Old Manufacturing Hubs Find New Life in Warehousing

Over the past decade, millions of manufacturing jobs have disappeared from U.S. cities, while employment in warehousing and transportation has surged.

Internet retailers like Amazon, Walmart and Zulily are competing to deliver goods to the buyer’s doorstep as quickly as possible. The result has been a constellation of vast warehouses employing workers without college degrees. And it’s breathed new life into pockets of the country that had fallen economically behind.

In recent years, steel mills in Texas and Pennsylvania, shipyards in Louisiana and former military sites in Joliet, Ill., and Oakland, Calif., have all been reinvented as logistics hubs. In fact, redevelopment firms are finding that such endeavors are often more appealing to the local populations than breaking ground on new developments.

Resistance to Development

Take, for instance, the situation in Lehigh Valley, Penn., where developers are encountering significant residential backlash as warehouses gobble up real estate. Residents of several once-rural communities are not all thrilled about the area’s urbanization.

According to Becky Bradley, executive director of the Lehigh Valley Planning Commission, Lehigh residents have suffered “severe culture shock.” Big companies have rapidly moved in and started building over the past 10 years.

“Where there was once a wheat or corn field is now a warehouse, and people aren’t happy about that, so politically it’s a very sensitive issue,” Bradley said. “It was residential for 50-60 years, and now it’s different.”

About 62 municipalities span the two counties that make up Lehigh Valley (Lehigh and Northampton counties), and not all of them are in agreement about how much warehouse building should continue in the area.

Reinventing Old Factory Sites

Which makes the redevelopment of old manufacturing sites more appealing than gobbling up rural real estate. And the government has sweetened the deal by offering incentives, such as tax abatements and credits. These incentives allow companies that redevelop steel mill land to save hundreds of thousands on their tax bills over 10 years.

And the location is often ideal. “All these old-line industrial sites are on great real estate,” said Michael Moore, a former shipping and port executive. “The same things that make them great for manufacturing—the land, the water, the rail—make them great for logistics.”

Giant Warehouses = Lots of Workers

As Americans have grown more comfortable with online purchasing, the size of their orders has increased. Even bulky items like canoes and refrigerators are being bought over the internet. Which means warehouses have become gargantuan, doubling in size since 2010.

And while robots are controlling more and more of the distribution processes, it still takes a lot of bodies to move hundreds of thousands of boxes in and out of these buildings every day. As a result, warehouses serving the largest e-tailers typically employ more than 2,000 people. (See related article, “Warehouse Automation: How Far Should You Go?”)


In fact, since 2010, warehouses have been adding workers at four times the rate of overall job growth. According to Michael Mandel, chief economic strategist at the Progressive Policy Institute in Washington, this growth illustrates “a rather large transformation, and the humble warehouse is the leading edge of this.”

Goetz Wolff, a UCLA professor of urban planning, agrees. “The distribution system and warehouses offer employment, and so logistics is viewed as a kind of savior,” he said.

According to Mandel, “These fulfillment center jobs are not being created in the tech hubs that were growing before. We’ve broadened the winner’s circle.”

The New Winners

So who are “the winners”? They’re people like Ellen Gaugler of Bethlehem, Pennsylvania. She remembers driving her father to the now-closed Bethlehem Steel mill. These days she drives herself to the same location, only now it’s a Zulily warehouse.

 

The 54-year-old earns $13.50 an hour putting together shipments at the warehouse. (According to the U.S. Labor Department, the average warehouse worker earns $15.47 an hour, compared with $22.36 in the metals manufacturing industry.)

Gaugler says some folks in town are nostalgic for the time when the steel mill filled the sky with black smoke and the furnaces churned all day. But not her. “These are secure jobs,” she said. “With the steel, you didn’t know if you would have a job the next day.”


Sources:

New York Times

Wall Street Journal

Supply Chain Dive