Amazon facility prime example of South Dakota's economic growth, workforce shortages, officials say
South Dakota's first full-sized Amazon fulfillment center is ramping up quickly, with the company offering sign-on bonuses to begin filling the 3-million-square-foot facility.
SIOUX FALLS, S.D. — State and local officials — including Lt. Gov. Larry Rhoden and Mayor Paul TenHaken — were all smiles Sunday as they cut the ceremonial ribbon in the lobby of Amazon’s first fulfillment center in South Dakota, a nearly 3-million-square-foot complex northwest of downtown in Sioux Falls.
The investment from one of the world’s largest companies is a milestone in the city and state’s continued growth and business development, but officials know that with each announcement comes additional stress on already strained workforce and housing availability.
“There’s a lot of excitement when you bring large-scale businesses to Sioux Falls. But the two concerns I have are, one, are they going to be able to find the people to fill the jobs?” TenHaken told Forum News Service after the ribbon-cutting ceremony and tour. “And the second is, will we have the housing?”
Despite an announced delay last summer, the fulfillment center opened at a partial capacity in October to aid with the holiday season, about two-and-a-half years from when plans for the facility were first broached during the early months of the pandemic.
“It was obvious that Amazon knew what they were doing,” TenHaken said about the process. “We kind of just stayed out of their way, and this thing came together quickly."
As Rhoden spoke to lead off the procession on the afternoon of Jan. 15, he framed the sparkling facility as proof of South Dakota’s rapid economic growth.
“Every time we bring a big, new business to our state, it boosts our economy and financial situation. It makes us better able to afford to give money back to the people. We can afford to reduce the tax burden, we can afford to cut the sales tax on groceries,” Rhoden said, prompting a chuckle from the crowd with the sudden tack to his and Gov. Kristi Noem’s central campaign promise. “Had to get that in.”
However, across the state, this economic growth touted by the Noem administration and other leaders is inexorably linked to a shortage of workforce and housing.
Data from 2022 showed Sioux Falls issuing building permits for 4,834 housing units — a combined stock of single-family, multi-family and apartment projects — a 40% increase from the record-setting 2021 total of 3,024 such permits.
Still, with nearly 13,000 people moving to the city since the beginning of 2021, that record pace is still not enough.
“We’re still behind in housing,” TenHaken said, “Even though we had a record number of permits this last year, it's still not keeping up with demand.”
Even a trillion-dollar giant like Amazon is not immune to the issue.
According to Scott Seroka, Amazon’s regional public relations manager in South Dakota and other parts of the Upper Midwest, the facility currently employs 350 people, with plans to quickly increase that number toward a goal of between 1,000 and 1,500 employees.
Yet South Dakota’s statewide unemployment numbers in the past year have shifted seasonally between a low of around 600 and a high of about 2,300.
To lure in help from this limited pool of workers fancied by businesses across the state, Seroka said the facility is offering a $3,000 sign-on bonus to new, full-time employees and $1,000 referral bonuses to current employees.
TenHaken pointed to Senate Bill 41, a clarifying piece of legislation to finally discharge $200 million toward developing housing infrastructure, as key to helping Sioux Falls — and the rest of the state — meet the demand posed by employers.
With that legislation already through the Senate, the bill’s backers hope to have it passed through the House and signed by Gov. Noem by the end of January.
“The housing bill needs to pass to get that money out there and help continue building more units,” TenHaken said.
Outside of staffing concerns, other practical questions were mulled over by officials during the ribbon-cutting ceremony and subsequent tour of the largely-automated processes that run the huge facility.
“Will I finally get the two-day Prime?” Sen. Josh Klumb, of Mitchell, one of five legislators in attendance, asked Forum News Service.
Though the fulfillment center is more of a regional hub for the Midwest than a dedicated South Dakota product liaison, the foothold in the state means faster delivery, especially for the eastern part of the state, Seroka said.