The Free Press, Mankato, MN

March 17, 2013

Progress 2013: How the Wal-Mart distribution center will boost area

By Tim Krohn
Free Press Staff Writer

MANKATO — For nearly eight years the question about a new Wal-Mart distribution center in Mankato was “when?”

Now that the world’s largest retailer has announced it will build the center and open it in late 2015, local leaders speculated on the project’s impact.

For starters, the project will be a boon for contractors and construction workers during what is expected to be a 12- to 16-month construction schedule.

The massive center also is expected to create spin-off development, help housing sales, potentially pull employees from other local manufacturers, and create an uptick in wages for some jobs locally.

Once open, the center will employ 300 people.

Brent Pearson, a Mankato-based regional analyst for the Minnesota Department of Employment and Economic Development, said the jobs will add about 10-15 percent to the current number of jobs in the “transportation and warehousing” sector in the region.

“Those types of occupations tend to pay higher than the median wage for all occupations across our region.”

Mankato City Manager Pat Hentges said that based on studies and research the city has done, he expects Wal-Mart will bring strongly competitive pay for employees and will spur initial creation of businesses that cater to truck drivers and provide related warehousing and pallet services.

“What we learned is they will come into the marketplace and potentially offer wages to get the best and the brightest. Anecdotally, we saw that their employees tend to be longtime employees, so their wages and benefits must be competitive,” Hentges said.

“The other thing we hear is that there could be 20 or more managers that come from other locations. They offer opportunities from within.”

As for spin-off development, Hentges said he doesn’t expect an immediate explosion in building, but he said there are people interested in developing projects near the site.

“Truck support seems to be a big interest — trucks stops, truck repairs. You also see pallet operations that spring up around them and ancillary warehousing operations.”

A study in Yakima, Wash., last year found employees at a Wal-Mart distribution center there made an average of $18 an hour.

A detailed 2004 study by the Planning Commission of St. James, Mo., found the opening of a distribution center there led to other big manufacturers in the area losing about 5 percent of their employees to Wal-Mart. And the opening of the Wal-Mart facility caused overall wages for similar positions to tick up.

The study showed there was negligible population increase after the opening of the center, but there was a large increase in the number of people working in the city. That created a sizable increase in spending in the community.

Jonathan Zierdt, president & CEO of Greater Mankato Growth, said the project will give local housing a bump.

“Wal-Mart will move a number of people here just for start-up and for their expertise. Some will be temporary and some will be long term.

“And they’ll hire 300 people. Some will be from the region, but others may come from farther, Owatonna or the Twin Cities or wherever,” Zierdt said.

And having a company whose revenue would place it on par with the 25th largest economy in the world is a big boost in itself.

“There is something about having a presence from an international company like Wal-Mart. This helps establish us a a destination for business,” he said.

Wal-Mart purchased land on the northeast edge of Mankato in 2005 and originally planned to open a distribution center in 2008 — a plan that got delayed because of the recession. The original plan called for a center of more than 800,000 square feet that would be divided between dry storage and a refrigerated storage building for fresh produce and other grocery items.

The Arkansas-based company says it will construct a 420,000-square-foot refrigerated distribution center. Ground breaking could possibly happen this year. Wal-Mart may yet build, but hasn’t yet committed to, a general-merchandise storage building, estimated at about 400,000 square feet. There is room for such an addition on the property.

City officials say the perishable portion is the higher-value part of the original full-scale distribution center plan with a high level of mechanization, refrigeration and freezing, city officials said.

The new distribution center follows a growth spurt for Wal-Mart in Minnesota. The company opened Minnesota stores in 2012 in Lakeville, Brooklyn Center, Burnsville and St. Cloud and expanded in Redwood Falls. A store in Princeton opened earlier this year and a supercenter is under construction in Blaine.