Amazon Inspires a Comeback in The Heartland
08/27/18A tiny midwestern town was so broke it was about to sell the fire truck. The folks from Seattle changed everything.
“You came, you shopped, you dressed nice — you went to the mall,” recalled Seph Lawless, an artist who hung out in malls as a kid and now is fascinated by their dying exoskeletons. When the Randall Park Mall opened in 1976, it had a Sears and JCPenney, performing arts center, an Olympic pool, and a hotel complex. At the opening, Cleveland honchos were greeted by actress Dina Merrill, a famous movie star and one of the world’s wealthiest women.
Lifestyle Changes
Twenty years later, if the mall shoppers even heard of Dina Merrill, it was because her childhood home, Mar a Lago, was now the residence of a real estate tycoon named Donald Trump. Consumers suddenly decided what they really liked was shopping online or in downtown neighborhoods with art galleries and microbreweries. The mall felt like a sleepy anachronism, and poof, 1,500 luxury emporia turned into 1,000 white elephants.
The disappearing act had two more tricks. When the L’Occitane and Bodyshop stores “demalled,” the jobs and tax revenues vanished, and the small Midwestern hamlets transformed into ghost towns. Business recovered soon enough, by adapting just like Darwin said we should, but the small towns in the heartland were broken.
The pool in the North Randall Mall, 2006 (courtesy of Sherman Cahal)
The people of North Randall didn’t need an economist to show them the effects of joblessness. They could look out the window. The hotel complex was a drug sanctuary, the pool vandalized, petty crime and assaults were on the rise. It may sound oversimplified to people with money or who have wealthy parents that buy them condos in big cities. But in locations like North Randall, when jobs go the safety net is the tavern or the crack house.
And that’s when things started to get strange.
Crossed Lives
Jameel Talley, 36, and Guy Wills, III, 41 never met before their paths crossed tragically in 2003. Both were African American and from the Cleveland suburbs. Wills was an unemployed heroin and cocaine addict, and a hapless shoplifter. Talley was a Maple Heights police officer doing part-time store security for Dillard’s. When Talley spied Wills on the security camera snatching a $159 leather jacket, he didn’t know Wills was on a heroin high.
Talley approached Wills and he resisted. They got into a scuffle and next thing, Wills hits his head on the ground. Wills was arrested and taken to a hospital where he refused medical attention twice over the next 24 hours. He died of head injuries two days later. Talley was tried, convicted of involuntary manslaughter, and sentenced to three years in prison.
The tragedy had aftershocks. Customers were hesitant about shopping at Dillard’s and after a few months, the store shut down. Because it was the remaining anchor tenant, within five years, Randall Park went from “where did I leave my car” to skid row.
The irony about Talley and Wills is that quite by accident, their story led to the rebirth of North Randall. But the town had a small problem to fix first.
Fire Truck
The challenge with dead malls is removing the carcass. Getting them to the dump is like hauling away a baseball park. That kind of labor is done by private sector contractors who like to work for a fiscally sound clients. Like the funeral directors say, don’t die if you can’t afford the casket.
Money was North Randall’s biggest problem. The most promising idea was “let’s sell the ladder truck.” They had already canceled the midnight police shift to save $8800 a month. Then the State of Ohio auditor warned it was going to examine the town’s books. Things weren’t looking too good for the town.
Fortunately, the mayor, a tall and athletic African American man named David Smith, is an incurable optimist. He is the kind of public servant whose job is part-time but clocks in hundred-hour weeks. Smith likes to dress like a Wall Street broker but drives around town in a 10-year-old Ford Crown Vic. On his website during the dark days, he posted a slogan that might surprise those who think running a small town is about bakery sales:
“Adversity builds the character of this community and makes it the best location to start new beginnings with happy endings.”
Miracle-Gro
Under these circumstances, when the RFP from Amazon arrived at the North Randall Town Council in 2016, they were surprised. The town is 83% African American, with an average age of 55 and mostly unskilled labor. Why was Amazon interested in building a new fulfillment center there? Every town in the region was making a play for this.
Better sounding places were bidding, and first, the town had to coax investors into demolishing a dilapidated hotel on which it owed $2 million.
Mayor Smith jumped into the Crown Vic.
Evil Warehouse
North Randall isn’t on the list of 50 best places to visit, or even the 500 best. It is flyover country; that’s how journalists describe a place that doesn’t have a Starbucks or Sephora. That was why the Amazon jobs were going to be a game changer, or so most people thought.
When a press release from a Cleveland based labor activist landed in journalists’ inboxes claiming Amazon was exploiting Ohio workers, it blindsided the company. After all, Amazon was bringing 2,000 new jobs to Ohio. But they weren’t union jobs, and big labor was taking its best shot. The release said warehouse wages were so low people needed food stamps to survive.
The truth was later revealed that employees qualify for food assistance based on any number of pre-existing health issues or children or dependent parents. Amazon’s wages had nothing to do with it. But it was catnip to the media, as literally dozens of websites, including wealth worshipping CNBC and Business Insider, found a headline with Jeff Bezos and “low warehouse wages” too delicious to pass up.
The press release was going to be trouble. The question was how much? For North Randall, there was a more substantial concern. Would this cause Amazon to delay the opening until things cooled down, or even choose a different state?
Indomitable Spirit
Two months later, 2400 miles away in Seattle, Amazon vice president Sanjay Shah concluded his review for the Ohio warehouse. He said, “the company takes into account many factors in making a final choice because our ability to expand is dependent on incredible customers and an outstanding workforce.”
Shah and his team at Amazon saw an indomitable spirit in this gritty Cleveland suburb. When the Village Council read the good news to Mayor Dave Smith, he was exuberant, “I’m lost for words because we are so fortunate to get this.”
Few people can realize what it meant to North Randall to see their town recognized by Amazon in this way. The town’s average per capita income of $21,421, according to the latest census, compared to Amazon’s wages starting at $14 per hour or $30,000 per year, could mean a palpable change in lifestyle. This is before stock options and bonuses, health insurance, and tuition refund are added in. According to Digital Commerce, “the Amazon jobs are the best of their kind, and significantly exceed federal and state minimums.”
The Payoff
The Amazon warehouse in North Randall is scheduled to open on September 9th. The company has invested $177 million in the project and is on track to hire 2,000 employees.
For North Randall and places like it across the American heartland, Amazon is turning technology disruption on its head and rebuilding cities, training workers, and putting people back in jobs. But it takes patience for these things to happen, and for North Randall, the added ingredients of spirit and optimism got them through the darkest hours.
In that sense, the real miracle of Amazon and North Randall isn’t the warehouse, it is that they found each other. With Mayor Dave Smith’s help.
The views expressed in this article do not necessarily reflect those of Thunderbird School of Global Management or Arizona State University as a whole.
Author’s Bio
Jeff Cunningham is an advocate for enlightened global leadership, which he calls the most valuable natural resource in the world.
He is a Professor at ASU’s Thunderbird School of Global Management and was the former publisher of Forbes Magazine, startup founder, digital content CEO, and ran an internet venture capital fund.
He travels the globe in search of iconic leaders. As an interviewer/host, he created a YouTube interview series, Iconic Voices, now co-produced by @Thunderbird, featuring mega moguls from Warren Buffett to Jeff Immelt. His articles on leadership have been featured in the Arizona Republic, Forbes, Chief Executive Magazine, Board Member Magazine, LinkedIn and Medium via JeffCunningham.com.
His career experience includes publisher of Forbes Magazine; founder of Directorship Magazine; CEO of Zip2 (founded by Elon Musk), Myway.com, and CareerTrack.com; venture partner with Schroders. He serves as a trustee of the McCain Institute and previously as a trustee of CSIS and Middle East Institute, and as an advisor to the Nobel Peace Prize Committee.
He has also been a board director of 10 public companies.
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