One small town demonstrated the value of its region and won a major retail DC for its efforts
Small-town values and work ethic can't overcome a bad location, but when a number of good locations compete for a major distribution center (DC), attitude can influence the decision. That's one of the lessons retail giant Wal-Mart Stores Inc. learned when it opened a food distribution center in Yakima County, Wash., earlier this year.
Wal-Mart was looking for a site for a food DC to serve customers who shop for groceries at its stores in the northwestern U.S., says Rollin Ford, executive vice president of logistics for Wal-Mart Stores. The facility, which was eventually located in Grandview, Wash., was a significant project, he comments.
Once a site was selected, Wal-Mart set a 12-month construction timeline to build a highly automated facility of over 800,000 sq. ft., says Amy Hill, whose project management responsibilities extend throughout the western region and included the Grandview facility.
Getting to the first brick took some effort. The community had its hands “somewhat tied” when it came to financial incentives, admits Sheila Black, marketing coordinator for the Yakima County Development Association. But a number of factors helped Wal-Mart fast-track its DC, and in the end, the results appear to be better than expected.
In its first six weeks of operations, Wal-Mart found its absentee rate at the new DC was less than 1%. In addition, throughput levels were at 80% in roughly that same time period, well above the 55% to 60% Wal-Mart had grown to expect for a facility the size of its new Grandview DC.
How was the small community of Grandview able to exceed expectations of the world's largest retailer? It wasn't as much the result of a formal strategy to attract logistics operations as it was a community that was anxious to bring in new businesses and new jobs.
The development association worked with Carter & Burgess Inc. for 18 months before they knew the identity of the prospective tenant. During that time Wal-Mart was narrowing its search. “We knew the area we needed to serve,” says Hill, “and it's not unusual for that to encompass site considerations in several states.”
One important step had been taken before siting discussions started — the land that would eventually house the Wal-Mart DC had already been zoned for light industrial use. As the siting process went forward, the land had to be annexed into the city of Grandview. However, there were relatively few people in the area that had to vote on the annexation, so that went smoothly. Environmental reviews had been completed, and no significant issues were uncovered.
Area businesses supported Grandview as a distribution site for Wal-Mart. One gas and oil distributor noted it was able to achieve quick turnarounds moving product to Seattle, Portland and Spokane. Two other companies, Ace Hardware and Horizon Distribution, operate local DCs of over 500,000 sq. ft. and 200,000 sq. ft., respectively. Other companies in and around Grandview also came forward and discussed their experiences.
“The people in the Yakima Valley have been some of the most enthusiastic and supportive that I've ever seen,” says Wal-Mart's Hill. “They were really a pleasure to work with.” But it goes beyond that. “There were several sites that we were looking at within Yakima County,” she explains. “These jurisdictions were competing against each other but instead of looking at it that way, they all worked together, seeing the importance of landing this in their community vs. the jurisdictions fighting with one another.”
The site Wal-Mart selected had good access to Interstate 82, and the land itself was flat. What infrastructure wasn't already in place, Yakima County was able to help fund. The county gets 0.8 cents back from each dollar of sales tax that the county pays into the state. Those funds are available to widen or bring roads up to the project site, put in sewer or water lines, or any other type of public infrastructure. It's half grant and half loan, says Black.
Another incentive Yakima County was able to offer Wal-Mart was support for hiring and training. A liaison from the development association worked directly with Wal-Mart to connect them with agencies like WorkSource Washington, the state employment services agency.
WorkSource helped screen applicants for the 400 jobs at the Wal-Mart DC. There were plenty of applicants — 6,000 by WorkSource's count.
Wal-Mart's experience is not unique, points out Black. When Northwest Horticulture opened its facility about 15 minutes away from Grandview, it got 3,000 applicants for 150 jobs. The Yakima standard metropolitan statistical area (SMSA) has the lowest median wage for warehouse workers — $8.11 per hour. This compares with $10.58 in the Seattle SMSA.
The economic development agency keeps a close eye on the changing base for the workforce, says Black. The growing Hispanic population has proven valuable to the region as more companies, especially in the service industries, look for bilingual and biliterate workers.
The Burlington Northern/Santa Fe (BNSF) and Union Pacific railroads both serve the area, hauling agricultural products as well as goods for local plastics and metals manufacturers. Those rail volumes help ensure regular service. In addition, the Port of Grandview (which Black refers to as a “dry port”) is one of a number of taxing districts throughout the state of Washington designed to promote trade and economic development.
In the end, a broad-based but very positive community spirit and enthusiasm combined with the location, infrastructure and workforce to swing the Wal-Mart decision to Grandview. The Grandview DC added 400 new jobs and expects to reach 600 within three years but, as Wal-Mart's Hill agrees, the economic impact will reach far beyond that. LT
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