Nebraska: America’s Emerging Logistics Center
Strategically positioned in the center of the country, with a business-friendly climate and well-educated workforce, Nebraska offers an ideal location for transportation, logistics, distribution, and warehousing companies. The state has become a manufacturing growth center and an emerging distribution hub.
Putting Down Steaks in Omaha
Wal-Mart, Farmland Foods, Oriental Trading Company, Tractor Supply Company, Iams, and Omaha Steaks. What do these companies have in common? In the last few years, they each opened or expanded distribution center operations in Nebraska. In doing so, they took advantage of all the state has to offer as America’s newest emerging logistics hub.
“Nebraska has a renewed focus as a state,” says Larry Johnson, president of the Nebraska Trucking Association. “Not only do we have a great quality of life and lower labor, land, and electricity costs for attracting manufacturing and other industries, we also have the advantage of being at the geographic center of the United States.
“This makes Nebraska ideal as a location for distribution, warehousing, and logistics projects,” he says. “As a result, our area is coalescing as a logistics hub, and word is starting to spread.”
In addition to being geographically central, more than 50 million people live within a 500-mile radius of Nebraska. “Our location allows companies here to serve all four corners of the country in a relatively short time frame,” says Richard Baier, director, Nebraska Department of Economic Development.
Nebraska also is well-situated to serve international markets. The Union Pacific’s main railroad line in central Nebraska, for example, is the busiest freight corridor in the world; many of the trains carry containerized and bulk cargo to and from West Coast ports.
The state currently has operating Foreign Trade Zones (FTZs)—which reduce or eliminate duties and excise taxes by allowing domestic activity involving foreign items to take place as if it were outside of U.S. Customs territory—in Omaha and Lincoln.
Nebraska’s attractive business climate, tax incentives, labor productivity, and effective job training programs have all combined to fuel unprecedented growth in the state’s manufacturing sector.
“Our real estate is plentiful and is half the cost of sites in more urbanized areas,” Baier says. “We also offer high employee productivity and low labor costs. In Nebraska, our overall cost of doing business is significantly lower than in other states.”
When companies look to site a new distribution center or logistics facility, they consider a long list of factors—everything from transportation infrastructure to quality of life. Nebraska has much to offer in these areas, as well as labor resources, incentives and development assistance, and education.
The Infrastructure Advantage
Any discussion of Nebraska as a potential distribution center site starts with transportation. The state offers a unique blend of infrastructure capable of supporting the needs of distribution operations for years to come.
Highway. Nebraska is criss-crossed by a highway system that includes 22,156 miles of hard-surfaced roads—482 miles of which is Interstate 80, the most traveled east-west transcontinental route of America’s interstate highway system.
On the north-south axis, Nebraska’s highways include I-29, which passes along the state’s eastern border in Iowa, and I-25, farther west.
More than 8,000 licensed motor carrier companies operate in the state, with approximately 815,000 trucks, according to Johnson.
Largely because of Nebraska’s interstate connections, one of the biggest trucking companies in the country, Werner Enterprises, is headquartered in Omaha. Werner, with close to $2 billion in annual revenues, is a truckload motor carrier of general commodities in both interstate and intrastate commerce. It operates throughout the 48 contiguous states and portions of Canada, and provides through-trailer service into and out of Mexico.
Werner’s fleet consists of about 9,000 tractors, nearly 23,000 trailers, and more than 13,000 employees and independent contractors, about 2,000 of whom reside in Omaha. The carrier, which is celebrating its 50th anniversary this year, offers round-the-clock service, seven days a week.
“We have aggressively formed alliances on the intermodal side of our business to provide the types of capacity and transit solutions our shippers require,” says Jim Schelble, executive vice president sales and marketing at Werner. “We have very strong rail and highway infrastructure, and a balanced capacity situation—it’s nearly as desirable to come into Nebraska as it is to leave.
“With driver shortages a fact of life in the truckload sector, capacity issues can be a problem for some companies,” Schelble continues. “Werner works closely with its customers to develop solutions that deliver the service reliability and geographic coverage they require.
“Customers are driving our growth in several areas: brokerage, intermodal, international, and engineered solutions such as dedicated contract carriage,” he says.
The growth in these areas and other more custom-tailored transportation solutions results, in part, from recent alterations to the federal driver Hours-of-Service regulations.
“The new rules, which went into effect in 2005, have taken away a lot of carrier and driver flexibility with regard to managing work schedules,” notes Schelble. “This, combined with the driver shortage, is causing companies to re-think their distribution network strategies.
“Many shippers, in fact, are moving to a distribution network concept that reduces the number of long-distance, one-way hauls.
“Nebraska is the perfect location for executing this kind of strategy,” he says. “From here, you can reach almost any point in the United States within two days.”
In addition to Werner, more than 100 other Class I and Class II carriers provide regular motor freight service to nearly all Nebraska communities. They provide one-day service to Chicago, Denver, Kansas City, Minneapolis, and St. Louis.
Nebraska is also home to a wide array of regional logistics companies. Nebraska Warehouse, for example, provides regional warehouse capacity as well as regional TL and LTL service through its subsidiary Cannonball Express Transportation Co. LLC. Cannonball operates dry van and flatbed service, as well as refrigerated service handling LTL products to all points south and east of Nebraska.
“We make weekly scheduled deliveries of time-sensitive perishables throughout the service area,” says Bruce Meyers, vice president of Nebraska Warehouse and president of Cannonball Express.
Cannonball also is a licensed transportation broker that can handle all freight management to any point throughout the country.
“Nebraska’s roadways have none of the congestion you find in the larger markets,” Meyers notes. “It’s easier to get in and out. We don’t have traffic issues. The same applies to rail and intermodal transportation; we can get trucks out of a railyard in 45 minutes versus two or three hours in a Chicago yard.”
Air. Commercial airline service is available in nine Nebraska cities, providing direct service to major hubs. Airfreight service is provided to six additional communities. A total of 88 public-use airports are located throughout the state. In addition, UPS operates a regional air hub in Omaha.
Nebraska has two major airports—Eppley Airport located in Omaha, and Lincoln Airport. Eppley reported record passenger volume in 2005, with an 8.4-percent increase over 2004 traffic.
“In 2004,” says Don Smithey, executive director of the Omaha Airport Authority, “we handled about 3.8 million passengers. In 2005, that number rose to 4.2 million. In January 2006, we were up 7 percent over last year. Our growth rate far exceeds the national average of 2.5 percent.
“The fact that three of the country’s top five low-fare carriers—Southwest Airlines, America West/USAir, and Frontier Airlines—serve Eppley contributes to this volume increase,” Smithey says. “We have good competition to many major markets so our fares are low and that drives passenger numbers up.”
Eppley is served by six other major airlines—American, Continental, Delta, Midwest, Northwest, and United—as well as by various regional carriers. The airport has approximately 92 daily departures per day, with non-stops to 19 cities.
Eppley is completing a new 8,500-foot runway capable of handling any size aircraft. This gives the airport three runways in this category, each with precision instrument landing systems that make Eppley an all-weather airport.
“We have the capacity to handle increased traffic and operations,” Smithey says. “We have no congestion issues.
“Omaha has a good economic climate, with dynamic growth in both business expansion and residential housing,” Smithey continues. “In the past two years, Union Pacific moved many of its employees from St. Louis to Omaha. Yellow Transportation built a new campus 10 minutes from Eppley, and the new Qwest sports arena is 10 minutes from the airport. We have a low unemployment rate. All this adds up to a growing aviation sector.”
At Lincoln Airport, air service is stable. Two airlines, Northwest and United, continue to serve Lincoln with 16 flights per day to Denver, Minneappolis, Chicago and Detroit. In February, Allegiant Airlines started low-fare service between Lincoln and Las Vegas.
The Lincoln Airport Authority also operates the Lincoln Air Park West industrial park, created when the former Lincoln Air Force Base closed in the mid 1960s.
The Authority is undertaking a new development within Air Park—the Air Park Rail Center, a completely new, 60-acre “heavy industrial” development.
When complete, the Center will include up to eight 110,000-square-foot precast concrete buildings, according to John Wood, executive director of the Lincoln Airport Authority. Each building will have two 55,000-square-foot connected bays, allowing each structure to easily accommodate one or two tenants in its flexible-use space. The first 110,000-square-foot building is currently under construction and scheduled for completion at the end of 2006.
“Our building plan is flexible,” says Wood. “The Center doesn’t have to end up with, for example, six 110,000-square-foot buildings, especially at the north end where we could easily fit a 300,000- to 400,000-square-foot building with rail access available on two sides.
“The Center is adjacent to a Foreign Trade Zone,” Wood says, “so if a company required an FTZ designation, it could expand or create a subzone off the existing FTZ.”
Lincoln’s FTZ is a 372-acre general purpose zone administered by the Lincoln Partnership for Economic Development. The FTZ enables companies to defer, reduce, or in some cases, eliminate customs duties on products admitted to the zone.
Each building in the Lincoln Air Park Rail Center will be served by its own rail spur, with four rail doors per bay and eight doors per building. Each building will also have 15 truck docks per bay or 30 per building, along with additional trailer storage on site. This makes the Center ideal for warehousing, light manufacturing, and/or assembly facilities.
From its major railyard located in west Lincoln, BNSF Railway will provide service to Center businesses as needed. The Rail Center is strategically situated three miles from an I-80 on-ramp, two miles from U.S. Highway 34, a short drive from the Lincoln Airport terminal building, and only two blocks from runway-accessible concrete ramps.
Lincoln Air Park West also contains several hundred acres of developed land that do not have rail access but on which facilities of almost any size can be constructed with excellent access to I-80.
Rail. Two major railroads serve Nebraska: BNSF Railway and Union Pacific, which is headquartered in Omaha. Union Pacific, with an annual payroll of $3.3 billion, is the largest railroad in North America, covering 23 states across two-thirds of the United States.
Thirteen freight railroads operate more than 3,600 miles of track throughout Nebraska. A reciprocal switching agreement is in effect for all railroads.
Omaha is one of the nation’s major rail centers. The most direct mid-continent route to the West Coast passes through Nebraska with branches that terminate in Portland, Spokane, Seattle, and Los Angeles. No major city in the United States is more than five days away by rail from Nebraska.
Water. With the Missouri River forming Nebraska’s eastern border, the state is a western terminus for barge traffic. Barges have access to both the Gulf of Mexico via the Mississippi River, and the Atlantic Ocean via the Great Lakes and the St. Lawrence Seaway.
Powering Business Needs
For many companies, electric rates are a key determinant in site selection decision-making. Here, Nebraska shines.
Nebraska’s industrial electric rates are 33 percent less than the U.S. average and are among the lowest of the 48 contiguous states, according to Donis Petersan, an economist with the Nebraska Public Power District (NPPD).
“Nebraska’s position has improved over the last year compared to utilities around the country that depend more on natural gas,” Petersan explains. “Our loads are more dependent on less-expensive coal and nuclear energy, which accounts for our competitive position. The data for 2005 reflects this difference, and we think 2006 will show an even greater spread.”
Nebraska is the only state in the nation with electric service provided entirely by public power. The state’s two largest electric utilities, NPPD and Omaha Public Power District (OPPD), have under their control an efficient and dependable mix of generating systems to supply current and projected needs. The mix includes coal, nuclear, hydro, gas, oil, and diesel sources.
NPPD’s chartered territory includes 91 of the state’s 93 counties, serving some 800,000 people. OPPD serves more than 310,000 customers in 13 southeast Nebraska counties. For the past five years, OPPD’s reliability measurement from the Average Service Availability Index has averaged 99.98 percent. Such reliability is critical to energy-intensive enterprises such as food processors/ handlers and data centers.
“Our customer service ranks among the best in the nation,” says Roger Christianson, economic development manager, OPPD. “Last year we picked up our fifth JD Power award for service, earning the highest score in the country.”
Nebraska utilities operate 12 hydroelectric plants and receive a power allotment from Western Area Power Administration hydroelectric facilities on the Missouri River. They operate with a reserve capacity that protects users against voltage reductions and brownouts.
Furthermore, they are members of the Mid Continent Area Power Pool, which interconnects eight upper Midwestern states and a Canadian province with an extensive network of high-voltage transmission facilities.
A gas-producing state, Nebraska is close and well connected by pipeline to the major gas fields of the central and southern plains. The state’s average cost of industrial gas is less than both the regional and national averages.
In addition to providing power, Nebraska’s utilities serve as a valuable resource for companies considering locating a distribution facility in the state. NPPD, for instance, has an economic development team available to assist companies looking to expand or locate in Nebraska.
When working with prospective business customers, NPPD is “first interested in the company’s needs or project criteria regarding location, space, transportation, labor, and energy,” explains Dennis Hall, manager of economic development for the utility. “Then we help them by gathering information about sites and proposals from communities that might meet their needs.
“The company’s site selection team reviews these, tells us which ones they want to see, and we facilitate those visits. Every company needs an electric supplier so we end up talking to all of them.”
NPPD maintains information on some 500 communities at www.sites.nppd.com. “We have a searchable database of industrial sites or buildings throughout our area,” Petersan explains. “A company can enter parameters and the search engine will give them a list of sites or buildings that meet their requirements.
“Companies also can download from our site in-depth industrial fact books about 100 communities,” Petersan adds. “This information is useful for companies comparing potential sites.”
“We work closely with the state’s Department of Economic Development and other related agencies to help companies identify possible locations in the state,” Hall notes.
Incentives and Development Assistance Programs
In 2005 the Nebraska legislature enacted the Nebraska Advantage package, which became law Jan. 1, 2006. The Nebraska Advantage package was designed to replace and improve Nebraska’s existing tax incentive programs and to create a business climate that makes Nebraska the preferred location for business start-ups and expansions. It rewards businesses that invest in the state and hire Nebraskans by reducing or eliminating corporate income and sales taxes.
“The consensus is that the Nebraska Advantage package makes the state stand out from the pack,” says Christianson.
The Nebraska Advantage package provides transportation and logistics companies that invest at least $10 million and create 100 new jobs in Nebraska with a new 10-year personal property tax exemption on machinery and equipment. The exemption applies to transportation, materials handling, and warehousing equipment. In addition, it provides a sales tax refund, jobs credit, and investment credits for qualifying businesses.
The Nebraska Advantage package replaces and significantly enhances Nebraska’s existing performance-based tax incentive programs. The existing tax incentives, first passed by the Nebraska legislature in 1987, have had a profound effect on stimulating business investment, expansion, and job creation. Nebraska’s existing tax incentive programs have contributed to substantial investment and job creation, including a total investment of $20.4 billion and 109,331 jobs.
Moreover, the incentive programs have contributed to expansion of the food products industry. From 1988 through 2004, investment in food manufacturing totaled $2.6 billion with food industry jobs totaling 18,051.
Nebraska Advantage provides a flexible and discretionary job training program that will funnel $15 million into customized job training assistance designated for 2006 and 2007. Companies can design their own training or a statewide training team can assist with needs assessments, plans, curriculum development, and instruction.
“Study after study shows that we should invest in transportation and logistics, and the Nebraska Advantage leverages a significant opportunity to grow Nebraska’s future,” says Baier.
The Nebraska Advantage package benefits businesses with:
- Investment credits
- Wage credits
- Sales tax refunds
- Customized job training
- State and local sales tax exemptions for purchases of manufacturing machinery, equipment, and related services
- Research and development tax credits
- Micro-enterprise tax credits
- Inventory tax exemptions
“The Nebraska Advantage package is significant because we hadn’t made too many changes in our business incentives over the last 15 years,” says Christianson. “This puts a new set of tools to work for us.”
“We’re following a pattern in Nebraska to make all our incentive programs performance-based,” explains Rod Moseman, vice president of economic development for the Greater Omaha Chamber of Commerce.
“That means the value or size of the incentive is directly related to the size or growth—through new jobs, growing payroll, and higher capital investments—of the new or expanding companies. The larger any one of these numbers is, the more benefits flow to that company.
“The new package is targeted specifically to certain types of businesses—including warehousing and distribution,” he adds.
Nebraska Advantage consists of five benefit tiers:
Tier 1— $1 million investment/10 new jobs: Refund of one half of the sales tax paid for qualified capital purchases at the project, the full sliding scale wage credit of 3, 4, 5, or 6 percent depending on wage level, and a 3-percent investment tax credit.
Tier 2— $3 million investment/30 new jobs: Sales tax refunds for capital purchases at the project, the sliding scale wage credit, and a 10-percent investment credit.
Tier 3— jobs only: Requires creation of 30 new jobs. Companies receive the sliding scale wage credit. No capital investment is required.
Tier 4— $10 million investment/100 new jobs: In addition to the sales tax refund, jobs credit, and investment credit, qualifying businesses in this tier receive a personal property tax exemption for certain equipment investments, including equipment used in a distribution facility, for up to 10 years.
Tier 5— investment only/no jobs: Requires $30 million in new investment. Companies receive a refund of sales taxes paid on eligible property for the project. Companies must maintain employment.
As of 2004, Nebraska had an estimated total population of 1,747,214, according to the United States Census Bureau, with most people (55.1 percent) concentrated around Omaha and Lincoln. Nebraska’s labor force has a strong work ethic and high level of technical proficiency.
“Our trucks deliver all over the country and the work ethic of the people in Nebraska stands out,” says Meyers of Cannonball Express. “Nebraskans tend to be far more attentive to customers. That’s just our nature.”
According to the Nebraska Department of Economic Development:
- Productivity in Nebraska is 18 percent higher than the national average.
- Wages average 14 percent below the national average.
- The population is younger and more educated than the nation as a whole.
Contributing to Nebraska’s high labor productivity are low absenteeism and employee turnover rates. Furthermore, Nebraska employers pay among the lowest unemployment insurance and workers’ compensation rates in the nation.
Higher Education Resources
Education has a lot to do with the quality of Nebraska’s workforce. In 2004, 91.3 percent of the state’s population 25 years of age and older were high school graduates, compared to 85.2 percent nationally.
In addition, the four-year graduation rate of 84.2 percent ranks Nebraska among the highest in the nation.
Finally, Nebraska students consistently score above the U.S. average on both standardized achievement tests and college entrance exams. In 2005 Nebraska students averaged 21.8 on the ACT college entrance test, compared to 20.9 nationally.
Nebraska offers flexible, state-of-the-art educational resources. The University of Nebraska, state colleges, and the community college network provide resources to help manufacturers maintain an educated and trained workforce.
The University of Nebraska System, with campuses in Lincoln, Omaha, and Kearney, has the largest facilities among the state’s 23 colleges and universities and offers bachelor’s and advanced degrees in most professional fields. It is a major center for both basic and applied research and has a combined student enrollment of more than 45,000.
The University of Nebraska Lincoln offers a specialist in logistics certification program. “We also launched a new Center of Engineering and Logistics Distribution Research, funded in part by a grant from the National Science Foundation (NSF),” reports Erick Jones, professor and head of the Center. “We are one of three such centers funded by the NSF.”
Jones and his team have developed a distribution network analysis model that helps companies determine where to site distribution centers in the region.
“The model takes into account transportation costs and routes, facility leases, access to labor, and other variables,” he explains. “We can enter a company’s customer base and service parameters into the model and give them a fair evaluation of how Nebraska ranks compared to other states. The model even considers Nebraska’s incentive programs.
“Our initial findings show that while Nebraska is a very good place to locate distribution facilities, the answer is not Nebraska every time,” Jones continues. “Traditionally, cities such as Atlanta and Memphis have been central locations, but cost and congestion are shifting companies’ attention farther out, which makes Nebraska more attractive.”
At other schools around the state, logistics-related course programs are springing up.
Bellevue University, for instance, offers an accelerated 52-week bachelor’s degree completion program in intermodal logistics management. The program is aimed at non-traditional students who have some college credits already, but need additional hours to complete their degree, explains Ed Haynes, associate professor.
“We looked at the kind of careers and education we wanted to offer,” says Haynes. “We saw that our community colleges were teaching vocational skills in the transportation field—such as diesel engine maintenance, for example. Eventually, though, a lot of these workers move up into jobs where they need management or supervisory skills. So a college degree in this field helps enhance their careers.”
In April, Bellevue University will launch an MBA program with a concentration in supply chain management. “The logistics field will need a talent pool for the future,” Haynes notes, “so this strategy makes sense.”
At the community college level, six colleges on 13 campuses offer specialized logistics and transportation job training programs. These colleges work closely with the Department of Economic Development to establish customized training programs for companies around the state.
One of the state’s most exciting workforce training efforts is called FutureForce Nebraska.
“The goal of FutureForce Nebraska is to improve the economy and quality of life in Nebraska by educating students, their parents, and adults in transition about career opportunities here,” explains Bill Hitesman, president, Hasting Campus, Central Community College.
“We joined forces with other organizations—Werner Enterprises, Union Pacific, the Nebraska Department of Economic Development, the Nebraska Department of Education, the Nebraska Trucking Association, Mid-Plains Community College, and our public school system—to support this effort.
“There is potential for substantial growth in transportation and distribution in Nebraska,” Hitesman says. “The industry offers good salaries, and will need a tremendous number of people over the next six to 10 years.”
Central Community College, in partnership with another Nebraska community college, received a $1.9-million U.S. Department of Labor training grant to advance its truck driver, diesel technician, and rail programs.
“We see FutureForce Nebraska as part of a solution to the driver shortage,” notes Johnson of the Nebraska Trucking Association. “In Nebraska, young adults can get a commercial driver’s license when they turn 18, but they can’t drive across the state line.
“Insurance rates are also high for young new drivers. The combination of these two factors dissuades many young people from considering a career as a truck driver.
“We’re trying to help young adults choose transportation as a career,” Johnson says. “This means introducing them to the field in a meaningful way when they’re too young to become a professional driver—for example, training them to work in a distribution center or truck repair shop and letting them earn associate degree credits for this training while they are still in high school.
“We’re also working with the warehousing industry to give students credit for on-the-job training, so by the time they graduate from high school, they have multiple career choices within transportation available to them.
“FutureForce’s intent is to create a pipeline of trained professionals to meet the growing needs of the transportation and logistics industry in Nebraska,” he says.
Quality of Life
For a potential newcomer to Nebraska, the state’s livability is also a consideration. Nebraska ranks high in quality-of-life studies—and below average in cost of living. The state’s landscape is clean and spacious, both in urban and rural areas.
Residents blend Midwestern values with Western enthusiasm for growth and change. This helps create a high degree of citizen participation in both neighborhood and community-wide activities.
The cost of living in Nebraska is 0.8 percent less than the U.S. average. Of particular interest is the cost of housing, which, in Nebraska, averages 7.7 percent less than for the United States as a whole.
Zeroing In—Greater Omaha
Omaha is the largest city in Nebraska, with a population of slightly more than 402,000. The population of the Omaha metropolitan statistical area (MSA) is about 807,000 with more than 1.2 million within a 60-minute drive.
“In the last year,” Moseman reports, “we’ve seen a net increase of about 7,500 jobs in the metro area. The Bureau of Labor Statistics indicates more than 49,000 workers in Nebraska are employed in transportation and warehousing. In the Omaha MSA, some 5.7 percent of the workforce is employed in these activities.”
One factor companies are most concerned about in making site selection decisions is workforce education.
“In this area, Omaha stands out,” Moseman says. Nearly 88 percent of Omaha’s population has completed high school or above, compared to 80.5 for the national average. Almost 27 percent have attained bachelor’s degree or higher status in Omaha, versus 24.5 percent for the national average.
“Every year, we interview 300 executives in Omaha to understand their needs and challenges,” says Moseman. “We ask what they like most about doing business in Omaha. The number-one answer is the workforce—its loyalty, reliability, and productivity.
“What you get for your dollar of wages is where Nebraska excels. Based on Department of Labor statistics, our value-added-per-dollar-of-production payroll is 10 percent higher than the national average. This means you get 10 percent more for your buck in wages.
“We have seen capital investment and growth across all areas of our community,” Moseman adds. “Omaha is on a roll. Our downtown is booming. We continue to see strong new projects announced, and we’ve watched a new skyline emerge in the last seven years, representing about $2 billion in new investment.”
Finally, Omaha is developing a Free Trade Zone that today offers more than 250,000 square feet of commercial warehouse space, 17 acres of land, and two-sided rail access.
“Target Logistic Services, an Omaha-based global transportation services provider, will operate the FTZ,” says Moseman. “As a result of developing the FTZ, companies in San Diego and Seattle are considering locating distribution operations here. When you consider that wages can be 30 percent to 40 percent higher in those cities, the savings potential is huge.”
Lincoln, Nebraska’s second-largest city with a population of more than 236,000 people, offers the ambiance of a friendly small town and the amenities, attractions, and entertainment opportunities of a major metropolitan area.
Lincoln is both the state capital and home to the University of Nebraska’s flagship campus. As a result, it provides a greater range of offerings than might be expected in a community its size.
“From an economic development standpoint, Lincoln has a highly educated workforce, and offers a quality of life that is unparalleled in many communities this size,” notes Jason Smith, vice president for economic development, the Lincoln Partnership for Economic Development. “Lincoln is a great place to live and raise a family. People come and stay.”
The Lincoln Partnership for Economic Development is a community-based, public-private collaboration that provides focused direction for Lincoln’s economic development activities.
The partnership includes York, Seward, Gage and Fillmore Counties, as well as Falls City. The Partnership works closely with various economic development organizations in the region—including the surrounding counties—to attract new investment and jobs.
Tractor Supply Company (TSC) is a new resident of the Lincoln area. The $2-billion specialty retailer recently opened a 450,000- square-foot distribution center just outside Lincoln, in Waverly. The company says it “provides for the lifestyle needs of hobby and part-time farmers and ranchers, as well as others who live the rural lifestyle.”
TSC also serves the maintenance needs of tradesmen and small businesses. It operates more than 590 stores in 33 states.
After considering several states and communities, Tractor Supply selected the Lincoln area for its proximity to customer markets, excellent transportation infrastructure, quality of life, and attractive land values. Tractor Supply also tapped into Nebraska’s job training program.
“Our region can meet the needs of a wide range of organizations,” Smith notes. “Between Lincoln and our partners, we offer just about every kind of site or building a company would require, as well as numerous transportation and workforce options. That’s why Tractor Supply and, most recently, MBA Poultry, decided to locate DCs here.”
Zeroing In—The I-80 Corridor
The I-80 Nebraska Coalition was organized in 2003 by local economic developers out of a recognized need to work together as a region. Made up of nine counties spanning 250 miles across central Nebraska, the Coalition represents a region with a population exceeding 230,000. The common thread linking these counties: the transportation lifeline known as Interstate 80.
“We have plenty of available industrial sites in all nine counties, and those sites are supported by the right infrastructure,” says Ron Tillery, president, Economic Development Council of Buffalo County, located in the I-80 Corridor.
Wal-Mart, for example, located two facilities along I-80—a 380,000-square-foot refrigerated DC and a 400,000-square-foot dry goods DC.
“Many of our communities have existing buildings available, and we offer a sufficient labor force to supply larger distribution centers as well as smaller logistics service providers,” Tillery notes.
I-80 Corridor communities have little or no congestion, convenient access to I-80, and lower labor rates in a right-to-work, non-unionized state, as well as low utility costs and land prices. Truck transportation service is plentiful, and either or both the BNSF Railway and Union Pacific railroads serve all nine counties.
Room to Grow
“During the last year, a number of communities in the I-80 Nebraska Coalition have done significant preparatory work to lay the groundwork for accepting larger projects into the region,” Tillery reports.
“They have identified sites and qualified them for immediate development. This means the sites’ environmental assessments and zoning already are in place, so a company can come in and get a project up and running quickly.”
Nebraska expects big results from its efforts to attract distribution and transportation facility investments.
“There is room to grow here,” Tillery says. “Today, our communities better understand the needs of the logistics/distribution sector and are positioning themselves to fulfill those needs. Motivated communities are willing to help companies complete their projects.
“If a central location is important to a transportation or distribution center project, the company ought to consider Nebraska,” he adds.
“When you look back over the last year,” observes Moseman, “and consider what has happened to other areas of the country, we believe we have been fortunate. Nebraska is alive, well, growing, and open for business.”
For more information about Inbound Logistics’ Economic Development Special Sections, contact James Armstrong, Director of Economic Development, at 815-334-9945 or e-mail [email protected].
A number of companies have recently built new or expanded existing distribution centers in Nebraska. Here’s a sampling:
- BCS, a consortium of Brazilian granite companies—U.S. headquarters and distribution center, Omaha
- Buckle Inc., distribution center expansion, Kearney
- Farmland Foods, distribution center, Crete
- Iams Company, distribution center, Aurora
- Omaha Steaks, distribution center, Omaha
- Oriental Trading Company, distribution center, LaVista
- Telesis Technology Company, distribution center, Superior
- Tractor Supply Company, distribution center, Waverly
- Wal-Mart, distribution center, North Platte
- Shopko/Pamida, distribution center, Omaha
- Free flow of freight leads to large cost savings
- Bonded containers on truck and rail move out of ports faster—alternative customs route through Omaha/Lincoln
Lower Cost of Doing Business
- Real estate
- Labor costs
- Cost of living/quality of life
Speed to Market
- One day by truck reaches 26 percent of continental U.S. population and households
- Two days by truck reaches 91 percent of continental U.S. population; 90 percent of continental U.S. households
- Strategically located in mid-continent NAFTA trade corridor
- 68 percent increase in trade since 1995
- Corridor accounts for 33 percent of all NAFTA truck traffic
- Truck traffic along the corridor anticipated to grow by 80 percent before 2025
- Two top-10 motor carriers
- 8,000 licensed motor carriers
- Approximately 815,000 trucks
- Union Pacific headquarters
- World-class logistics companies
- Nebraska Logistics Council
Why Nebraska? Businesses gain a competitive edge from the state’s top-notch transportation infrastructure and low cost of doing business.
- 482-mile stretch of I-80
- North-South highways—22,156 miles of hard-surface roads
- Automatic Vehicle Identification (AVI) System
- Debt-free interstate and highway system
- Ability to grow as traffic volumes increase
- Served by nation’s two largest rail companies
- Air freight capabilities
- Water access
Putting Down Steaks in Omaha
After considering sites in Ohio and Kentucky, Omaha Steaks—which manufactures, markets, and distributes premium steaks, red meats, and other gourmet foods—decided to stay put and expand its distribution facility in Omaha.
The company replaced its current DC with one nearly twice its size—110,000 square feet—located near Interstates 29 and 80 and Nebraska Highway 370.
“The advantage that we have being located in the middle of the United States is that we can deliver a customer order anywhere domestically within three business days,” said Ron Eike, Omaha Steaks operations director, in an interview for the Omaha World Herald.
“If we were located on the East or West Coast, that would extend to five days.”
In 2005, Omaha Steaks shipped about 3.5 million packages from Omaha. This year, it expects shipment volume to increase 5 percent to 7 percent.
Nebraska makes sense as a distribution center, Eike observes, adding, “Why not Nebraska? It’s a good climate for doing business and a cost-effective climate from a distribution standpoint. It’s the good life.”