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Supply chains now have global reach, and product flow often is measured in weeks rather than days. The contingencies of logistics and DC networks have changed dramatically.
In many ways, product transportation has a lot in common with summer. Both are hot topics. Both can make people sweat. And both typically involve some time on the water.
This was not always the case when U.S. supply chains were predominantly domestic and product flow was measured in days. But now that so many U.S. companies have moved manufacturing overseas, the supply chain climate has changed dramatically and will continue to evolve.
In light of that, here’s an “A to C” forecast about the three phenomena most likely to affect your company’s DC network efficiency in the year ahead.
A is for Asia
The manufacturing shift from the United States to Asia has extended the length of the average U.S. supply chain by thousands of miles and several weeks. It also has significantly increased supply chain volatility, because international shipments typically involve more transportation modes, carriers, paperwork and—consequently—a greater opportunity for contingency.
What this means for your North American DC network is simple: You’ll get the best value out of locations that enable you to minimize variability and regain control of your transportation timeline once product has reached the United States. For example, you may want to have at least one deconsolidation center within your warehousing network—or use one operated by a 3PL—so you can take advantage of time-saving techniques like DC bypass or postponement.
B is for Bottom Line
Relocating manufacturing to lower-cost labor markets such as China and India has resulted in significant production savings for many companies. However, it also has created higher overall supply chain costs in the form of longer transits, more inventory, and the need for higher-level supply chain talent and systems. Compounding this expense is the rising price of fuel.
In light of these developments, it’s more important than ever to make transportation economy a top—if not the top—DC site selection consideration.
This doesn’t mean ignoring potentially outstanding real estate deals; after all, many of the tax breaks and other financial incentives being offered to possible distribution centers these days are significant. But it does mean being leery of locations that are ideally priced yet too remotely located for your company’s particular needs, because transportation costs typically outweigh real estate costs several times over.
C is for Carbon Footprint
There are many names for the current emphasis on sustainability; from carbon credits, to green building, or simply “going green.” But all of them stem from the growing critical concern that businesses are leaving more carbon footprints than they should.
- Expect the “go green” pressure on your company’s supply chain to get more intense in the months ahead. Choose your distribution centers accordingly.
- Look closely at whether any potential facility has solar energy panels, skylights and newer fluorescent lighting; all enable companies to consume less electricity.
- Give extra points if roofing materials and parking lots are made from lighter-colored asphalt, because this reduces what some experts call a “heat island effect.”
- Consider how much landscaping currently requires watering, since many areas of the United States are now struggling with drought.
- And, of course, make sure the location affords the least amount of transportation effort for the highest yield of efficiency.
In that same environmental spirit, this article offers you a chance to visit several potential logistics locales without burning a single gallon of gas. It contains detailed information from many cities and counties telling you how and why their venues could be the solution you need when your supply chain challenges heat up.
Laurens County, SC is a Rapidly Growing Distribution Hub
Laurens County is located between the metropolitan areas of Greenville-Spartanburg and Columbia, midway between Atlanta, GA and Charlotte, NC. The region provides an excellent location to serve the entire East Coast. The county is dissected by two Interstates (I-385 and I-26), making it easily accessible to I-85 and the Port of Charleston.
Current unemployment in the county is 6.3%, which is above the state average of 5.7%. Distribution accounts for 18.5% of the employment in Laurens County. The county is home to nine distribution companies, including the largest, Wal-Mart.
A 95,000-square-foot distribution facility currently is available in Hunter Industrial Park in Laurens. The building formerly occupied by Sofa Express has a 44 ft. ceiling height and more than 20 dock doors, and is located on 18.5 acres. The county offers four industrial parks; Owings Industrial Park, Hunter Industrial Park and Clinton Park Corporate Center III are all Certified Sites (shovel ready) by the South Carolina Department of Commerce. Additionally, the county offers numerous stand-alone sites up to 1,000 acres, many of which have rail service.
The county will reduce the assessment ratio by more than 40% for a period of 20 years with a Fee-In-Lieu of Tax for companies investing at least $2.5 million; it also has the ability to offer a 10-year Special Source Revenue Credit that further reduces taxes.
The state offers a potential discretionary incentive that rebates a portion of new employees withholding taxes, which can be use to address the specific needs of individual companies. The state also offers a statutory incentive to both new and existing companies that create new jobs in the state. ReadySC, a state program, will train employees through the Technical College System at no cost to the company.
For more information, visit us at www.laurenscounty.org.
Johnson County, TN, a Center of Logistics Activity
Although Johnson City, TN is well known for its highly developed educational and medical economy, with the East Tennessee State University College of Medicine, a new College of Pharmacy, and several major hospitals, manufacturers and distributors key elements of the local economic base. More than 160 manufacturing firms are located in Johnson City and Washington County, TN.
The key to distribution is location. Johnson City’s central location in the eastern United States has created a hot market for corporate relocations, business expansions, and new business start-ups.
The region’s vastly improved highway system is vitally important to the development of the wholesale/distribution industry. Four-lane highways now link Johnson City to Elizabethton, Greeneville, Bristol, Kingsport, and other cities in the surrounding area. Interstates 81 and 26 give access to distant locations. Two major railroads—CSX and Norfolk/Southern—serve Johnson City.
A foreign trade zone in Johnson City and Washington County helps businesses with their international efforts, allowing manufacturers to have goods inspected, repaired, relabeled, assembled, displayed or stored without clearing customs or paying duties. Tri-Cities Airport also is a United States Port of Entry.
Manufacturers in Tennessee are allowed an investment tax credit of 1% on the cost of industrial machinery. Distributors in Tennessee are exempt from property taxes on inventories. Businesses that invest at least $500,000 and create a minimum of 25 new jobs qualify for a Jobs Tax Credit of $4,500 against the franchise tax for each new job created.
Johnson City’s cost of living is among the lowest of any southeastern city. Forbes Magazine rated Johnson City tenth of small MSAs for Best Place for Business and Careers in 2006 and 2007. USA Today rated Johnson City as the fifth Best Place to Live overall.
For more information on the business climate and overall relocation possibilities in Johnson City and Washington County, TN, visit the Web site at www.jcedb.org.
Richland County, OH, is “In The Middle Of It All”
Richland County, OH, has an apt slogan for a logistics locale: “In the Middle of It All.”
If you subscribe to the theory that logistics begins with location, then it would be difficult to argue that Richland County, is not in the middle of it all. Mansfield, the county seat and largest city with about 50,000 residents, is almost equidistant between two of Ohio’s largest cities, Cleveland and Columbus.
Logistics is a time-sensitive arena and highway infrastructure plays a huge role in determining just how successful an area will be in attracting logistics-related businesses. The Mansfield MSA, which includes all of Richland County, recently was recognized by a national group as having the fourth best road infrastructure in the country, mainly due to improvements to Interstate 71 and US Rte. 30 which have significantly shortened over-the-road travel time in all directions.
Richland County possesses a network of industrial parks which serve as home to a large array of diverse businesses. Logistics assets that are leveraged include rail service from Norfolk Southern, CSX and Ashland Railway, a short line with 55 miles of track in Richland and contiguous counties. Much of the rail service is accessible to several of the existing and developing industrial/business parks.
Perhaps the most unique asset in to Richland’s logistics and manufacturing environment is Mansfield Lahm Regional Airport. With two runways of 7000 and 9000 feet and an FAA tower, this aviation jewel can be the dealmaker for a company looking to utilize general aviation assets to enhance its operations.
A well-trained workforce is available in Richland County, which has put together an attraction partnership with the workforce training community including North Central State College, the Mansfield Campus of The Ohio State University, and others to streamline the response time to inquiries regarding available land sites or existing buildings.
Riverside County, CA: Intelligent Choice
When British retailing giant Tesco PLC decided to enter the American market, it came as no surprise to savvy site selectors that it chose Riverside County, CA as the hub for its distribution network and the site for several of its Fresh & Easy Neighborhood Markets.
Two years ago, Tesco Stores West, Inc., a wholly owned subsidiary of Tesco PLC, began building an 820,400-square-foot distribution facility on 88.4 acres at Meridian Business Park in Riverside County.
With low vacancy rates for industrial property in coastal communities and international trade activity in Southern California expected to grow nearly 14% this year, Riverside County is expected to remain at the center of robust commercial real estate activity for the next couple of years.
“With a global identity inexorably linked to the distribution of goods, the Inland Southern California industrial market still enjoys a rampant building cycle, whether it’s Fortune 500 companies establishing custom-tailored warehouses in the area, or developers—vying for market share—building massive business parks on a speculative basis,” according to a second-quarter 2007 report by Grubb & Ellis. “As a result, Inland Southern California topped all national markets by a long shot with 24.2 million square feet in the pipeline; about twice as much as runners-up Dallas-Fort Worth and Chicago.”
As such, the region is the first choice for companies seeking the ideal location. DHL, a major freight forwarder, is located in Riverside County at March Air Reserve Base. Ross Dress for Less regional distribution center has grown to more than 2.2 million square feet, and Lowe’s, Walgreens, Pepsi, and Big Five all have facilities along the I-215 corridor.
Luxembourg: Putting Europe at Your Fingertips
Luxembourg, located at the crossroads of Europe’s main consumer markets, provides U.S. companies with many strategic advantages for conducting successful business in Europe. The country has an open, export-driven economy based on sound fundamentals that allow the government to pursue a growth-oriented and business-friendly tax policy. The availability of a highly skilled, multilingual workforce, easy access to decision makers, and efficient communication and transportation infrastructures reinforces Luxembourg’s position as a competitive European hub for the export of goods and services.
Luxembourg is fully integrated into the European Union (EU) common market, yet offers commercial neutrality. It is the ideal gateway to the European market and its 500 million consumers. As much as 79% of the EU’s GDP lies within a 500-mile radius—a day’s truck ride.
During the past 10 years, Luxembourg has continuously improved its ability to capitalize on these opportunities by establishing itself as the European leader for contract, air freight-based, and value-added logistics.
Luxembourg is a location where companies can provide value-added services, including pre-positioning, assembly, market specific packaging, kitting, quality control and certification, documentation management, labeling, and invoicing. Cargolux, China Airlines, DHL, Kuehne & Nagel, Nippon Express, Panalpina, and Schenker have chosen Luxembourg as an operating base for value-added logistic activities.
The Ministry of Economy and Trade has developed and owns logistics parks in the immediate vicinity of Luxembourg Airport (Eurohub Centre) and major railways and highway corridors (Eurohub South). Value-added activities include third-party logistics (warehousing, packaging, processing and shipping operations), fourth-party logistics (organization of production and distribution flows, supply chain management, invoicing services), and reverse logistics (handling of overstocks, recovery, recycling and reselling of non-sold products).
Troy, OH, an Automotive Hub
The automotive sector in Troy, OH, continues to grow. Troy has become the East Coast consolidation center for Honda’s parts distribution. Honda’s expansion created nearly one million square feet of warehousing, repackaging and procurement operations.
“[Our] success has been driven by the very unique public-private initiative that combines the efforts of the Troy Development Council (TDC) with those of the city of Troy,” notes Charles Cochran, TDC president.
During the past four years, Troy has added nearly 2 million square feet of manufacturing space. New companies in Troy include Precision Aero, Clopay, Komyo, F-Tech Research & Development, U.S. Kushin, Prex and Novacel. Companies with recent expansions include Goodrich Aerospace, American Honda, Faurecia, F&P America, Hobart Brothers and Freudenburg-NOK.
To fill its new jobs, the TDC’s workforce development committee partnered with area educational leaders to create an advanced manufacturing training program specifically designed to support immediate needs of the manufacturing sector. Identified as “Skill-Trac,” the program already has more than 120 students enrolled in courses at Edison Community College, Sinclair Community College, and Wright State University.