Attracting Hi-Tech DCs to Your Community

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As consumers continue to drive the supply chain, the role of technology in providing better collaboration between the manufacturer and the retail outlet has increased. To stay competitive, public entities—cities, counties, economic development districts—must be able to accommodate the needs of high-tech distribution centers.

Economic development commissions and other public entities seeking to attract new, technology-driven distribution centers need to do their homework.

Modern, high-end distribution centers are very attractive to most communities, as they offer employment to a large labor force. For example, a distribution center sized at 500,000 square feet to one million square feet—even one designed to take advantage of labor-saving technology—can account for between 500 and 1,000 jobs.

And these are not low-paying jobs; most would be classified as middle-range jobs. Depending upon the geographical region, they would likely pay in the $10-per-hour range.

As new distribution centers make use of more advanced technologies, the demand for increasingly skilled employees jumps. Because skilled workers earn higher wages, these types of distribution centers become even more attractive to a community.

To attract a particular distribution center, a community should have a developed plan that enumerates the available incentives—a plan that addresses the needs of that particular industry. Again, "do your homework" is applicable advice.

A community can improve its chances of attracting a sought-after enterprise by offering very specific incentives—the type that would appeal to a technology-driven distribution center.

Determining Factors

When determining where to locate a technology-driven DC, companies evaluate multiple factors. Beyond the specific incentives that would make a community or public entity attractive to such distribution centers, a community must be aware of and address the following basic attractions or incentives:

A reliable energy source. As distribution centers become more technologically driven, their managers become critically concerned with the energy source: electricity. The availability of a reliable source of electricity, at a competitive rate, is a critical element in determining the location of a modern, technology-driven DC.

Access to continuing education. One crucial incentive for a community or local public entity to be a serious contender is the educational capability of the local community college. The college's willingness to work with the distribution center management in developing special work-related training courses also plays a large role.

Support from local colleges. It is vitally important to have a high-ranking member of the community college—ideally the president or chief executive—as a member of the community economic commission. This approach offers the obvious benefit of having the college's chief decision-maker meet face to face with the prospective management of the distribution center.

In addition, it adds the psychological punch of demonstrating just how serious the community is in attracting and supporting the operational needs of a high-tech distribution center.

A critical segment of any proposal is a definite and enthusiastic statement from the college in support of the training needs of the distribution center. In some cases, additional support on a higher educational level, such as the local university, could be another plus in making a given area attractive to a technology-driven distribution center.

Access to transportation systems. The transportation priorities considered when determining a location for a distribution center can differ greatly. Most companies agree that the location offered must have direct and easy access to interstate highway systems. Most also do not want to intersect a school crossing to get to a highway or interstate system.

For some companies, proximity to a major airport—one that offers multiple routes of domestic travel—is critical. For others, the need for easy access to international travel is a requirement. The same situation pertains to the closeness and availability of railroad facilities.

Established enterprise zones. Another attractive incentive for a potential distribution center location is the availability of already established enterprise zones. These zones are designed to offer attractive incentives such as free land, a reduction in permit fees, tax abatements, and other business-friendly perks. The site the local community offers for consideration should range in size from 50 acres to 250 acres.

Action Plan

A public entity looking to attract the modern, technology-driven distribution center must have clearly defined goals. The entity should decide what company it wants to attract, then study the needs of that particular company, and its industry, in detail.

Other actions a community should take include: contacting expanding, progressive industries—such as major retailers—with growing distribution needs; learning specifically what interests these companies/industries; and attending trade shows to talk to decision-makers.

To maintain a competitive stance in attracting modern, high-tech facilities, cities, counties, and economic development districts must be fully aware of the overall needs of a distribution center, as well as its leadership and future workforce.

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