As Philadelphia vies with national rivals for Amazon’s second headquarters and a potential 50,000 jobs, a months-long state air pollution review has delayed the planned opening of its Amazon Woot! manufacturing facility near Norristown until next year.
Woot!, which aims to operate a massive print-on-demand T-shirt operation in West Norriton, applied in August for a factory air-quality permit from the Pennsylvania Department of Environmental Protection (DEP). But regulators won’t be able to complete the review until November. That triggered Woot! to delay acceptance of about a dozen textile printing machines, which each cost about $500,000.
The stock price of the T-shirt machine manufacturer Kornit Digital fell 15 percent, to $14.65, in Nasdaq trading Wednesday, after Israeli-based Kornit’s chief executive, Gabi Seligsohn, told investors on Wednesday the permitting issue was “delaying” $16 million in machine deliveries. The stock rose slightly Thursday to close at $15.05, or 2.73%.
Amazon has been advertising for managers and garment-printing workers to staff the 110,000-square-foot site, which once housed a Ricoh copier facility on the Boulevard of the Generals. The plant has parking for 200 cars. Woot! is an Amazon discount online retailer whose shirt.woot.com division specializes in inexpensive, custom-printed T-shirts. The West Norriton plant would produce and ship the shirts directly to customers.
Amazon first applied for a Pennsylvania “minor facility” air-quality permit for the site, where the company planned to install at least 25 of the Kornit Avalanche machines, wrote Joseph Wolf, an analyst with Barclays, the investment bank.
But all those new printing presses mean the building will become “a major emissions source, which triggers requirements under Pennsylvania’s Air Pollution Control Act for the protection of regional air quality and public health,” said Neil Shader, spokesman for the DEP.
“We understand the company’s desire to open this facility and DEP is working expeditiously to complete review of the permit,” and “could issue a decision that would allow the facility to open in November,” Shader said.
But plant operators have to wait for the permit to install the machines, Kornit’s CEO told investors. So with a November approval — already well into the Christmas shopping season, when Amazon typically hires seasonal workers to speed gift orders — the plant would “miss peak volume for the year.” It won’t likely install the machines until “sometime in 2018,” Seligsohn added.
The review comes as Gov. Wolf seeks to back applications to attract Amazon’s HQ2 to the state. Contenders include Philadelphia, the Lehigh Valley, and smaller communities such as Bensalem Township, which is offering up a large Delaware River property; Harrisburg, which wants to put Amazon in an ex-psychiatric hospital; and Pittsburgh, a former factory town near West Virginia.
“Governor Wolf has made it a top personal priority to show off Pennsylvania as a top-tier contender for Amazon’s HQ2. He has already personally spoken with and written to top Amazon leaders and further engagement is planned over the coming weeks,” said Wolf spokesman J.J. Abbott. Amazon did not respond to inquiries about the Woot! plant or its headquarters plans.
Amazon as of last year operated 13 large “fulfillment center” warehouses around Pennsylvania, tying it with California as the state with the most. The Seattle behemoth also has added smaller facilities in metro areas to support clothing, groceries, and other direct-to-consumer businesses.
Amazon, which analysts expect will earn more than $5 billion in profits on $170 billion in sales this year, negotiated more than $400 million in tax forgiveness, grants, and tax breaks during the Rendell, Corbett, and Wolf administrations in exchange for opening facilities in the Keystone State. Besides its fast-growing retail operations, the company owns Amazon Web Services, the leading cloud-computing platform, serving corporations and government agencies.
Amazon employs nearly 400,000 nationally (plus more than 100,000 Christmas-season temps). Its large warehouses employ around 10,000 in Pennsylvania. That’s almost as many as the Philadelphia area’s largest corporate employers, including Comcast in Philadelphia, Vanguard Group in Malvern, or Merck in the Spring House area.
Kornit Digital also supplies equipment to Fanatics, the national pro and college sportswear business owned by Conshohocken-based online retail pioneer Michael Rubin and backed with a $1 billion investment from Japan’s SoftBank.