Helix at Amazon’s Arlington headquarters will o er a variety of alternative work environments for Amazon employees amidst a biophilic design plan that features lush gardens and fl ourishing trees native to the region. All images courtesy of Amazon If it seems like Amazon opens a new facility every other day, that’s about right. From New Year’s Day until early , Site Selection’s Conway Data Projects Database tracked Amazon facility investments worldwide. ose projects join a global portfolio that as of December , , was closing in on million sq. ft., which equates to more than , acres or square miles — just a smidgen smaller than the country of San Marino in Italy, and about half the size of Bessemer, Alabama, where Amazon fulfi llment center employees recently voted not to join a union. A new year hasn’t slowed the pace of Amazon projects. Among the latest: • , more jobs at the company’s tech hub in Boston; • A new last-mile facility in Bakersfi eld, California, and a new delivery station in Slidell, Louisiana, a state where the company is building fulfi llment centers at the former Evangeline Downs racetrack and at a former mall in Baton Rouge; • e company’s th Indiana fulfi llment center (code-named “Project Mastodon”) coming to Fort Wayne, and a ,-job fulfi llment center coming to Greater Richmond, Virginia; • Five new buildings and , new full- and part-time jobs in metro Detroit; • New Amazon Web Services infrastructure regions in Japan, Australia and India; • A new offi ce tower in Bellevue, Washington; • e company’s fi rst-ever purchase of Boeing - aircraft, expanding its Amazon Air fl eet as it expands air operations worldwide; • A -job fulfi llment center in Amarillo, Texas, in a state where the company has created more than , jobs since with facilities that include fulfi llment and sortation centers, delivery stations, three tech hubs, three air gateways, one regional air hub and, for good measure, a wind farm. Honestly, it’s hard to keep up. But if it seems hard to us, imagine the challenges for Amazon Head of Worldwide Economic Development Holly Sullivan. Late in , Amazon reached out to me about a potential interview with Sullivan, a former economic development leader in Tennessee. (Oh yeah, Tennessee in February welcomed a new fulfi llment center in Alcoa, the company’s sixth in the state and third new announcement within a year.) An edited version of our conversation follows. Visit siteselection.com in May for the full transcript. No employer comes close to creating the number of jobs Amazon has since the onset of the pandemic. What has it been like to be part of this tremendous wave of job creation that takes place in such an atmosphere of health risk? HOLLY SULLIVAN: It’s been an incredible opportunity and a huge responsibility to not only deliver for the communities and continue creating jobs, but to invest to make sure we’re keeping our employees safe. At the onset of the pandemic, we were very customer focused. “How do we get these essential items from point A to point B as effi ciently and safely as possible?” en we looked at how can we make Working Backwards from the Customer Drives Amazon’s Relentless Forward MomentumRelentless Forward Momentum by ADAM BRUNS adam.bruns@siteselection.com S I T E S E L E C T I O N MAY 2021 29 sure we’re keeping employees safe: We immediately put in over diff erent processes, investing billions of dollars, following guidelines from federal and local health authorities, the CDC, the WHO. We brought in our own experts and hired independent epidemiologists to make sure we’re providing a safe and healthy working environment. How do you manage the Amazon real estate and site portfolio? SULLIVAN: All of our investment decisions include a cross-functional team. My team comes in at diff erent times in the process. On the corporate side, we’re always looking at how we can expand and evaluate the offi ce footprint based on the business needs, and at where we should make those additional investments. We’re always working backwards from the customer, which I think is unique to Amazon: What additional innovations are we looking at, and how do we look around those corners to make sure we’re investing in the right team? With our corporate offi ces through the years we’ve learned that we tend to locate in more urban areas, and we like to go into areas where it’s not yet a campus environment. We want to mold into an existing neighborhood, whether that’s a central business district or a suburban, high- density offi ce area like Austin, Texas, where you have the restaurants and an -hour entertainment area. Not only for our employees, but as we’re investing in these neighborhoods, it really benefi ts the entire community. On the operations side, which is our fulfi llment centers, we really focus on where our customer density is. We work backwards from there on where there are customers, where we need to double down or triple down, and what types of facilities we will locate there. Across the board, there are two things that will drive most of our business decisions. One is ensuring we can have that initial day one talent, and where we can invest in the long-term talent pipeline. Number two would be business friendliness. We want to locate and invest in communities that want us and can support us in the long term, and where we can build a long-term community partnership. We also don’t tend to look too far out. As we are looking at these decisions, we’re looking in windows of three to fi ve years, and then we can make those decisions based on real-time data and marrying the data with anecdotal information. We have a lot of experience in global locations. We can take that experience and narrative back to help guide our site selection process. Share an update about HQ2: What have you learned along the way? SULLIVAN: We’ve started construction at our second headquarters. Metropolitan Park was our fi rst phase of million square feet. at was approved in December . We’re fully under construction there. Our second phase is called Penn Place. at is now going through approvals in the coming months, will take a couple years of construction and should be complete by . We have hired over ,, and we have over , job openings. We understood the importance of those community relationships, and I think this project has really validated that engagement, how “early and often” are important. I remember walking into a meeting of several joint neighborhood associations, and I was a little nervous. ere was a presentation and update, and then minutes to an hour for questions. ere were several hundred people in that meeting room. I left that meeting and remember feeling relieved, but thankful I was given the opportunity to answer their diffi cult questions, and thankful that they listened. I think what was surprising to most was when we made our decision to locate our second headquarters in Arlington, there was an assumption it was a fully baked plan — that we had our development plan down and we were going to put a shovel in the ground the next day. But that isn’t how we make a decision, and it’s not really how we work. Once we made a decision to locate in Arlington, we met with the county board, community stakeholders, neighborhood associations, the county staff . We really wanted to hear their input. at went into our decisions on our work with our development partner and architects on what the Arlington headquarters would look like. It’s not just wanting to go into a community and develop our site. We really want to integrate into the fabric of that neighborhood, really stitch ourselves into it, create that -hour neighborhood and be an addition. Everyone knows about HQ2, but not as many may be familiar with the giant HQ campus in Hyderabad, India. SULLIVAN: e Indian example is prototypical of how we make these decisions. When you look at India, it was really an opportunity to deliver for our customers. Holly Sullivan, Amazon Head of Worldwide Economic Development All of our investment decisions include a cross-functional team. My team comes those additional investments. We’re always is now going through approvals in the coming months, will take a couple years of construction and should be complete by . We have hired over ,, and we have over , job openings. We understood the importance of those community relationships, and I think this project has really validated that engagement, how “early and often” are 30 MAY 2021 S I T E S EL E C T I O N We understood the local talent opportunities there and that was a key factor. Over the last seven years, the Indian customer began to value convenience and online shopping. It was incumbent on us to look at how we continue long-term investments and opportunities. Our India team is amazing, first of all, in their innovations and what they’re able to not only provide customers in India but on a global basis. Our new corporate office there is over 9.5 acres and will support more than 15,000 employees. It is our first owned office building outside of the U.S. I think this will continue to strengthen our talent in India, and really create that tech base outside the United States for global innovation. You’re growing fast in Ireland too. Where else are you looking to ramp up abroad? SULLIVAN: India, Ireland, Australia, Singapore, Canadian locations, Costa Rica — those are some of our larger corporate offices. Cape Town, South Africa, would also be included in that list. Amazon has launched a $2 billion housing equity fund. Describe how Amazon’s new focus on housing affordability and equity is part of your commitment to community. SULLIVAN: I would push back on the premise of “new.” We’ve been focused on homelessness and housing Construction is well underway on Amazon’s HQ2 in Arlington, Virginia, where the company remains committed to creating 25,000 jobs and investing $2.5 billion over the next decade. All images courtesy of Amazon S I T E S E L E C T I O N MAY 2021 31 affordability for years. We were one of the early investors in Mary’s Place, a homeless shelter in Seattle. We provided space for years, and now they have a permanent home in one of our headquarters buildings in downtown Seattle. [Amazon founder Jeff Bezos visited Mary’s Place this spring to mark the site’s first anniversary.] We’re long- term partners with Fair Start, a fabulous story and amazing organization that takes previously incarcerated people and gives them front-of-the-house and back-of-the- house skills in the restaurant industry. We have a Fair Start restaurant in one of our retail spaces at our headquarters. We’ve done housing matches. We’ve been part of the Seattle affordable housing discussion for years and years. What is new is our new housing equity fund. That puts economies of scale into a much bigger conversation. We’re now focusing outside of the Puget Sound area on other locations in the United States. The goal is really about funding units. We see an urgency in metro areas. I can tell you this from my experience: Most areas are experiencing affordability issues now. The question for us is “How can Amazon be a good partner in that?” One example is in Nashville, which was hit by tornadoes a year ago last week, then a global pandemic, and then a 34% property tax increase, all within six months for Nashville residents. [Amazon is investing in a 5,000-job tech hub in Nashville.] In the downtown Nashville area, there are several neighborhoods experiencing gentrification. One of the things we did was partner with a local nonprofit to provide the financial assistance so that for people still rebuilding from the tornadoes who are unable to bridge that gap with the property tax increase, there’s now a fund they can apply for to help bridge that gap. With the housing equity fund we want to recognize that housing affordability is different in every major metro area. So how can we have that conversation about what is affordable, how can Amazon be a long-term partner, and how can we also help drive policy for long-term solutions for the local community? 32 MAY 2021 S I T E S EL E C T I O N NOR TH AMERICAN REPOR T S Lighting Out Data from the U.S. Postal Service adds ballast to the notion that Americans are fl eeing some of the nation’s coastal meccas. San Francisco, New York, Seattle and Boston all appear among the Top 10 metros with the biggest changes in net out-migration in 2020. Others include oil towns in west Texas and Louisiana. Tops for in-migration included several suburbs of New York City and Boston. Source: Apple Source: Ultium Cells by GARY DAUGHTERS gary.daughters@siteselection.com Apple ‘Doubling Down’ in the U.S. Metros With the Biggest Change in Net Out-Migration (out of 926 metro areas) Metro 2019 Change 2020 Change Shift 1 Lake Charles, LA -1.7% -6.7% -5.0 pts. 2 Odessa, TX -2.3% -5.6% -3.3 pts. 3 San Francisco-Oakland, CA -2.0% -4.8% -2.8 pts. 4 Hobbs, NM -1.4% -4.0% -2.6 pts. 5 Midland, TX -1.6% -4.0% -2.4 pts. 6 New York, NY -4.0% -5.7% -1.7 pts. 7 San Jose, CA -2.1% -3.8% -1.7 pts. 8 Gillette, WY -1.0% -2.4% -1.4 pts. 9 Seattle-Tacoma, WA -0.7% -2.1% -1.3 pts. 10 Boston, MA -1.7% -2.7% -0.9 pts. Source: U.S. Postal Service Apple in late April announced what it called an “acceleration of U.S. investments,” with plans to make new commitments of more than $430 billion while adding 20,000 new jobs across the country over the next fi ve years. “At this moment of recovery and rebuilding, Apple is doubling down on our commitment to U.S. innovation and manufacturing with a generational investment reaching communities across all 50 states,” said Apple CEO Tim Cook. As part of its investments and expansion, Apple plans to invest over $1 billion in North Carolina and will begin construction on a new campus and engineering hub in the Research Triangle area. The investment, Apple says, will create at least 3,000 new jobs in machine learning, artifi cial intelligence, software engineering and other cutting-edge fi elds. S I T E S E L E C T I O N MAY 2021 33 Source: Ingersoll Machine Tools The Stars Shine on Rockford Ingersoll Machine Tools broke ground March 31 on a major expansion of its Rockford, Illinois, campus to support the construction of the new Giant Magellan Telescope Mount. The expansion, which will add an additional 40,000 sq. ft. (3,715 sq. m.) to the current campus, includes both a new high-bay assembly space as well as a new high-bay manufacturing space. The assembly bay will enable new precision manufacturing space to build the 1,800-ton mount for the extremely large telescope (ELT) to be deployed in Chile. An All-North American Railway Regardless of the winner, the bidding war that has erupted over Kansas City Southern Railway Company is likely to create the fi rst North American railway spanning the U.S., Mexico and Canada. After the Class I railroad based in Kansas City, Missouri, entered into a $28.9 billion merger agreement in March with Canadian Pacifi c, it agreed in April to entertain a rival $33.7 billion o er from Canadian Pacifi c rival Canadian National. Kansas City Southern is the smallest Class I operator in the U.S., but the only one with north-to-south operations that also span both coasts of Mexico. Either competing bid would represent the continent’s biggest railroad transaction in two decades. EV Battery Wars Ultium Cells LLC, a joint venture of LG Energy Solution and General Motors, announced plans in mid-April for a second EV battery cell manufacturing plant in the U.S. The $2.3 billion factory, similar to the JV’s project that broke ground last year in Lordstown, Ohio, is to create 1,300 new jobs in Spring Hill, Tennessee. Once operational in late 2023, the facility is to support production of GM’s upcoming Cadillac Lyriq crossover and other EVs at GM’s Spring Hill Assembly Plant. LG Energy’s parent company, LG Chemical, is to receive about $1.8 billion to settle a trade secrets dispute with South Korea’s SK Innovation, thus clearing the way for SK to complete an EV battery project in Georgia whose future had been in doubt. “Project owners and budget o cials should anticipate that projects will cost more and have longer — perhaps uncertain — completion times.” — Ken Simonson, Chief Economist, Associated General Contractors of America34 MAY 2021 S I T E S EL E C T I O N by MARK AREND mark.arend@siteselection.com NOR TH AMERICAN A UT OMO TIVE Speedbump or pothole? Either way, a global shortage of electric vehicle (EV) batteries is disrupting new and established manufacturers’ plans to deliver their product to consumers in the volumes and timeframes they first envisaged. That’s an opportunity for those looking to supply the demand, much of which is driven by local, state and national goals to reduce carbon emissions significantly in coming years. In March, for example, Volkswagen Group announced it is “pushing ahead at full speed with the development of production capacities in Europe in order to meet the increasing demand for battery cells,” according to a company release. “Together with partners, we want to have a total of six cell factories up and running in Europe by 2030 thus guaranteeing security of supply,” explained Thomas Schmall, Member of the Board of Management of Volkswagen Group for Technology, and CEO of Volkswagen Group Components. The new factories are expected to produce cells with a total energy value of 240 GWh per year by the time they are finally completed. Volkswagen is working to meet the targets of the European Union’s Green Deal. The first two factories will operate in the Swedish city of Skellefteå and in Salzgitter. In the U.S., Ultium Cells LLC, a joint venture of LG Energy Solution and General Motors, will invest more than $2.3 billion to build its second battery cell manufacturing plant in the United States. Located in Spring Hill, Tennessee, the project will create 1,300 new manufacturing jobs. Ultium Cells LLC will build the new, 2.8-million-square- foot plant on land leased from General Motors. Once operational in late 2023, the plant will supply battery cells to GM’s Spring Hill assembly plant for the Cadillac LYRIQ, initially. Demand Puts EV Battery Production In the Fast Lane UK-based Arrival will soon be producing electric vans and buses in the Charlotte, North Carolina, metro area. Images courtesy of Arrival, Inc.36 MAY 2021 S I T E S EL E C T I O N “This partnership with General Motors will transform Tennessee into another key location for electric vehicle and battery production,” said Jonghyun Kim, LG Energy Solution president and CEO. “It will allow us to build solid and stable U.S- based supply chains that enable everything from research, product development and production to the procurement of raw components.” ‘The Whole Supply Chain’ in Sight Therein lies the rub. Only now are U.S.- based EV battery producers beginning to meet demand from North American manufacturers transitioning to e-mobility platforms. “In the United States, we’re only making about 10% of the worldwide lithium-ion battery inventory, and China produces about 77%,” says Georgia Department of Economic Development Commissioner Pat Wilson in an interview following resolution in April of a trade dispute with LG Energy Solution that threatened to sideline SK Innovation’s $2.6 billion EV battery manufacturing plant in Jackson County, Georgia. “The great thing about the SK facility is that it is non-captive, meaning any OEM can work with SK to create an electric vehicle that uses that battery,” says Wilson. “When fully up and running, it will produce 50% of the non-captive battery inventory in the United States. They’ll go to Volkswagen and Ford, and other companies can bid for the services of that facility as well, supplying more OEMs and companies in the energy storage market too.” The majority of cathodes, anodes, copper foil and other battery components are sourced in Asia, Wilson points out. “We need to be looking at building that whole supply chain in the United States. Having a facility like SK locate in Georgia gives us a leg up on bringing that into the state. We’re looking at that entire supply chain, from the raw materials on the front end all the way to the battery on the back end and delivery to the OEM. We’re already seeing an uptick in outreach from suppliers looking to locate near that facility after the recent trade settlement.” EV Investment Migrates Southeast Brea, California-based Mullen Technologies, an emerging EV manufacturer, was busy in March ramping up operations in the Southeast. On March 11th, it announced plans to purchase an EV manufacturing facility in Tunica, Mississippi. This five-year-old, turn-key facility will be known as Mullen’s Advanced Manufacturing Engineering Center (AMEC) and Proving Grounds. AMEC replaces Mullen’s pilot facility in Monrovia, California. “Our goal is to sustain 100% of our manufacturing processes in the U.S. and by U.S. workers,” said David Michery, CEO and chairman of Mullen Technologies. “With the establishment of AMEC in Tunica, we are among the very few EV companies that have a manufacturing presence in the U.S. Tunica will allow us to perfect the engineering and manufacturing processes involved in building our EVs, while affording us the ability to assemble vehicles now. This facility is ideal for Mullen’s upcoming initiatives and will be pivotal in allowing us to get to the production of our vehicles in less than typical time.” A week later, Mullen announced plans to lease an 820,000-sq.-ft. facility in Memphis, Tennessee, where it plans Georgia Governor Brian Kemp, Economic Development Commissioner Pat Wilson (to his right) and SK Innovation executives at the EV battery maker’s plant in Commerce, Georgia. Photo courtesy of Office of the GovernorNext >