What Amazon’s Quebec exit means for shoppers, workers, landlords

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Amazon.com Inc. surprised its Quebec workers on Wednesday by announcing it will shutter all seven of its facilities in the province by March, laying off about 1,950 full-time and temporary employees as it switches to third-party delivery services. The move has sparked outrage from the union representing some of the Quebec workers, which alleges the move is tied to the unionization efforts. Here, the Financial Post’s Jane Switzer and Yvonne Lau explain what the closure means for Amazon customers in Quebec, the company’s landlords across Canada and the affected employees.

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Will Quebecers still be able to order from Amazon?

Yes. Although Amazon is shutting down operations of its fulfillment centres, sorting centres and delivery stations in Quebec, customers in the province will still be able to make purchases. An Amazon spokesperson confirmed that Quebecers will still have the same product selection and delivery speeds. Orders will be dispatched from other Amazon fulfillment centres throughout Canada and delivered by third-party providers in Quebec.

What will happen to Amazon’s facilities in Quebec?

Amazon leased its sorting, fulfilment and delivery centres in Quebec from an array of property development management and construction firms.

“The facilities in Quebec are leased and will remain in use over the coming months as we wind down operations,” Barbara Agrait, an Amazon spokesperson told the Financial Post. “As we complete (the wind-down) process, our team will work with the relevant landlords — as they do any time we exit a leased facility — to determine what’s next for them.”

If Amazon backs out of its Quebec leases early, its landlords could potentially fine the e-commerce giant,

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The company’s lease terms across Canada can include termination penalties worth “millions,” according to one source familiar with the terms of some of Amazon’s deals who asked not to be named as they were not authorized to speak to media.

Michel Deslauriers, the director of the Jonathan Wener Centre for Real Estate at Concordia University in Montreal, said it would be impossible to determine for certain whether Amazon is subject to any penalties without access to their contracts.

“If their leases are expiring, there would be no penalty. If the leases haven’t matured, there will certainly … be some negotiation with the landlord.”

Leases for industrial spaces are generally signed for “longer terms” of three to 10 years, he added.

QuadReal Property Group Ltd., a B.C.-based real estate investment firm that has signed warehouse and office deals with Amazon across Canada and owns the entity that controls Amazon’s Coteau-du-Lac sorting centre, declined to comment. “Details pertaining to tenant relationships and the status of leases are confidential,” Hannah Wanlin, the firm’s communications manager said in an emailed statement.

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What’s clear is that Amazon’s Quebec pull-out will pose a challenge for landlords.

“(They) now have to find new tenants for these large spaces, which have been no doubt customized for Amazon,” Deslauriers said. The recent uptick of new development in the industrial real estate market could make it more difficult to find new tenants quickly.

How much has Amazon invested in the province?

Since 2010, Amazon has invested $50 billion in Canada and has created 46,000 jobs across the country, according to a 2024 company report. It invested $12 billion in Canada in 2023.

In Quebec alone, Amazon has spent billions.

A major slice of Amazon’s investments in the province have been directed to its Amazon Web Services (AWS) data centre operations in Montreal. From 2016 to 2021, the company invested $1.4 billion on the project, creating an annual average of 484 local jobs for the centre’s construction and operations. The company declined to provide the total amount of its provincial investment and a breakdown of how much capital is channelled to each business segment.

Still, Amazon has noted that it plans to invest nearly $25 billion in its web service infrastructure across Canada that will support 9,300 full-time jobs. Around $4.3 billion of that sum and 963 of those jobs will be channelled to its Alberta data centre operations headquartered in Calgary. AWS in Quebec over the next 15 years will support an “estimated annual average of 3,412 full-time equivalent local jobs,” according to the AWS 2021 economic impact study.

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Could Amazon leave the rest of Canada?

Amazon said the company routinely evaluates its businesses but doesn’t have any other announcements about operations in other provinces at this time.

David Ian Gray, principal at Vancouver-based retail consulting firm DIG360 Consulting Ltd., said Canada’s size, weather and distance between major present logistical challenges to many retailers. But because Amazon is a leader in logistics and delivery, and popular with Canadian consumers, it’s unlikely it would completely abandon the Canadian market.

“In terms of being good at delivery, I can’t at this point picture a Canadian operator that could pick up the slack and do it better than Amazon can do it, especially now that Amazon’s put all their investment into their systems in Canada,” he said.

Over the last few years, Amazon has hired thousands of workers and expanded its footprint with facilities across Canada. Excluding the Quebec facilities slated to close, Amazon currently operates 22 fulfillment centres, four sorting centres, 31 delivery stations, and five AMXL delivery stations across Canada, the majority of which are in Ontario, Alberta and British Columbia. It also has three Canadian corporate offices and two tech hubs in Toronto and Vancouver.

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“There’s a lot of signals that they’re investing in Canada, not retreating from Canada,” said Gray.

Amazon may have no intention of leaving Canada, but the company may have to contend with more scrutiny from the federal government.

On Thursday, Industry Minister Francois-Philippe Champagne said Ottawa would be examining its business relationships with the tech giant, urging it to keep the Quebec operations open.

“You will undoubtedly understand that such action calls for a review of the business relationship that exists between Amazon and the Government of Canada,” Champagne said in a letter to Amazon chief executive Andy Jassy that was published on social media network X. “It is not too late to reconsider your decision.”

Do the closures violate any labour laws?

Caroline Senneville, president of the Confédération des syndicats nationaux (CSN) union that represents workers at Amazon’s DXT4 warehouse in Laval, points to another case that unfolded in Quebec 20 years ago.

In April 2005, Wal-Mart Canada Corp. closed a store in the borough of Jonquière after workers received union certification, announcing the closure on the same day stalled collective bargaining negotiations were sent to arbitration.

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Wal-Mart argued it closed the store because of financial struggles, but the Supreme Court of Canada ruled in 2014 that the company violated the Quebec Labour Code and ordered it to pay damages to the store’s 190 employees.

Senneville said the Jonquière case set a precedent, and CSN is currently exploring its legal options.

“It is now illegal in Quebec to close the shop because they are unionized,” she said. “So, we’re going to see on what legal grounds we’re standing and see what can be done about that.”

—with files from Bloomberg News

• Email: jswitzer@postmedia.com

• Email: ylau@postmedia.com

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