A small convoy of new distribution operations have been arriving in the Spokane area, prompting the Spokane Business & Industrial Park to build more warehouse space here and showing economic-development officials that theres still plenty of tread left on the image of Spokane as a distribution hub.


In the past couple of years, at least half a dozen companies have opened distribution facilities here, others have expanded, and even more have looked into locating here in the future.


Meanwhile, Crown West Realty LLC, owner of the Spokane Business & Industrial Park, plans to start construction next spring on a $4.6 million, 100,000-square-foot distribution building in the southern part of the park, says Brent Long, Crown Wests marketing director. The structure is being built on a speculative basis, but if the company gets interest in that building from potential tenants, it could build a second, identical structure next year, he says.


Weve seen lots of business from distribution companies, Long says.


Since early last year, the sprawling Spokane Valley park has added about 160,000 square feet of space in two new buildings designed for distribution and warehouse uses, including a 105,000-square-foot building completed in January 1998 and a 55,000-square-foot structure completed this past August. Both buildings, located in Crowne Center at the Park, along Sullivan Road, are leased fully by companies that use the space for distribution, Long says.


From the two new structures, Sears, Roebuck & Co. distributes refrigerators; Mohawk Industries and L.D. Brinkman & Co. deliver carpet around the region; Nova Verta USA imports and distributes paint booths for auto-body shops; and Core-Mark International Inc., which expanded operations here in September, distributes items to convenience stores.


The new buildings also house McKillican American Inc., a distributor of hardware and wood products for the building industry; a distribution center for Scholastic Book Fairs, a book and education-products company; and a distribution location for Hewlett-Packard Co. From elsewhere in the park, Empire Trading Co., a 2-year-old venture, imports and distributes plastic shopping bags, and other companies distribute wood products, industrial supplies, chemicals, and more.


Serving a region


Elsewhere in Spokane, Nordan Products Inc., a Bellingham, Wash.-based distributor of wholesale auto-body repair parts, is one company that has come here to serve its Inland Northwest customers better.


Were primarily an I-5 company, says Dalton Van Houten, general manager of Nordans Spokane distribution center. In addition to its Bellingham headquarters, the company operates other distribution centers along the Interstate 5 corridor in Burnaby, British Columbia, and Kent, Wash. However, its customer base stretches east to Spokane and into Idaho and Montana.


We couldnt compete logically from the coast, Van Houten says, because shipping times and costs were too high to serve eastern customers.


A year ago, Nordan opened a six-employee, 14,000-square-foot distribution warehouse at 3200 E. Trent, which now provides next-day service to customers in Washington east of the Tri-Cities, northwestern Oregon, Idaho, and Montana. We cut two days off delivery to Eastern Montana, Van Houten says.


Mark Turner, president of the Spokane Area Economic Development Council, says the EDC long has recognized Spokanes attractiveness to distribution companies and continues to target distributors in its recruiting efforts.


We have had a number of distribution-oriented inquiries from outside the region that put us under the microscope, he says. They are a decent target for us.


Small distributors that specialize in serving niche markets are proliferating nationally, and such distributors can work well in Spokane, Turner says. Those small companies have few employees, but distributors are an important piece of a diverse economy, he says.


Another trend seen in distribution, the advent of mega-distribution centers of 1 million square feet or larger being built by major retail chains such as Wal-Mart Stores Inc., are more likely to locate in areas that have higher store densities, Turner says.


Spokane is an attractive potential location for distribution companies because its a hub from which they can reach a large, regional market, Turner says. He points out that several million people live within distances that can be covered in an overnight trucking haul from Spokane. The broad region that can be served from here stretches across Washington, Idaho, Montana, and parts of Oregon, and is a pretty interesting market, that includes numerous communities and industries, he says.


Canadian connection


Spokanes nearness to Canada has prompted two British Columbia companies to locate their U.S. distribution centers here. Far West Industries Inc., an outdoor clothing maker from Vernon, British Columbia, recently leased space at 811 E. Sprague for a distribution center and small retail outlet, its first in the U.S. It employs six people here.


Another Vernon-based company, tekmar Control System Inc., bought land in the MeadowWood Business Park in Liberty Lake in 1997 and plans to break ground next spring on a 15,000-square-foot distribution center there that also could house a repair depot and limited production facilities. Tekmar, which has some distribution activity here now, makes electronic controls for hot-water heating systems, and its facility here initially would employ three or four people. Both companies say they chose Spokane, in part, because they wanted a U.S. location near their headquarters.


Company President Don Gibbs says tekmar also considered Bellingham, and Oroville, Wash., but Spokane offered the best all-round package.


That package included transportation alternatives, including easy highway, railroad, and airport access; a selection of potential employees; a pool of other companies tekmar might work with; and affordable real estate in a business park with good growth potential, Gibbs says. Although Oroville was closer to Vernon and had inexpensive land, that remote, small town lacked other amenities Spokane offered, and while Bellingham offered advantages similar to those of Spokaneexcept for airport accessland was less available and more expensive there, he says.


Affordable real estate also drew Far West here. In addition to making clothing in Vernon, Far West imports some of its products from Asia, through Seattle, and considered locating its distribution center in Seattle or Bellevue, says Michael Wardlow, Far Wests vice president.


Seattle is the port, but truck and rail costs (to bring goods to Spokane) are compensated by the savings on real estate, Wardlow says.


Wardlow also likes that Spokane offers a climate and an outdoor-recreation culture that is similar to that of Vernon, as well as a history of being a home to outdoor-gear makers, such as now-defunct Serac Inc.


Meanwhile, Malt-o-Meal, the big Minneapolis-based cereal maker, has been eyeing Spokane for several years as a site for a regional distribution center. Jerry Sackmaster, Malt-o-Meals director of distribution, says the company has pinpointed Spokane as the location for an about 100,000-square-foot facility to handle cereal shipped to the Pacific Northwest from the Midwest.


He says that between 12 percent and 14 percent of the cereal the company sends into the region ends up in the Spokane area, so rather than ship all of the companys cereal across the region to a center in Seattle or Portland and then send a portion of it back to Spokane, Malt-o-Meal would prefer to build a distribution center at the eastern edge of the Northwest territory it serves.


Sackmaster says Malt-o-Meal originally planned the facility here in 1998, but as cereal sales went soggy industrywide, put its plans on hold. Sales havent rebounded entirely yet, but if growth occurs as expected, the distribution center here could be built by the end of next year, he says. It would employ about six people.


Crown Wests Long says that having appropriate spaces available for distribution is a key to bringing those operations to Spokane. He says the market here had lacked large facilities designed specifically for distribution, and demand for such buildings was growing, which prompted Crown West to add distribution facilities and strengthen its efforts to recruit such businesses. A variety of space, such as older buildings at Spokane Business & Industrial Park economical rates for large spaces and service by two railroads and new buildings with large dock doors and high ceiling clearances, appeals to different types of distribution operations, Long says.


Adding advantages


With easy highway transportation on Interstate 90, efficient trucking terminals and bi-modal terminals served by truck and train, and continued growth in air freight at Spokane International Airport, Spokanes transportation infrastructure is a good asset to attract distribution companies, says the EDCs Turner.


Projects like the ongoing work to improve capacity on I-90 in the Spokane Valley show that investments are being made in the system. Maintaining and improving that infrastructure is critical, though, he says.


A north-south freeway would provide more efficient movement of freight and could be a key ingredient to bringing more distribution companies here, say Turner and Crown Wests Long. That project and other capacity improvements here, however, now are on hold as a result of the passage of Initiative 695, which is expected to cut state transportation funding drastically.


Turner says another potential advantage to distribution companies locating here is a statewide tax incentive that exempts companies which are building distribution facilities of at least 200,000 square feet of space from paying sales taxes on building materials. He says the Legislature may be asked to lower the size requirement to extend the benefit to additional companies.