Amazon cancels order on Czech investment

By bne IntelliNews April 2, 2014

bne -

US internet retail giant Amazon has scrapped a plan to build a logistics centre in the Czech city of Brno after the local authorities blocked the warehouse. The head of the company's European operations said it is now considering two other sites "in Central and Eastern Europe".

"We respect the decision of the city of Brno and we won't pursue this project," Tim Collins told journalists gathered at one of Amazon's 10 German logistics centres in Graben. Brno's city council withdrew the building permit for the project near the city's international airport last month.

The Brno location was one of five facilities in Amazon's strategy for expanding in CEE. Collins said recruitment for management at a warehouse near Prague has now started, with operations set for "late summer 2015". Three Polish operations should be ready by September, he added.

Amazon would not be drawn on the location of the Brno replacement, but Collins said it has "two alternatives" currently. Slovakia began lobbying instantly in the wake of the decision by the Brno authorities, while the mayor of the Moravian city had been trying to offer an alternative. Other Czech cities such as Ostrava have also said they'd be keen to see the investment, with each facility worth around €100m, and likely to bring over 3,000 jobs.

All five of the CEE projects were announced at the same time. On the one hand, Collins says that the permitting process is quicker in Poland. On the other, he insists the national and regional authorities in both Poland and the Czech Republic have been strong, but delays on the Prague logistics centre stem from "project particulars".

Zero dollars
The Amazon director claims that the US company "brings a lot to the table, but asks for little. We've asked for zero dollars from the Czechs and Poles," Collins continues, "only for help to make the project quick."

"The fundamental thing we need is speed," he says. That, he says, will be the deciding factor for nailing down a new location.

"The end of investment plans by Amazon in Brno doesn't discourage the government from its steady hard work to attract new investments namely into the regions with high unemployment levels," Bohuslav Sobotka, the Czech Prime Minister, said, according to Dow Jones.

However, Radek Spicar, vice president of the Czech Confederation of Industry, claimed Amazon's decision could hurt the country's reputation with foreign investors. "We are now in a situation when the Czech Republic is losing, to a certain extent, its attractiveness in the eyes of foreign investors, for a number of reasons," he told Radio Praha.

"One of them is the high prices of energy," he continued. "It's also known it's not easy to invest here because of human resources, that is, skilled labour force is not always available everywhere. The high taxation of high-earners is a big issue, and our immigration policy is not working in a proper way."

Politicians in Brno reacted with surprise, Radio Praha reports. Deputy mayor Oliver Pospisil had insisted on April 1 that Amazon were still interested in investing in the project, and said he had received no indication that the internet retailer was going to give up on the city. Mayor Roman Onderka said he would await an official letter from the company regarding its plans.

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