Bloomberg News

Amazon Hub’s Fate Hangs on Verdict of Traffic-Shy Czech Village

February 13, 2014

Officials in a Czech village outside of Prague may decide today whether to let Amazon.com (AMZN:US) build a logistics center after residents complained the project will inundate the area with traffic.

Czech political leaders support the project in Dobroviz, about 4.5 miles from Prague’s Vaclav Havel International Airport to lure thousands of jobs to the country and bring in budget revenue. The local town hall will hold a meeting tonight at 7 p.m. on the matter.

“I would like to vote on the agreement today, but our lawyers are still going through it, so we will see whether we’ll get to it,” Dobroviz Mayor Martin Safr said. “We’re trying to be really cautious so that the conditions would be advantageous for us and any heavy traffic wouldn’t hurt us.”

Seattle-based Amazon wants to develop two sites in the Czech Republic as it expands service in central Europe. The second location would be in an industrial park in Brno, the country’s second-largest city about 124 miles east of Prague and connected by the country’s biggest highway.

Amazon’s expenses have been climbing as Chief Executive Officer Jeff Bezos pumps money into new initiatives like warehouses to speed shipments and research on home-delivery drones. The shares (AMZN:US) fell 3.47 percent yesterday to $349.25.

In Dobroviz, the U.S. company wants to set a facility as big as 13 football fields. The plans, which were envisioned to have been finalized by the end of last year, have been stalled because of appeals by officials from Dobroviz and two other civic associations. Amazon already opened a center for returned goods in the Dobroviz industrial zone last year.

Central Position

The Czech Republic was chosen for the two centers because of its position in central Europe, sandwiched between Poland, Germany, Austria and Slovakia. It’s a through-way to the Balkans and Italy to the south, central to a region where demand is expected to rise, said Tim Collins, Amazon’s head of European operations, at a news conference on Dec. 5 in Prague.

The decision on Dobroviz would include building a bypass by the end of 2015 to divert the traffic from the industrial zone away from the village, adding cameras to monitor traffic and imposing fines in case the road project is delayed.

Amazon needs to have both sites operational by September, in time for the year-end holiday season, when orders skyrocket. The two sites would create 4,000 permanent jobs and another 6,000 seasonal jobs to cover holiday demand, Collins said.

The facilities are both designed to hold tens of millions of orders and ship hundreds of thousands of packages all over Europe every day. Each site is worth 100 million euros ($136 million), said Collins.

‘Great Opportunity’

“This is a great opportunity to get this investment and thousands of jobs and I believe there will be a solution,” Czech Industry and Trade Minister Jan Mladek said last week after a municipal meeting in Dobroviz. “It’s necessary that the village be compensated for the fact that there will be increased traffic.”

The government’s aim is to attract more sophisticated jobs than just logistics in the long term and it’s urging Amazon to employ more locals over commuting workers, Mladek said.

The Czech unemployment rate rose to 8.6 percent in January, the highest on record, from 8.2 percent in December, the Ministry of Labor and Social Affairs said on Feb. 10.

Brno, where the second Amazon facility should be built, will also hold an extraordinary municipal meeting tomorrow to discuss the project.

No Solution

Some Dobroviz residents argue that the project lacks a sensible transport solution, and a bypass without a direct new link to the highway leading out of Prague would lead to inevitable traffic jams.

The resulting increase in traffic will add to an existing transport burden from several warehouses already in the area. Some people also worry that workers will be mostly commuters rather than locals.

“The bypass wouldn’t solve anything as there would be traffic jams in the next village anyway,” said Ota Medesi, one of dozens of locals who packed into a municipality meeting on Feb. 4. “We already suffer from heavy traffic and noise from the airport. I painted my house seven years ago because we’re not that young anymore. And what do you think? It’s all gray now.”

To contact the reporter on this story: Lenka Ponikelska in Prague at lponikelska1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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