Business Brno blocks investment by e-commerce giant Amazon

19-03-2014 13:12 | Chris Johnstone

Plans for US-based e-commerce giant Amazon to build a second distribution centre on the outskirts of the Czech Republic’s second city, Brno, appear to have been thwarted. Other Czech sites are also being offered while Slovakia is also trying to land the investment and the estimated 2000 jobs going with it.

Roman Onderka (right), photo: CTKRoman Onderka (right), photo: CTK Brno mayor Roman Onderka has admitted that plans for a second Czech Amazon distribution centre in Brno are as good as dead after the expected majority of councillors in favour failed to materialize. Votes in favour of the Amazon investment fell three short of the required 28 to push the project through.

The biggest last minute hitch at the council meeting appears to have been the fact that changes in the land use plans for the massive logistics centre, the size of 13 football pitches, have not been agreed.

Some councillors were worried that failure to make that change could have left the city open to expensive arbitration proceedings from Amazon and the development company representing it if everything went pear shaped later on. Offers from developer CTP Invest to give guarantees that no such proceedings would be launched were not sufficient to overcome those concerns.

Mayor Onderka, one of the biggest supporters of the Amazon investment, told public service broadcaster Czech Television later that he would try and get the land use change problem ironed out at the following council meeting in April, or perhaps, May, but it was up to Amazon in the last resort if it wanted to delay its plans until then.

Time has been of the essence to the e-commerce giant, which wants to get the new centre up and running before the Christmas rush of orders. Ironically, what appeared to be far bigger initial problems were overcome a few weeks ago to get a similar Amazon investment confirmed on the outskirts of Prague.

In a statement released after Tuesday’s vote, Onderka said that he respected the result of the vote but did not agree with it. ‘At a time of economic recession, Brno has missed the chance to get a strong investor and at the same time has sent a negative signal to other potential investors,’ he added.

Illustrative photo: CTKIllustrative photo: CTK There are around 23,000 people in Brno registered as unemployed with Amazon offering the possibility of up to 2,000 new jobs as well as millions invested in transport links to the industrial zone earmarked for the centre, Onderka said. Arguments that many of the jobs amounted to modern day slavery or that a gun was being held at the council’s head in last minute negotiations were not true, he added.

As well as being a slap in the face for the mayor, with six of his fellow Social Democrat party members failing to vote in favour, the council vote is also a rebuff for Social Democrat, Prime Minister Bohuslav Sobotka and Minister of Industry and Trade, Jan Mládek, who both strongly backed the investment.

The ball now appears to be firmly back in Amazon’s court. While other Czech locations will be offered for the 2.7 billion crown distribution centre, which should serve not just the Czech Republic but the whole of Central Europe, including Austria, Slovakia is keen to get in on the act. The Slovak daily SME reported Wednesday that the west Slovak town of Malacky and the capital Bratislava are both in talks over the Amazon project with a spokesman for the Ministry of Economy suggesting that investment incentives could be mobilized to land the US investment.

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