Outlook 2013: Area’s location makes good warehousing site
The Capital Region is prime warehousing country.
Companies like Target, Wal-Mart, Sysco and Ace Hardware have major distribution centers throughout the region, but they don’t come here for the scenery or any special incentives. According to Denis Brobston, president of the Saratoga Economic Development Corp., companies set up their warehouses here because of the roads.
“The Capital Region is right at the intersection of the Thruway and the Northway,” he said. “Shipping is easy from here to New York City, Boston, Buffalo and Montreal.”
Brobston said most companies look for locations less than a mile from an interstate highway — preferably two interstate highways — even taking into account the number of traffic lights between a potential facility and the open road.
Montgomery, Saratoga, Schenectady and Albany counties are strung together by interstates 90 and 87, which attracts the shipping industry. Just counting the major companies within Saratoga County, more than 2,000 people work in warehouses. That’s a significant source of employment and has been in the area for many years.
The Erie Canal, railroads and now massive interstates all brought shipping and warehousing jobs to the area, but the industry is constantly changing.
“If you go down to the railroad tracks in Rotterdam,” Brobston said, “you’ll see a lot of old brick buildings. Those are the old rail warehouses. They’re 20 feet tall, rather than 40, very inefficient but also very cheap to lease.”
Those are still in use, but barely. The last major shift in warehousing rendered the rail buildings obsolete back in the 1990s, back when Saratoga County first started courting the shipping industry.
“In the old days, they were just looking for a workforce that could manhandle merchandise,” Brobston said, recounting his first career in manufacturing. “In the early ’90s, computers got involved.”
After that, warehouses needed a skilled workforce, better at data entry, computer programming and team building than lifting heavy boxes. These days, Target distribution centers have multimillion-dollar conveyor belt systems powered by electromagnets. Pallets are literally floated from their shelves to the correct shipping bay on a magnetic field without so much as a person on a forklift lending a hand.
As a result, the company’s 1.5 million square foot Saratoga facility is run by 750 employees, compared to the 800,000 square foot Ace Hardware facility’s 500 employees. The magnetic conveyor belts allow each employee to cover more warehouse space.
Brobston described a science fiction-like setup, but Target officials wouldn’t comment on their distribution centers in the Montgomery County town of Florida or in Saratoga.
“They have systems designed to keep them ahead of their competition,” he said. “They don’t want anyone peeking at it.”
For years, warehouses have been trending in the Target direction, but different goods need different treatment. Sysco’s 300,000-square-foot Halfmoon warehouse facility ships food products to 5,000 customers all over eastern New York, along with Vermont and the Berkshires, according to Michael de la Rocha, the company’s vice president. It’s a big operation, but aside from a computer planning system, he said, they still use the classic forklift and pallet-jack system.
“Things haven’t changed much since I’ve been in the business,” de la Rocha said, describing the facility as a network of 35-foot steel uprights with shelves every four or five feet.
Employees on forklifts roll up and down the aisles, filling each order. It’s a system that still works mainly because food comes in relatively small containers. Target’s expensive, high-tech system is worthwhile because it is used to handle larger items such as TVs and lawn mowers.
Huge warehouses work for large companies, but Brobston said the industry is about to shift again. Since GlobalFoundries brought the semiconductor industry to the area, a whole new set of businesses is looking for space.
“If GlobalFoundries needs a tool or more of a specific material,” he said, “that need has to be dealt with in a few hours, so vendors will have to be local.”
These new technology vendors don’t need the massive amounts of space required by Target. They need flexible space, with offices and warehouse facilities.
“These are cutting-edge companies,” Brobston said. “They want cutting-edge, efficient facilities.”
The problem is, there are no such facilities. In general, companies want to come in and set up in six months, which is less time than it takes to build an energy-efficient warehouse from scratch. As part of an economic development team, Brobston is trying to encourage builders to get on the problem.
To read all the stories from the 2013 Outlook special report, click here.