Amazon delays the second phase of its new headquarters

March 7, 2023 by
Frank Calviño
Amazon delays construction

Amazon has decided to delay the construction of the second phase of its new headquarters in Arlington (Virginia, USA). 

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"We are always evaluating space plans to ensure they fit our business needs and to create a great employee experience," said John Schoettler, Amazon's head of the real estate division.

As explained in a news release by EFE, an Amazon source claims that the first phase of the project, known as Met Park, will open as planned next June and will house more than 8,000 workers that Amazon already has in Virginia and who will move to these new facilities. The same source has assured that "this decision does not imply any job cuts."

In total, Met Park can accommodate about 14,000 employees, so for now; the company has decided to put on hold the start of construction of the second phase of the project, called PenPlace. The opening of a second Amazon headquarters was announced in 2018 and was initially going to be split between Arlington and the New York borough of Queens. Still, in 2019 the company canceled the Big Apple part amid local opposition.

Amazon seems to be struggling 

In early January, the company announced the layoff of about 18,000 employees. Amazon started by laying off 10,000 employees in November, but eventually, the adjustment will be larger than expected. 

The layoffs have mostly affected the store divisions (Amazon Stores) and PXT, which is the human resources area of the company. The cuts amount to 6% of the roughly 300,000-strong workforce and represent a quick turnaround for an entity that recently doubled its base salary cap.

Amazon also closed 2022 in the red. The U.S. company has been weathering losses and closing at a profit since about 2015, thanks to its cloud business. However, last fiscal year, it posted a loss of $2.722 billion.

Expanding Same-day deliveries, but with added costs

The company is also expanding its ultrafast delivery options, a sign that it remains committed to pushing its logistics system for speed as it scales back plans in other areas.

The expansions are happening at a crucial point for Amazon, which faces competition for fast-delivery options while Chief Executive Officer Andy Jassy puts a renewed focus on profits.

A central part of Amazon’s ultrafast delivery strategy is its network of warehouses that the company calls same-day sites. 

The facilities are a fraction of the size of Amazon’s large fulfillment warehouses and are designed to prepare products for immediate delivery. 

In contrast, the larger Amazon warehouses typically rely on delivery stations closer to customers for the final shipping stage.

Amazon has opened about 45 of the smaller sites since 2019 and could expand to at least 150 centers in the next several years, according to MWPVL International Inc., which tracks Amazon warehouse operations. 

The sites have primarily opened near large cities and deliver the most popular 100,000 items in Amazon’s catalog, MWPVL said. New locations recently opened in Los Angeles, San Francisco, and Phoenix, according to Amazon, which declined to provide information on how many of the same-day sites it has.

These new ultrafast deliveries can arrive in hours, although Amazon charges members of its Prime subscription service a fee of $2.99 per order if customers don’t meet a $25 threshold.

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