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Published: Sunday, 7/6/2003

Delivery sites on roadway to new blue-collar economy

BY JULIE M. McKINNON
BLADE BUSINESS WRITER
Home Depot merchandise is unloaded at the Monroe County `cross dock' facility, a transfer point that does not include storage. Home Depot merchandise is unloaded at the Monroe County `cross dock' facility, a transfer point that does not include storage.
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Semi-tractor trucks roll in and out of Lowe's Cos. Inc. distribution center north of Findlay as bathroom fixtures, lawn supplies, and thousands of other products are unloaded from some rigs. Other trucks are filled with an array of items for 108 stores.

Inside the automated 1.2 million-plus-square-foot facility, miles of conveyors whisk merchandise to storage areas or delivery trucks. Items are tagged with bar codes identifying store destinations or areas of the distribution center where they will be held.

About 475 of the center's 600 employees perform basic and essential tasks: Inspecting and accepting truckloads of products from vendors, moving items or monitoring their progress to storage areas or trucks, and assembling and loading deliveries for stores.

Those freight-handling jobs, which start at $10 an hour and hit $13 an hour after three years, require a mix of mental and physical skills, said Fred Sampson, general manager of the $75 million center.

“It's not just lifting boxes,” he said. “The group of people that we've assembled here is why we're successful.”

The shift from manufacturing to service jobs is altering local blue-collar work, replacing factory tasks with posts focused on keeping retailers supplied with products. Over the last decade, nearly a half-dozen mass-market retailers have built distribution centers in northwest Ohio and southeast Michigan.

It started in northwest Ohio with Kohl's Department Stores' facility in 1994 in Findlay, in or near which the majority of local centers are located. Lowe's facility in Hancock County's Allen Township opened 11/2 years ago. Home Depot Inc. joined the local list in January, opening a 200-employee “cross dock” facility in Monroe County, Michigan's Frenchtown Township just north of Monroe, where all products are transferred from vendor to store-delivery trucks and removed within 38 hours.

Other companies, including Cardinal Health of Dublin, Ohio, have or plan to open local distribution centers. That firm is to break ground tomorrow for a $15 million, 175,000-square-foot wholesale pharmaceutical distribution center near Findlay in Marion Township that will employ up to 100 people.

Posts in trucking and warehousing will increase more than the average of job growth in both the Toledo area and Ohio as a whole, and manufacturing jobs are expected to decline for both in coming years, state projections show.

In the Toledo area, trucking and warehousing jobs will increase nearly 16 percent to 4,800 between 1998 and 2008, according to estimates from the Ohio Department of Job and Family Services. That places the local area among the leaders in the state.

Wages for freight, stock, and material movers - who make up the bulk of distribution center employees - averaged $10.92 an hour statewide in 2001, state records show. That pay is less than for many manufacturing jobs, especially those in the major automotive factories, where workers make twice that.

Pay is likely to rise along with the skills needed to handle increasingly sophisticated computerized distribution center operations, just as wages rose for factory work, said Edward Schulte, vice president of business development for Toledo's Regional Growth Partnership.

The use of computers to track products and fill orders, along with other automation, has changed warehousing, improving speed and accuracy. It has given rise to the need for what Mr. Sampson of Lowe's termed “super mechanics,” higher-paid workers with millwright and other backgrounds who keep equipment humming.

Manufacturing jobs in the Toledo area will decline more than 1 percent between 1998 to 2008 to 59,660 jobs, according to state projections. Across Ohio, trucking and warehousing jobs are projected to increase 17 percent to 95,700 between 2000 and 2010, during which time manufacturing posts will fall more than 3 percent to fewer than 1.05 million.

Mass-merchandise retailers, such as Lowe's and Best Buy, have more frequently turned to handling their own distribution, which helped fuel the growth of such centers locally, especially along main routes such as I-75.

“We think of Wal-Mart, Lowe's, Home Depot, Kohl's, Target as great retailers,” Mr. Schulte said. “What the people in the industry say is, really, they're great distributors.”

The key is to maximize the number of items on trailers coming into the distribution center from vendors, as well as those going out to stores, Lowe's Mr. Sampson said. The company has nine distribution centers nationwide and has plans for more as it opens new stores, he said.

Warehouse-type jobs, however, are not new for the area.

Local factories often staff warehouses for their products, including Toledo's Libbey Inc. in its hometown and Benton Harbor, Mich.'s Whirlpool Corp. at its dishwasher plant in Findlay. Companies such as Findlay tire wholesaler Hercules Tire & Rubber Co. have consolidated warehouse space locally, and storage has long been offered for rent at contract warehouses.

The sheer size and required investments for distribution centers can be staggering. Lowe's facility, for example, is large enough to cover 26 football fields, including end zones, and it will supply 122 stores by year's end.

Walgreen Co. spent about $133 million to build and equip a 650,000-square-foot warehouse distribution center in Perrysburg Township to supply 600 stores in Ohio, Michigan, and Indiana. Walgreen, which received an incentive package that included a full 10-year tax abatement from Wood County, declined to provide The Blade with information about the operation.

Home Depot's $10 million facility, run by warehousing contractor Exel Inc. of Westerville, Ohio, represents a different approach to distribution.

The home-improvement chain started using so-called cross-dock facilities six years ago for its domestic deliveries so storage wouldn't be involved, Lenny Kapiloff, director of logistics for Home Depot in Atlanta.

A cross dock has no conveyors, just forklifts and people moving products in a long, narrow building. The site quickly transfers merchandise, rather than storing it, and collects a variety of items from different vendors and puts them into trucks headed to specified stores. Home Depot has 10 such facilities nationwide, and three more are to open this year, Mr. Kapiloff said.

“What we're trying to do is move the freight as fast as we can from the vendors to the stores in the most efficient manner,” he said.



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