Taking Stock by Malcolm Berko

The Real Reason Amazon Left Queens

Dear Mr. Berko: Our investment club thinks Amazon didn’t leave Queens because of that $3 billion; Amazon believes Rep. Alexander Ocasio-Cortez would create sticky problems if they opened offices in Queens. Your thoughts, please. Your opinion also of Tod’s, the Italian company making those expensive, beautiful shoes? -- R.A., Mecklenburg, N.C.

Dear R.A.: That $3 billion is raw, unmitigated corporate welfare. Amazon believes that Queens and its outlying communities have such a good group of talented people that it was going to say to heck with the $3 billion, but the constant bickering and negativity by various organizations was deafening. That $3 billion giveaway wasn’t the real reason “Queenslanders” were furious with Amazon, but it was the excuse paid agitators knew would rally organizers to demand socio-economic concessions from Amazon.

The real reason Amazon (AMZN-$1,791) took its ball home wasn’t the fear that housing costs would skyrocket. AMZN would have helped. Nor was it the fear that some low-income residents would be driven out of Queens. Many would find better employment with AMZN or the numerous businesses providing AMZN with daily supplies and material. It wasn't numerous self-interest groups, eleemosynary organizations, politicians, city, county and state bureaucrats making demands, delivering petitions and challenging AMZN’s process for doing things. AMZN has met these challenges at fulfillment centers and warehouses around the nation.

Those reasons sound good to the public, but AMZN was willing and able to bargain. However, a management-level AMZN employee and column reader with access to the executive suite gave me the real reason: AMZN fears the unions. Over the years, Amazon has developed a nearly perfect process that controls workers, generates efficiencies and gets product delivered. Founder Jeff Bezos and his boys know that unions will demand work rule changes, wage scales, reduced package volume, decreased worker hours, longer holidays, increased insurance and pension benefits, longer lunch breaks, increased bathroom/smoke breaks, etc. And workers striking to enforce these changes would destroy AMZN like they did the steel companies, automakers and airlines, notably TWA, Eastern, Braniff, US Air, Pan Am, National, United, Delta. That’s the real reason.

When AMZN went home, newly elected member of Congress Alexandria Ocasio-Cortez exulted: “Today was the day a group of dedicated, everyday New Yorkers and their neighbors defeated Amazon’s corporate greed and its worker exploitation.” Is it any wonder that Amazon left Queens?

Tod’s S.p.A. (TOD-$40.29) usually advertises on page two or three of The Wall Street Journal every day. Several weeks ago, it presented a lovely, dark blue canvas shoe for $550. Good Lord, Charlie Ford -- what human being in their right mind would pay $550 for two bloody, matching tennis shoes? Flaunting that kind of dough for a canvas shoe is vulgar, offensive and obnoxious! I realize that Princess Diana purchased dozens of shoes from TOD each year, as did eminences such as Diane Von Furstenberg, the Duke of Norfolk, Prince Philip and many Hollywood stars. TOD’s most expensive shoe, made of gold, leather and silk, features 236 diamonds with two D-flawless diamonds of 15 carats and costs $17 million.

Filippo Della Valle started this company in his basement in 1920. By the 1970s, his grandson Diego took over and expanded the basement into a huge factory. Today, TOD makes abhorrently expensive but admittedly high-quality luxury shoes, leather goods and accessories in Italy, which only the upper 10 percent of the top 1 percent can afford.

TOD’s shares have fallen 70 percent since 2003, and during the last four years revenues fell from $1.45 billion to $1 billion, causing net income to crash from $170 million to $65 million. Business is bad and Della Valle is looking for investors. This year’s revenues and earnings are expected to be lower than last year, and many observers expect TOD may be trading in the mid-$30s by year’s end.

(Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com.)