Business

Friday, Nov 07 2008 11:44 PM

Building the economy: Kern works to attract distribution centers

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    By Felix Adamo/ The Californian

    Working about 40 feet above the IKEA Distribution Center floor, Jay McVay scans an item after removing it from the shelves.

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    By Felix Adamo/ The Californian

    Electric forklifts, along with other loading machinery, are a constant whirl of activity at the IKEA Distribution Center.

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    By Felix Adamo/ The Californian

    Rows and rows of furniture await delivery to buyers from the IKEA Distribution Center south of Bakersfield.

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By JENNY SHEARER, Californian staff writer jshearer@bakersfield.com

The IKEA distribution center at the base of the Grapevine is a temple of cardboard and shrink wrap with beeping forklifts and their cousins that glide along the smooth floor.

Tricycle-style bikes with laptops, printers and scanners track inventory among the racks.

In another area, “silos” lined with merchandise reach heights of 80 feet.

About 95 percent of the freight shipped to IKEA arrives in the ports of Los Angeles, Long Beach and Oakland.

Then trucks haul 350 to 450 containers a week to Kern, where they are processed within hours or days, depending on the shipment, by 350 to 450 workers, depending on the season.

The bustling IKEA center is just one example of the distribution and logistics operations that business leaders and the Kern Economic Development Corp. want to attract here to bolster the economy.

The jobs offer reliable paychecks and opportunities for advancement, said Richard Chapman, KEDC’s president and chief executive.

Kern’s vacancy rate for industrial space with 50,000 square feet or more is a healthy 3.9 percent, said Eric Powers, executive vice president of NAI Capital Commercial. He’s in negotiations with tenants looking for 300,000 square feet to 4 million square feet.

WHAT WE HAVE

Kern has scored other successes in this area.

An Oneida distribution center is next to IKEA. A 350,000-square-foot facility for Famous Footwear is under construction and will likely open in spring 2009.

Target and Sears have distribution centers in Shafter and Delano, respectively.

So far, about 3.3 million square feet of the approved 20 million square feet at the Tejon Industrial Complex is developed, said Barry Hibbard, vice president of commercial and industrial development at Tejon Ranch.

“We have a ways to go. It’s a 10-year plus or minus plan. It really depends on the market,” he said.

When it’s built out, Hibbard said, 6,000 people will work at centers there.

WHY KERN?

Kern is an attractive home for logistics because of our location, with the twin ports of Los Angeles and Long Beach to the south and Oakland to the north.

County distribution centers can bring in products from both, and Highway 58 connects with Interstate 40 in Barstow.

That’s the primary truck route in the United States, Hibbard said.

A second plus for Kern is trucks headed to Sacramento and San Diego can leave Kern and return the same day.

“We are competitively right in the middle of that in an uncongested area,” Hibbard said.

Ontario is among one of the biggest industrial space markets in the nation. But about 25 years ago, the Inland Empire transitioned from an agricultural-based economy to manufacturing, light assembly and logistics.

“We have a very similar labor force today that they did,” Hibbard said.

Agricultural laborers are desirable because they are conscientious and familiar with equipment used in warehouses more so than the general population.

These automated facilities are more than big square boxes and require more workers than people realize, said Jon DeCesare, president of World Class Logistics Consulting in Long Beach.

Years ago, a company’s supply chain wasn’t viewed as it is today. But then Wal-Mart showed the world a sophisticated supply system creates a competitive advantage. The retailer lowered costs of delivering products and got merchandise at the right time to the right place, DeCesare said.

EFFICIENT OPERATIONS

IKEA’s facility, adjacent to Interstate 5, serves 16 stores in the West and holds 242,000 pallets, said Edrico Oliver, the distribution center manager.

The goal is to run it as efficiently as possible.

Inside, amid all the boxes, a child’s bedroom display includes a bright blue bed, stuffed frogs and turtles and fabric leaves that look like big pea pods jutting out from a painted wall. Scenes like this are spaced throughout the mile-long warehouse.

“At the end of the day, the bottom line is it’s all about the customer,” Oliver said. “We show the co-workers it’s more than a corrugated box.”

Hibbard said the goal is to ensure trucks are full going both ways, but that’s not happening yet. For example, if a container comes to Kern with IKEA furniture, “let’s make sure it’s full going out with agricultural products,” he said.

ON THE ROAD

Trucks that move goods raise pollution concerns.

About 78,000 trucks, including those that stop at distribution centers, trek through the valley each year and emit nitrogen oxide, according to the San Joaquin Valley Air Pollution Control District.

“NOX is the primary culprit for our ozone and particulate problems in the San Joaquin Valley,” said Sayed Sadredin, the district’s executive director. Kern’s geography and topography don’t help, either.

But diesel engines are becoming cleaner, and there’s demand for the technology. The district received $160 million in Proposition 1B funds to dole out during a four-year period.

It awarded $40 million so far but received $130 million in grant applications, Sadredin said.

The California Air Resources Board will consider adopting regulations to reduce diesel truck emissions in December.

What’s missing is data about where the goods that come into the county go, said Robert Phipps, an administrative analyst at the Kern Council of Governments, a planning and transportation agency.

In May, Kern and San Bernardino partnered to survey about 6,000 drivers along 58. Those findings should be ready by the first of the year.

This week, the council will survey truckers using I-5 and Highway 99 about their destinations. That data will be available in early summer, he said.

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