Economic development executive Kathy Moellenberdt accepts that pitching Topeka, Kan., as a tourist mecca is a lost cause. "We can't talk about mountain views and oceans," she admits. But it's clear that she's ready to fight when it comes to bringing new business to the community.
Moellenberdt has set her sights on business in general, and distribution centers in particular. Topeka is ideally situated for distribution operations, she says. "[O]ur central location lends itself to a very strong network transportation system." She's also quick to point out that Topeka offers a large, welleducated labor force and that Kansas, which has spent more than a half billion dollars to improve its highways, now boasts some of the best roads in the country.
If Topeka strikes you as an unlikely source for a marketing pitch, welcome to the new world of site selection. The big industrial regions— Southern California's Inland Empire, Columbus, the Port of Houston, Indianapolis, Chicago, Memphis, the Greater Atlanta area—are no longer the only ones mounting aggressive marketing campaigns. They've been joined by a horde of lesser-known but nonetheless scrappy players—Topeka, Kan.; Anchorage, Alaska; Kalamazoo, Mich.; Scranton, Pa.; Little Rock, Ark.—all hungry for new business.
To appeal to a distribution audience, these newcomers typically promote themselves as logistics hubs, or logistics villages, as they're also known. They're emphasizing the features most likely to attract a logistics professional's eye—a central geographic location; easy access to rail, highway, ocean or air connections; cheap land; or a bountiful labor force. Some even offer ready-to-occupy space in multi-tenant complexes specifically designed for distribution, with on-site logistics services and, of course, easy access to multiple modes of transportation.
Their pitches may prove hard to resist. The smaller cities definitely have some selling points, says Cliff Lynch, principal of C.F. Lynch & Associates, a logistics consulting firm. "[S]maller cities often offer lower land and building prices, tax incentives, and better labor pools [than large metropolitan areas]. And carriers will respond to service requirements if there is enough volume involved."
the new hot spots
If you want to attract DC business to your area, it's no longer enough to be business friendly. Now, you have to be RFID friendly as well.
With the RFID revolution well under way, economic development agencies are actively pitching their regions' technological capabilities in hopes of attracting RFID-enabled DC operations. In fact, two of the more aggressive promoters—North Texas and North London (yes, in England)—took the unusual step of setting up exhibits at the RFID World conference and exhibition in Dallas earlier this year.
Officials from the North Texas region have branded the Dallas/Fort Worth area as an RFID Hub, and not without cause. The Dallas/Fort Worth region, where both Wal-Mart and Target carried out their initial RFID deployments, has become something of a hotbed for RFID activity. Today, the area is home to companies specializing in all facets of RFID, including chip makers, hardware companies, software developers, and consultants offering RFID implementation and integration services, according to the Metroplex Technology Business Council.
Meanwhile, the North England Inward Investment Agency (NEIIA) is out promoting the ready availability of RFID expertise in North London—an area that includes Manchester, Newcastle, Liverpool, Leeds and Sheffield. The region is home to the University of Hull's Logistics Institute, whose staff members have vast experience with RFID implementations, says David Allison, NEIIA's chairman. That resource alone, he says, makes North London the ideal base for RFID-enabled companies looking to penetrate the European market.
Not to be outdone, economic development officials from the Atlanta area are also promoting their region's RFID capabilities. While other parts of the nation are experiencing a shortage of RFID expertise, Atlanta has no such problems, they claim. Atlanta's hometown university, Georgia Tech, produces more RFID engineers than any other school in the country.
Won't you be my neighbor?
Ironically, it wasn't so long ago that communities actively worked to keep distribution centers out. The prevailing opinion was that DCs made bad neighbors, the kind that attracted big trucks that would clog local roads and foul the air. A DC might bring a few jobs to the area, but not enough to outweigh the inconveniences. "There was a time eight to 10 years ago that most ... regions ... did not want distribution because it took up a lot of land, and communities didn't feel like they got enough jobs to compensate for the lost land," says Gil Mayfield, vice president of distribution center services for real estate developer Carter and Burgess.
The tide of public opinion has turned, says Mayfield. Nowadays, instead of pulling up the welcome mats, many regions are actively courting DCs. No one brings up air quality issues anymore, he says. People have come to realize that DCs, which are typically situated near interstate highways, usually have little impact on local traffic. And for communities desperately seeking to replace lost manufacturing jobs, they represent new hope.
Take Midlink Business Park, for example. Located in Kalamazoo, Mich., this multi-tenant business park occupies a sprawling site that was once home to a General Motors stamping plant. In its heyday, the plant employed 4,500 workers. But in 1999, GM shuttered the facility.
The property was quickly snapped up by a real estate investment firm that recognized its potential as a distribution hub. What attracted the investor's attention were the site's existing rail lines and its strategic location. Kalamazoo is centrally located halfway between Chicago and Detroit, which makes it a more viable logistics hub than Chicago or St. Louis, according to Midland executives.
Before it opened the business park last year, the investment firm completely redeveloped and re-branded the property as a distribution complex. "Generations of families had worked here, so a lot of people had bad feelings about GM leaving," says David Smith, Midlink's president. "It became important to us to emphasize that this is not a GM facility anymore—it's a new day, with a new world business model—distribution." Today, four companies are using the site for distribution, and Midlink hopes to add more.
Let's make a deal
If Midlink's challenge has been to erase the site's associations with the old GM plant, Anchorage's struggle will be educating the public. "There are so many misconceptions about Anchorage," says Bob Poe, head of the Anchorage Economic Development Corp. "Geography teachers have always presented Alaska as being a little bigger than Hawaii and located in a box [on a map] off Baja California. But that's not the case. A lot of people don't realize you can get to London, Tokyo and New York from Anchorage in about the same amount of time."
In fact, Anchorage is nine hours away (by jet) from 95 percent of the industrialized world, making it an ideal gateway to international locations, says Poe. Air carriers have already discovered this. FedEx and Northwest Airlines have established sorting centers in Anchorage for processing Asia-bound cargo, and other carriers use it as a fueling and maintenance stop. Now the challenge will be to attract other types of distribution business.
To help draw that business, Anchorage is offering attractive incentive packages. And it's by no means alone. Virtually every economic development bureau—from Topeka and Kalamazoo to Alabama's Port of Huntsville and Seguin, Texas—stands ready to offer a variety of enticements if that's what it takes to seal the deal.
Some offer free land. Topeka, for example, gave Target 143 acres of land (valued at $1.6 million) as an inducement to build a 1.4 millionsquare-foot DC in the region.
Others offer hard cash. Officials in Seguin, Texas, a community located 35 miles east of San Antonio along I-10, will give $6,000 to new or expanding companies for each permanent job created. "Seguin officials take a direct cash-on-the-barrelhead approach to economic development," says Ramón Lozano, executive director of the Seguin Economic Development Corp. "If you can offer grants up front for hard costs, it makes it a lot easier to market your community."
Location, location, location
Though economic development agencies like to think otherwise, the reality is that companies rarely choose a specific region based on incentives. "We generally see incentives as being third or fourth on the [priority] list," says Mayfield. "First, the transportation, labor, and construction cost aspects have to be right."
It's more common for incentives to come into play after a company has settled on a region and is deciding among two or three finalists within that region. That was the case when recreation equipment retailer REI began searching for a site where it could build a new DC that would serve the East Coast. After looking at 80 sites in an area that stretched roughly from Tennessee to New Jersey, REI narrowed its search to 20 sites within a 200mile radius of Bedford, Pa.
At that point, the bidding wars began. "Within that Mid-Atlantic region, there was certainly some stiff competition," remarks Dave Presley, REI's vice president of distribution and logistics.
Among the bidders was Bedford County Business Park, which eventually emerged the winner. Bedford County offered REI both tax abatements and training allocations, though the retailer is quick to point out that other factors also entered into its decision. For example, Bedford County had already cleared the land, completed the environmental studies and taken care of infrastructure improvements like water support systems for the 39-acre parcel, which saved REI time and money.
And perhaps more to the point, the Bedford County Business Park lies in close proximity to the general transit corridor that REI had determined was best for its distribution needs. As appealing as the give-aways may be, says Presley, ultimately it's location that matters. "I can't stress enough the importance of considering your current customer and vendor base, and your plans for inbound logistics," he says. "All of that has to come together to define the region where your DC needs to be."