Employment War: Employers Shudder When Amazon Warehouse Rises in Indiana Town

ELKHART, Ind., April 7 (Reuters) – What happens when Amazon.com Inc (AMZN.O) creates over 1,000 new jobs in one of the hottest job markets in the country?

RV Capital of the World is going to find out.

Like many other manufacturing centers across the United States, this spot in northern Indiana about 161 km east of Chicago has struggled to fill factory jobs during the pandemic, largely due to an unprecedented boom in the state-owned entertainment industry. the local economy.

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New U.S. manufacturing jobs were generated at about 32,000 a month last year – the fastest cut in more than a quarter of a century – but regional variations are significant. Around Elkhart, which has a population of about 52,000, the proportion of total labor employed in factories and production is 51.5%, compared to 8% nationwide, according to the Ministry of Labor.

Unemployment in the region fell to 0.9% in December, the lowest rate in the country, according to the Ministry of Labor, although it has risen slightly since then.

As a result, many of Elkhart’s current employers were shocked when Amazon announced in October that it would open a comprehensive refill center as well as a smaller last-mile delivery center in town.

“I’m not entirely sure about adding 1,000 more jobs to this tight labor market,” said Bob Martin, chief executive of Thor Industries Inc. (THO.N), the country’s largest RV manufacturer, which has factories around it. Elkhart.

The new jobs have irritated all types of employers. Amish Shah, chief executive of Kem Krest, a distributor of automotive materials and accessories such as paint pens used to touch car scratches at car dealerships, said: “Society as a whole is upset.”

Shah estimates that his company’s 700 employees are short of 100 employees, despite constant hiring, and points out that he has gone to new extremes to keep employees happy. The company recently opened a free clinic in its main department store, for example, and last week held a competition for employees with a six-month full attendance. Highest prize? Free use for one year on the new Chevrolet Trailblazer SUV, which usually goes on sale for over $ 26,000.

“We have people who have already received calls from Amazon saying, ‘Come work for us,'” Shah said, adding that no one has run to Amazon yet.

RV BOOM

Amazon’s new warehouse is emerging from a dusty area in one of the county’s most prominent locations – just across the freeway from the RV Hall of Fame and Museum, a local landmark. When it opens next year, it will have a space equivalent to 14 football pitches. The other facility, which is designed for last-mile deliveries, has not yet broken down, but is expected to open in 2023.

Amazon declined to comment on whether it was worried about staffing jobs in Elkhart’s tight labor market – or whether it expected to pay more than usual to attract willing hands.

The company, which has been harshly criticized for its working conditions and struggles with unions trying to organize its workers, has only said its jobs average $ 18 an hour. Last week, employees at Amazon’s facility in New York City voted to form a union despite the company’s campaign against it. Read more

The company often focuses on other benefits it offers when creating new jobs, including health benefits and retraining assistance.

“Amazon is proud of this job creation and we also believe that employees will be excited to grow their careers at Amazon in the Elkhart community,” said spokesman Andre Woodson in a statement.

Elkhart’s tight labor market is largely driven by the boom in the RV industry, as demand has risen sharply as Americans sought new ways to travel while staying away from strangers during a pandemic. Read more

It is estimated that 30,000-40,000 workers go to Elkhart County every day for work, which provides regular lanes of high-traffic lanes with heavy traffic. The county’s total workforce is about 115,000, according to the State Department of Personnel Development, so commuters are important for manning current jobs, which were nearly 140,000 at the end of September, showed federal work data.

“Just looking at the numbers, it does not make much sense. They already have far more jobs than employees,” said Michael Hicks, an economist at Ball State University who studies Indiana’s industrial economy.

EVERYONE COMES?

The key question is what the Amazon jobs will ultimately pay for. Many local officials expect the company to pay more than $ 18 on average per hour, given the extremely tight labor market. Elkhart County was ranked 4th among the largest 344 states in the weekly wage growth year-on-year from the third quarter of 2021, according to the latest data from the Department of Labor.

“I think they will do what they have to do to meet the demand (for labor),” said Chris Stager, president of Elkhart County Economic Development Association.

Stager and other local officials said the area faces a daunting challenge even without the addition of a large new employer. Housing is in short supply and more companies in Elkhart have started expanding in other areas simply to find enough employees.

Thor Industries is one of them. The company is building several factories about 20 miles away in Sturgis, Michigan, as part of its latest expansion and recently acquired a company in Alabama that gives it access to a much larger workforce.

“Amazon is a competition and sometimes competition makes you a better company,” said Thors CEO Martin.

But experts believe that large RV manufacturers are more isolated from losing employees to Amazon than many other types of employers. The motorhome industry uses a wage structure that offers production-driven incentives on top of a relatively low hourly rate that can significantly increase factory wages in good times, as it is now. It is not uncommon for assembly workers in factories to earn the equivalent of $ 50 or more per hour.

One question is how long the boom will last.

“The music will stop at some point,” said Pete McCown, president of the Elkhart County Community Foundation. High gas prices and rising interest rates could put a dent in the bill, although there are still no clear signs of a sharp contraction.

‘DO’

Of course, there are still many Elkhart employees who would probably get a raise by jumping to Amazon – including many who earn less in restaurants and other lower-paid service sectors.

As of May 2021, the county had about 6,500 employees in the food service who earned an average of $ 12.46 per hour, according to data from the Ministry of Labor published last week. In total, about half of the county’s employees earned less than $ 19 an hour. While this salary has certainly risen since then in the face of limited competition, it would still leave tens of thousands in the county earning less than $ 18 an hour, the starting average advertised by Amazon.

Jason Lippert, CEO of LCI Industries (LCII.N), the largest auto parts inventory company, said companies in the region that offer competitive wages and good working conditions should not worry. He has LCI in that group.

“It’s the restaurants that always go crazy,” he said, “because they have the lowest wages.

He believes that Amazon will burn the “glow” of the area.

“Others will look at the county and say, ‘Wow, this big tech company went there, so there must be something good in Elkhart.’

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Reports by Timothy Aeppel in Elkhart, Ind .; Editing by Dan Burns and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

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