After a torrid expansion that made Amazon the Chicago area’s largest private-sector employer, the e-commerce giant is pulling back here, shutting down two suburban distribution centers and dropping plans to build two more.
Amazon has already closed a warehouse in Mundelein and plans to close one in Elgin, a company spokeswoman confirmed. Amazon also has decided not to move forward with new distribution centers in Crystal Lake and Hoffman Estates.
The moves are part of a broader national retrenchment by the Seattle-based company, which went on a real estate and hiring binge in 2020 and 2021, opening new warehouses all over the country as e-commerce sales soared during the pandemic. Amazon’s Chicago-area workforce ballooned to an estimated 27,000 employees last year, up from 16,100 in 2020, and vaulting it past Advocate Aurora Health as the area’s largest private-sector employer on Crain’s list.
Amid slowing sales earlier this year, Amazon tapped the brakes, acknowledging it had expanded too quickly. Nationwide, the company has halted plans to open 42 warehouses totaling nearly 25 million square feet and delayed opening another 21 totaling nearly 28 million square feet, according to supply-chain consulting firm MWPVL International.
The company also has been closing existing distribution centers and cutting jobs. Amazon’s workforce shrank by about 100,000 to 1.52 million employees in the second quarter, the bulk of them in fulfillment and distribution.
The properties the company has decided to close here are small by Amazon standards, with the Mundelein warehouse encompassing 85,700 square feet and the Elgin building totaling 66,800 square feet. A broker for Amazon is marketing the Mundelein building, at 401 Terrace Drive, for sublease to other companies, with the Elgin property, at 250 Airport Road, next to Interstate 90, going up for sublease tomorrow, the Amazon spokeswoman said.
The two buildings are so-called delivery stations, the last stop for packages before they’re put on vans and delivered to customers. The spokeswoman wouldn’t disclose how many people Amazon employed at the Mundelein building or how many work in Elgin; she said the company has offered employees at both job opportunities at other Amazon facilities nearby. The spokesman also declined to say whether Amazon plans to close any more facilities here.
“We’re always making adjustments to our network to best fit our business needs and improve the experience for our employees, partners, drivers and customers,” she said in a statement. “While we’re closing some of our older sites, we’re also enhancing some of our facilities, and we continue to open new sites as well. In fact, since 2020, we’ve added more than 350 new modern facilities to our network in the U.S. alone and have dozens more facilities under construction here in the U.S. and around the world.”
Yet it’s not moving forward with some projects here. Amazon recently told officials in Crystal Lake that it has dropped plans for a 180,000-square-foot warehouse in the northwest suburb that would have employed about 500 people, said Kathryn Cowlin, Crystal Lake’s community development director. The company also scrapped a plan for a 250,000-square-foot distribution center in Hoffman Estates, the Daily Herald reported in May.
Amazon’s recent expansion here has included huge fulfillment centers in south suburban Markham and Matteson employing thousands of people and smaller warehouses in places like Cicero, Downers Grove, Waukegan and Channahon. In the city of Chicago, the company ships out of properties in Gage Park, Bridgeport and Pullman, and it’s opening a new delivery station in Humboldt Park later this year.
Amazon last year also bought the Central Steel & Wire plant in Gage Park, with plans to build a delivery station there. It’s unclear when or whether the company will move forward with that project.