Philly Deals: Amazon acquiring Kiva: Who let the robots in?

A Kiva Mobile-robotic Warehouse Automation System.
A Kiva Mobile-robotic Warehouse Automation System. (KivaSystems.com)
Posted: March 21, 2012

As Amazon.com killed Borders, crippled Best Buy, and started trimming even Walmart, at least the online retail giant was also hiring thousands of low-wage workers and contract laborers for the warehouses it has been raising in Pennsylvania, Delaware, and a few other states.

But Amazon's announcement Monday that it was buying industrial robot-maker Kiva Systems Inc. for $775 million could leave you wondering if retail was going to be completely taken over by machines.

Pennsylvania - America's warehouse - is home to one of Amazon's "order fulfillment" clusters, with five locations in the Allentown-to-Carlisle corridor on the Interstate freeways that bypass I-95 and the Pennsylvania Turnpike. Amazon is also preparing a second, larger distribution center in northern Delaware, "Home of Tax-Free Shopping," as other states prepare to tax online purchases.

Full-size Amazon centers each hire a thousand or more full-timers, plus a few thousand temps for the Christmas shopping rush. Only California, Virginia, and Tennessee have as many as Pennsylvania, according to Amazon.com's hiring board.

How long until these places are dark, box-mining caverns crossed by speedy cyber-mules tracking, racking, and toting from trailer to truck? Kiva may speed skids around, but humans will still "pick, pack, and stow" packages manually, Amazon vice president Dave Clark said in a brief statement. At least in the current state of development.

In fact, "Amazon already uses technology at Diapers.com and Soap.com" in Newark, N.J., which Amazon bought last year in its purchase of Quidsi Inc., notes Fiona Dias, chief strategy officer at ShopRunner, a division of Kynetic, based in Conshohocken. Kynetic is the successor to Amazon rival GSI Commerce, which sold its order-fulfillment centers last year to eBay.

There are still limits to what warehouse tech can do. "We found Kiva robots were good at racing out and getting a pallet. But they aren't good at sorting 500,000 in all shapes and sizes," Dias told me. "They are a piece of the puzzle. They are not ready to take over warehouses."

The initial disruption will be elsewhere: The Amazon-Kiva deal "will create some anxiety among Staples, Drugstore.com, Crate & Barrel, The Gap, and all the other customers who compete with Amazon," Dias said. Amazon could learn all about rivals' top sellers, order speed, and customer focus "from having a robotic Trojan horse in all these retailers' warehouses. There are a whole bunch of CEOs slamming their fists on the tables today, wondering, 'Why have we let these robots in?'?"

Not leaving

Ryerson, the Chicago-based metal-finishing and distribution company, says it recently renewed a lease, for five years - with an option to stay at least five more - for half of the 28-acre Fairless Hill site it occupies at 20 Steel Road South, in the New Ford Mill Road Industrial Park (Keystone Industrial Port Complex), for its steel-coils operation.

The property is also for sale by owner Richard Thypin's Manhasset Bay Associates, Princeton. Manhasset hired Roddy Inc., Bensalem, to seek tenants for the other half of the property, on the CSX and Norfolk southern rail lines, two miles from the deepwater Delaware River port in Morrisville, Bucks County.

Kevin Richardson, head of Ryerson's Southeast Region office in Norcross, Ga., stresses that Ryerson will stay through its lease, no matter who owns the site. He said a PhillyDeals blog post published March 9 "suggested that Ryerson would have to vacate" if a new tenant or owner were found, but that suggestion is "erroneous," and Ryerson will stay on Steel Road, where it employs around 40, "through at least 2017."

In growth mode

Corporation Service Co., a privately held, century-old Wilmington firm that sets up and helps manage the legal entities that make Delaware "America's Corporate Capital," has acquired Utah-based Ingeo Systems, which it called the nation's top provider of electronic real estate records, from owners including Utah's Epic Ventures, for an undisclosed price, said CSC president Rodman Ward 3d.

Contact Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com, or follow on Twitter @PhillyJoeD.

|
|
|
|
|