DC Velocity - February 2015

minutes of Exit 7-A on the New Jersey Turnpike and about an hour from the megamarkets of both New York City and Philadelphia. In July 2014, Amazon opened its first DC in New Jersey in Robbinsville, a 1. 2 million-square-foot fulfillment center that will employ some 1,400 workers. The company plans to use this fulfillment center to debut its much-anticipated same-day grocery delivery service, called AmazonFresh. We expect other DCs to be following Amazon to Robbinsville in the months ahead.

Nationally, other sites that we see riding this proxi-mate-to-market trend include: Lehigh Valley, Pennsylvania; Towson, Md.; Dublin, Ohio; Fishers, Ind.; Jeffersonville, Ind.; South Fulton County, Ga.; Miramar, Fla.; Ruskin, Fla.; Sugar Land, Texas; Denton, Texas; San Marcos, Texas; Oak Brook, Ill.; Liberty, Mo.; Aurora, Colo.; Casa Grande, Ariz.; Tualatin, Ore.;

Moreno Valley, Calif.; and Tracy, Calif.

4. THE NEED FOR MORE SKILLED WORKERS

The shortage of over-the-road truck drivers has been well documented in recent years. Manufacturing giants like GE, Caterpillar, and Siemens have also been very vocal about skill shortages in the United States being a major impediment to reshoring production jobs back to the U.S.

Not so well known to the general public is the growing shortage of workers in supply chain specialties like data analysis, robotics, engineering, and data security, to name just a few. While not as labor-intensive as call centers, our site selection projects in the DC sector are much more human resource-focused than ever before. HR managers need us to document that an area has a robust supply of technical and nontechnical workers not only at startup but also in the years ahead, especially if the DC is slated to provide additional value-added functions down the road. Our DC clients are increasingly interested in such labor market issues as the ability to hire ex-military, access to public transportation in order to tap inner-city labor pools, the availability of leading-edge skills in data security (a growing concern of our clients), and the tenor of labor-management relations. At the end of the day, labor is playing a greater role in distribution center site selection.

This is due in part to the breadth of jobs, from high-tech to low-tech, housed in today’s distribution center, as well as to the rather low profile the logistics industry has assumed in the mindset of many college graduates. While the industry employs some 6 million workers and accounts for almost 9 percent of our nation’s gross domestic product, its operations are mostly behind the scenes.

We expect the logistics industry to need to fill some 1. 5 million jobs over the next five years. Compounding the industry’s low profile among new college and tech school grads is the wave of retirements among the “baby boomer”

generation that the industry is now facing. We are seeing a growing number of our DC clients turning to social media sites like LinkedIn and Facebook to search for new workers.

5. MANUFACTURING AT THE DC

In recent years, more and more value-added functions have started to be housed in distribution centers—whether they are blue-collar light assembly, white-collar office tasks, or customer service-related operations. We expect to see an emerging technology known as three-dimensional (3-D) printing, or “additive manufacturing,” also being offered at distribution centers.

Three-dimensional printing is a process of creating a 3-D object from a digital file by laying down (or printing) successive layers of material. This new technology is expected to revolutionize production techniques, resulting in a significant proportion of manufacturing becoming localized and on-demand. The reliance on extended and costly supply chains would also be diminished. Our DC clients are telling us that the implications of 3-D printing could be enormous. Warehouse sizes and inventory levels could be reduced as 3-D printing leads to more real-time, custom manufacturing. For example, national parts warehouses would not need to be as large, because replacement parts could be downloaded, 3-D printed, and replaced within hours. Manufacturing reshoring from Asia would be hastened, thus reducing demands on the ocean shipping and air-cargo industries.

Only a few years ago, 3-D printing seemed like something out of a science fiction movie, but major supply chain players in the auto, aerospace, and medical technology industries are already producing strong and light component parts using 3-D technology. As more industries adopt the technology, the impact on DC sizes, volumes, and mission will no doubt increase.

A MULTIDISCIPLINARY APPROACH

In order to respond effectively to the great variety of cost factors, human resource issues, and emerging technologies that are affecting site selection, corporate relocation teams need to be much more collegial and multidisciplined than ever before. Everybody—from traffic to legal—needs to have a say in today’s location decisions. Additionally, companies may benefit from securing counsel from outside specialists. This may involve contracting with a corporate site selection firm like ours, or even outsourcing the entire logistics equation to a third-party logistics service provider.