By ARNOLD S. PLATOU
6:00 AM EST, December 9, 2012
Two large transportation companies are expanding their Washington County operations, giving the local economy new signs of strength after years of recession.
FedEx Ground is going to begin building a major addition to its package distribution center near Hagerstown soon as part of a nationwide network expansion “to boost daily package volume capacity and further enhance the speed and service capabilities of the FedEx Ground network,” the company said in a statement Friday.
With business increasing, the company is going to expand its current 380,000-square-foot center off Newgate Boulevard in the Hopewell area near Valley Mall to a total of 590,000 square feet, corporate spokeswoman Erin Truxal said. Construction is to begin early next year and be finished by fall 2014, she said.
Truxal said it’s too soon to know whether the company, which has nearly 900 employees at the center now, will hire more. “We won’t make those decisions until” late 2014, she said.
Another local company already is expanding here.
New England Motor Freight (NEMF) began moving into its new trucking terminal southwest of Hagerstown this weekend and is shifting into full operation on Monday, terminal Manager John D. Secrist said Thursday.
The new 40,800-square-foot terminal — like FedEx, also in the Hopewell area near Interstates 70 and 81 — is twice the size of the building space north of Hagerstown that NEMF has been leasing as a terminal since 2000, Secrist said.
NEMF, which has about 85 employees here now, is seeking applicants for about 20 jobs it hopes to fill soon, Secrist said. The company wants to hire about 10 truck drivers and about 10 dock workers, he said.
The expansion “is a huge step forward for our people in Hagerstown in recognition of all their quality work,” Secrist said. “This is like a big Christmas present for them right now because we’ve been talking about it many times.”
So, too, is the work done by FedEx Ground’s local employees key to its decision to expand here, according to Chuck Schussler, one of the company’s top officials here. As facilities maintenance manager at the local terminal, he has long had a central role in the planning for the addition.
“A lot of the reason we’re blessed to have this expansion is because of the work force in this area,” Schussler said. Other factors include the location of I-70 and I-81 in the county, he said.
Cementing its plans
FedEx Ground Package System Inc., known more commonly as FedEx Ground, cemented its plans for the local expansion by purchasing about 50 acres of fields on the other side of the two-lane Newgate Boulevard from the distribution center last month.
FedEx already owned 114.5 acres on the side where the distribution center is, according to Maryland Department of Assessments and Taxation records. The 11825 Newgate Blvd. property, including the center itself, had an assessed value of more than $32 million as of this past July.
In all, FedEx paid “about $10 million” for the new acreage, Truxal said.
Of that amount, $6.8 million was paid on Nov. 20 to Hagland LLC, a Maryland limited liability company, to buy 40 acres along the western side of Newgate, according to county deed records. Hagland had bought the land in 2006 for $2 million, the records showed.
As it happens, Hagland has ties to NEMF, according to the assessment records, which list Hagland’s address as being in care of New England Motor Freight, attention director of property, at the trucking company’s Elizabeth, N.J., headquarters.
The 40-acre tract is where the trucking company originally had planned to build its new Hagerstown terminal, company officials said. But then, NEMF’s current Hagerstown-area landlord offered to build the new terminal on land it owned, they said.
It wasn’t clear Friday who had owned the other 10 acres included in FedEx’s recent purchases. Truxal said 40 acres had been purchased, but Schussler said it was “close to 50 acres.” No indication could be immediately found in local deed records that FedEx Ground had bought as much as 10 more acres.
Schussler said about half the land just purchased will be developed initially as a secure parking lot for FedEx tractor-trailers and contractors, and the other half will be used for stormwater management. Later, the parking lot will become the distribution center’s sole parking area for employee vehicles, he said.
He said the addition itself will be built on the opposite side of Newgate Boulevard, on the lot where the employees park now, outside the already huge distribution center. Also, “in order to expand our building, we have to fill in the (stormwater management) pond that we have” on the distribution center side of the road, he said.
The 210,000-square-foot addition will be attached to the current center, Schussler said. That will enlarge it to the full 590,000-square-foot facility envisioned when FedEx Ground began operations here in 2005, Schussler said.
“The building itself has always been built so it can be modular,” he said. “There has always been a plan for this building to be expanded to full phase, which is what we’re doing.”
The addition will increase the number of bay doors to 462 from the 322 bay doors it has now, spokeswoman Truxal said. Drivers back their tractor-trailers up to the bay doors so packages can be unloaded and others can be loaded on.
The center is among the 32 so-called distribution hubs that FedEx Ground has throughout the nation, according to Sandi Waggoner, senior office administrator at the Hagerstown facility.
FedEx Ground, among several divisions of parent company FedEx Corp., specializes in the shipping of packages weighing up to 150 pounds each, Waggoner said. FedEx Freight, a division that has a large shipping center off Md. 63 west of Hagerstown, handles packages weighing more, she said.
Truxal said she doesn’t know how much the FedEx Ground expansion here will cost. She said construction will begin with a groundbreaking early in 2013, probably in February.
Schussler said plans for the addition already have gone out to area building contractors. He said their bids for the work are due soon.
“I’m getting a lot of visits right now from some of the prime contractors,” he said, adding that the work will “definitely” be a boost to the area’s construction industry. It was hit hard by and still is suffering from the nation’s recent recession.
“We try to use a lot of local” tradespeople, he said.
The expansion is the second at the distribution center since it opened in 2005, Waggoner said.
At that time, it had 330,000 square feet, she said. A 50,000-square-foot addition was completed in 2009, expanding the center to its present 380,000 square feet, she said.
According to stories The Herald-Mail published in those early years, the center was expected to have about 400 employees when it opened. The number of workers grew to about 600 by 2008, when construction of that first addition began, the newspaper’s archives show.
And by 2009, when that addition was completed, the company was planning to hire 250 more employees, the newspaper reported at the time.
Corporate spokewoman Truxal said she doesn’t know whether FedEx will hire more employees when the newest addition is ready.
“Right now, all the current employees will retain employment and we will add as dictates demand. We do not have a specific number,” Truxal said. “We chose to expand this facility because of the growth in the market and we will add the positions necessary to accomodate this growth.”
Waggoner said she doesn’t know either whether more employees will be hired.
She said the center has about 800 dock workers, some of them full time and some part time, plus about 88 other employees in management now.
Waggoner was asked whether the company’s past history of hiring is a good indication of how many new jobs could be created.
With the newest 210,000-square-foot expansion being four times the size of the 50,000 square feet added in 2009, isn’t it possible that FedEx will hire four times the 250 workers added in 2009?
Mathematically, it might seem so, Waggoner replied, “except this expansion is a little different.”
The new addition has “some dock doors, but a lot of it is going to be office space ... and things like that,” Waggoner said. “The first expansion was basically dock doors, meaning we can move more freight in.”
Schussler, who leads a team of employees in maintaining everything mechanical — “from the lights, to generators, to environmental stuff, all the way to bar code readers” inside and outside the distribution center — said he does think the company will hire more workers when the addition is completed.
Asked whether he thinks at least 200 more will be hired, Schussler said it’s “a very safe bet. And it’s likely to be even more than that.”
He said that while FedEx has seen good growth nationwide even during the recession, it’s been particularly strong in the eastern areas that the local center serves.
“We’ve definitely felt the recession early on, but online shipping is something that has really taken off,” he said. “And the fact that we provide such a superior service, compared to the competition, has allowed us to really grow, whereas our competition has not. So we’re really getting a lot of new business and it’s mainly because of our on-time service.”
New England Motor Freight
New England Motor Freight, a large trucking company with more than 30 terminals throughout the nation’s northeastern, mid-Atlantic and midwestern sections, opened its first terminal in Washington County nearly 20 years ago.
It was in the “mid-1990s” when NEMF opened its first terminal along Jefferson Boulevard, current terminal manager Secrist said.
In 2000, he said, the company moved its terminal to a building erected as a distribution center at 14557 Industry Drive. The building is across U.S. 11 from Hagerstown Regional Airport.
Ever since, two tenants — NEMF and Sam’s Club — have shared the 40,000-square-foot building, said local businessman Brad Fulton, whose family partnership owns the building. It has 84 dock doors, 50 of which are used by a company hired by the Sam’s discount store chain to run its product distribution center there and 34 of which were being used by the trucking company, Fulton said.
In 2006, NEMF bought the 40 acres along Newgate Boulevard that were sold to FedEx Ground last month.
NEMF planned to build a 72,000-square-foot terminal on the land, the county Economic Development Commission announced in August 2006. Work on the project, costing $13.5 million, was to begin in mid-2007 and the terminal was to be ready for use a year later, the EDC said then.
At the time, the nation’s economy had only just begun to slip down into what was to become the recession.
In 2004 and, especially, 2005, the economy had been booming as millions of people across the country got easy-term, adjustable rate mortgages. They bought houses, spreading the good times to economic sectors ranging from builders, to Realtors, to furniture and appliance stores, to trucking companies.
Officially, the recession didn’t begin until late 2007, but by 2006, the financial riskiness of the years just past had begun to catch up with many Americans. Suddenly, they were facing foreclosure and bankruptcy, and as those situations multiplied, the economy began to tighten on everybody.
Amid all of that, the 40 acres NEMF had just bought sat undeveloped.
Was the recession at least partly to blame?
Both Secrist, the current terminal manager, and Steve McEvoy, the current operations manager of NEMF’s mid-Atlantic region, said this past week they don’t know.
“When the economy hit the brakes, sure, all plans (by all U.S. companies) for financial capital expansions were probably re-evaluated,” McEvoy said.
Whatever the case, McEvoy said he thinks the reason the trucking company opted to steer away from using the 40 acres was “more that we’ve had a good, long-term relationship with the Fultons,” the family partnership that has been NEMF’s landlord near the airport.
“They’ve helped us grow, always met our needs,” he said of the family.
“About nine months to a year ago,” the Fultons and the trucking company began talking about the idea of the family building a large terminal solely for NEMF for it to lease, McEvoy said. The trucking company had reached “full capacity” in its space on Industry Drive, he said.
The new terminal, featuring 76 dock doors, was then built on 11.8 acres that the family partnership bought at 16503 Hunters Green Parkway in the same Hopewell area where FedEx Ground’s distribution center is located.
Including the cost of the land, the new terminal cost “somewhere in excess of $5 million,” Brad Fulton said.
The Fultons’ partnership paid $275,000 for the land in early 2011, according to county deed records.
NEMF has signed a “multiyear” agreement to lease the new terminal, McEvoy said. It is larger than the trucking company needs now, offering space for future business expansion.
Some of that already is coming.
“We plan to move some more of our business” here, McEvoy said. “We have (several) locations. Now that we have more capacity here, we’re going to divert more (shipments here) and we hope to attract more customers here” for the trucking company.
Many of the big companies in the county already use NEMF, he said. Its clients include “just about all the major players” here, he said.
As its business grows, its local employment will also, McEvoy said.
At present, “we’re adding about 20 jobs. That’s right now and, like I said, as we gain new customers in this terminal and divert (shipments) from other terminals, we could add another 10 onto that. So, 20 to 30 people,” he said.
Applicants for work as truck drivers — who could earn $55,000 to $60,000 or more per year — must have “good work habits and a clean driving record,” he said. The freight handlers needed to load and unload trucks will usually start with part-time hours, earning $20,000 to $25,000 per year, but some of those jobs can become full time, drawing higher pay, he said.
Springboard and catalyst
Just as NEMF’s sale of the 40 acres has become a springboard to FedEx Ground’s plans to expand its distribution center, the Fulton family partnership’s decision to build a new terminal solely for NEMF has become a catalyst for Sam’s Club to expand its distribution operation to the entire building on Industry Drive.
“The good news is, building for New England Motor Freight is going to allow us to expand another tenant into their space. And that would be Sam’s,” Brad Fulton said.
The expansion into use of the entire Industry Drive building won’t happen right away, according to an official of Kane Logistics, which has managed the remaining tenant’s distribution center there for several years. Curtis Weaver, who is Kane’s distribution center manager here, said he can’t name the tenant — which Fulton said is Sam’s — because it’s against Kane policy to identify a client.
Nonetheless, Weaver said the tenant’s shipping operation won’t begin full use of the distribution center until February, when its fiscal year begins. And when that happens, Kane probably won’t be increasing its work force at the building.
Kane has 54 employees there now, Weaver said. “Based on this additional space, no, right now, we’re not” going to hire more workers, he said.
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