Amazon Plans to Create 1,000 Jobs in Ohio With Data Centers

Updated on

Amazon.com Inc. said it plans to invest “several hundred million dollars” to build facilities in Ohio, with more than 1,000 full-time jobs during the next few years.

The company also will start collecting Ohio sales tax on customer purchases starting Monday, said Paul Misener, Amazon.com vice president of global public policy.

Amazon is building data centers, which typically handle cloud computing and storage, in the Columbus suburbs of Hilliard, Dublin and New Albany, and is considering one or more fulfillment centers, according to JobsOhio, the state’s private development agency.

“This is just a huge deal for us,” Governor John Kasich said during a press conference Friday in Columbus. “It’s going to attract a lot of people.”

The Ohio Tax Credit Authority approved an exemption on sales taxes for equipment purchases at the data centers and a tax credit for new payroll. In exchange, the company promised capital investment of at least $1.1 billion over three years, with 120 full-time jobs and an annual payroll of $9.6 million, records show.

The incentives are valued at an estimated $81 million over 15 years, including $77 million for the sales-tax exemption and $4 million for payroll tax credits, according to Todd Walker, a spokesman for the Ohio Development Services Agency.

Amazon didn’t specify how many years it would take to create more than 1,000 jobs or how many people would work in either its data centers or warehouses. Spokesman Ty Rogers didn’t return messages seeking comment.

Suspect Spending

Ohio shouldn’t offer tax breaks to Amazon because the company needs warehouses close to customers in the state and is likely attracted by affordable electricity for data centers, said Greg LeRoy, executive director at the nonprofit group Good Jobs First, which monitors incentives for business.

“We don’t think these are smart investments in terms of economic development,” LeRoy said.

Kasich said while he’s not a fan of incentives, he thinks the sales-tax break was appropriate and that other states are making similar offers.

Amazon Web Services, the company’s cloud-computing division, is its fastest-growing source of revenue and is profitable. The division generated $1.57 billion in first-quarter sales, up 49 percent from a year earlier. That made for operating income of $265 million that offset losses in Amazon’s other businesses.

Cloud-computing competitors include Google Inc. and Microsoft Corp.

Amazon introduced such services in 2006, offering rentable storage on computers. Its clients include Netflix Inc. and Pinterest.

Most of Amazon’s U.S. cloud infrastructure is in Virginia, Oregon and California, with smaller data centers elsewhere.

Amazon collects sales tax in 24 states that are home to about 70 percent of the U.S. population, not including Ohio.

State Tax Commissioner Joseph Testa said while he couldn’t provide an estimate for additional revenue, he hopes Amazon’s decision encourages other online retailers to collect sales tax.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE