Amazon (NASDAQ: AMZN) is shelving plans to construct a cargo facility at Newark Liberty International Airport after local advocates and union representatives brought stiff opposition to the project.
"Over the past year, the Port Authority and Amazon have engaged in good-faith negotiations. Unfortunately, the Port Authority and Amazon have been unable to reach an agreement on final lease terms and mutually concluded that further negotiations will not resolve the outstanding issues," Port Authority COO Huntley Lawrence said in a released statement. "The growth of air cargo and the redevelopment of airport facilities in a manner that benefits the region as well as the local community remain a top priority of the Port Authority. Moving forward, the Agency will examine options and determine the best future utilization of these cargo facilities."
The deal between the ecommerce titan and the Port Authority of New York and New Jersey was initially announced in August. Amazon Global Air, the company's cargo transport airline, was slated to invest $125 million to renovate existing facilities at Newark Airport into cargo loading facilities. At the time, New Jersey Governor Phil Murphy said that the project would create at least 1,000 jobs for the area.
The hub has met fierce resistance from local advocacy groups and union representatives, who brought a series of demands to Amazon that they would have to meet before receiving support. In addition to addressing the environmental concerns of local advocates who requested a zero-emissions benchmark for any facilities built, the company increasingly had to field concerns over the compensation of the facility's would-be workforce. A report put out by opposition groups noted that despite Amazon extensively constructing new warehouses in the state between 2013-2020, the average wage for workers in those warehouses declined by almost 17%.
While initially supportive of the hub, the messaging of New Jersey state officials changed drastically within months of the announcement. Not only were NJ citizens in protest, but officials had begun to take note of the company's increasing union busting even as workers win unionization votes, such as the successful vote at a nearby Staten Island facility.
While the Port Authority did not cite a specific reason for the deal falling apart, it can be assumed that Amazon found Newark to be much less inviting in July than it did in August last year. Shelving the project might not be a bad thing, though, given that Amazon's costs have gone up drastically. With Amazon growing at its slowest since the dot-com bubble burst, not embarking on an expensive and controversial project seems like a safe bet to help the company cut costs.