FedEx US hub sign of new growth
With the announcement by Fed-Ex Ground of a new Boone County hub, set to employ 500 workers at first and many as 2,400 by 2005, Northern Kentucky has landed its first major jobs expansion deal since 1999.
The new distribution hub announced Monday is the second of 10 such facilities being built nationwide as part of the shipping company's $1.8 billion expansion plan. If all goes well for the site, at full capacity, it will employ about 2,400 people processing 45,000 packages per hour.
That's welcome news for an area that had seen some slowing since steadily attracting big jobs deals from companies like Toyota, Ashland, Fidelity and Citibank through the mid-1990s.
FedEx Ground Support Systems announced Monday it will build a 335,000-square-foot warehouse on 96 acres at U.S. 25 and Maher Road. Construction is slated to begin this fall and end in mid-2005. FedEx bought the site for $6.3 million from Toebben Ltd. of Crescent Springs
The Kentucky Cabinet for Economic Development has approved a tax-break package contingent on the creation of 480 jobs whose hourly wages will range between $13 and $32. Boone County also will offer a payroll tax credit, issuing $65 million in industrial revenue bonds to support the project.
The plant is expected to generate the 480 jobs within three years, including:
* Eighty office and clerical employees
* Three hundred package handlers
* One hundred independent contractors.
Since the recent boom years of the 1990s and 2000, Northern Kentucky hasn't attracted so many jobs from a new business since GE Capital Information Services announced it would move to Boone County in 1999 and generate 800 jobs. The subsequent recession and downturn has left even that pledge unmet; the company has only created about 300 jobs, according to Karen Jackson of Northern Kentucky Tri-Ed.
The last major expansion of an existing business occurred early this year when Cincinnati Machine Tool left Cincinnati and shipped 350 jobs to Hebron.
Pittsburgh-based FedEx Ground said its new plant will start processing 22,500 packages an hour.
David Westrick, FedEx spokesman, said future growth is hard to predict but that business has been growing steadily. "As we need people, we're making a serious commitment to Northern Kentucky and Cincinnati. We've had sales growth of 20-plus percent the last five quarters," he said.
Westrick cited good existing roads and interchanges and Greater Cincinnati's central location as major factors in locating here.
"When looking for a new facility of this size, we always need to find a location that is close to highways with good accessibility and we also need to make sure there is an employee base," he said.
The site is close to Interstate routes 275, 75/71 and 74.
The region, as the home of Northern Kentucky University, the University of Cincinnati, Thomas More College, the College of Mount St. Joseph and Xavier University, comprises a large number of college students.
The largest portion of the FedEx Ground employee base in a hub like the one proposed for Boone County is made up typically of college students or other people who work one or two four-hour shifts as packages are put on belts, Westrick said. "While we wanted to complement the hub we had in Columbus, we couldn't be so close to it that we were drawing from the same employee pool."
FedEx's good fortune appears to be indicative of a broader economic recovery. Danny Fore, president of Tri-Ed, said interest in new and expanded businesses in Northern Kentucky recently spiked.
"We've actually had more contact (with prospective business developers) in the last three weeks than six months," he said. "Things seem to be picking up for us."
During the Clinton-era economic expansion — the longest in U.S. history — companies were growing so rapidly in Northern Kentucky that a lack of skilled workers was a constant concern among employers. Nearly three years of job losses has reversed the trend, leaving many qualified workers anxious for good jobs, Fore said.
"It is maybe the precursor of a spring. We're hoping it is," he said.
FedEx Ground will ship everything by truck, not air, Westrick said. The plant is one of four opening in an east-west line stretching from Hagerstown, Md., to Dallas, with plants in Boone County and Dallas in between. FedEx said the new station will feature new automated package sorting technology and will be the third of 10 similar warehouses to be built during the next six years at a cost of $1.8 billion.
The expansion is expected to double Fed-Ex Ground's daily volume of shipping from 2.5 million to 4.8 million packages. The company's typical customer is a wholesaler seeking business to business commercial deliveries, but FedEx Ground does offer home delivery, too.
FedEx has emphasized its FedEx Ground product more heavily since 2000. It's a parcel service that competes with United States Postal Service, UPS and DHL. "FedEd Ground started out as RPS in 1996. Now as our business is getting more dense, — we're just complemented what's already there and adding support," Westrick said.
