Logistics industry likely to see growth in space, jobs
December 31, 2007
A couple of years ago, Mike Peters, a first vice president with Denver-based ProLogis, decided to chart the amount of distribution space available in American cities.
The industrial real estate executives’ chart found nearly every city clustered around a single point an average of 50 square feet of distribution space per capita.
But one dot was so far to the right on the chart that it nearly required the use of wider paper Reno, which has 157 square feet of distribution space per capita, a figure that’s more than three times the national average.
That’s a strong commentary on the importance that the logistics and distribution industry plays in northern Nevada.
The industry’s importance is reflected, too, in its employment in the region somewhere in the neighborhood of 20,000 workers involved in wholesale trade, distribution and transportation. That’s nearly 9 percent of the jobs in the Reno-Sparks metropolitan area.
Those numbers space and employment alike appear likely to grow strongly during 2008 even though the flow of trade that encouraged growth of the distribution business in northern Nevada continues to change dramatically.
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The logistics industry grew in northern Nevada from two simple truths:
First, Reno is within 500 miles one day’s journey by truck of 16 percent of the population of the United States, and it’s at the crossroads of a transportation network.
Second, the state doesn’t tax inventories held in warehouses.
The upshot: Manufacturing companies, many of them from the Midwest and East Coast, opened distribution centers in Reno to provide fast service to their customers in California and elsewhere in the West. Merchandise flowed east-to-west, stopping for a few days in Reno.
But as manufacturing rushed offshore in the past decade, much of it to China, the predominant flow of merchandise now is west-to-east, and that may mean a changing role for northern Nevada.
Does it make sense, some logistics experts wonder, that merchandise would come into the United States at Oakland the fourth busiest port in the nation and be trucked through California to Reno warehouses, where it can be distributed back to California?
Or, they wonder, will expansion of the Panama Canal allow a bigger share of Chinese imports to travel directly to East Coast ports?
So far, those are little more than idle musings. Much of the big rush of industrial development under way in the region is designed to serve as distribution centers.
And there appears to be lots of interest in that space.
“We’re seeing lots of activity,” says Ken Pierson, director of business development for the Economic Development Authority of Western Nevada.
Logistics-related proposals, he says, account for 29 percent of the companies that are scouting the Reno-Sparks area for locations these days.
And companies that already are in the region are stepping up employment at their distribution centers. Wal-Mart plans to add 200 workers in coming months. PetSmart will move into large new distribution center at Tahoe Reno Industrial Center in mid-2008 and is looking to hire 250 to 300 workers.
Smaller companies, too, are launching new distribution operations in the Reno-Sparks area or expanding existing operations. Among the companies making recent announcements: Plumbing distributor Viega LLC and electronics distributor BDI-Laguna.
Russ Romine, president of Griffin Transport Services, a major logistics provider in Sparks, says short-term factors in the national economy may ripple into the logistics industry in northern Nevada.
High fuel costs, he says, hit hard at distribution companies that have fleets of trucks running between northern Nevada and the cities of California.
At the same time, Romine says, the effects of those costs might drive some companies in the East and Midwest to give a fresh look to distribution in northern Nevada as a method of regionalizing their distribution.
And he says some distribution decisions even decisions as large as investment in new facilities in northern Nevada may be hanging fire for a while as business executives try to get a better reading on the likelihood of an economic downturn in 2008.