This image, provided by Amazon, shows the e-commerce fulfillment center in the North Valley community of Patterson.
Written by John Lindt
After two years of construction, United Parcel Service (UPS) plans to open its new 450,000 square-foot distribution hub in the Visalia Industrial Park early next month.
UPS spokesperson Kim Krebs says the “new Visalia package sortation and distribution center will create more than 625 new full- and part-time, well-paying jobs.”
Contractors are packing up now after erecting the 88-acre complex at Plaza Drive and Riggin Avenue that includes several outbuildings, a truck maintenance facility, fuel center, customer service center and entrance station besides the main tilt-up concrete building with its advanced package sorting conveyor system. UPS bought the land in summer of 2017 from CapRock Partners, adding 30 acres last fall from the same party.
Next door to UPS, there is some surprising news from another mega-shipper. Amazon is the unnamed mystery logistics center that is now under construction, with a 1.3 million square-foot distribution center of its own — one of those “fulfillment centers” that typically employ 1000 or more. Amazon has not announced the Visalia project, but the contractor on the job, Kentucky-based Gray Construction, is an Amazon contractor at the job site this week. The company secured the city building permit.
Blake Steele with Gray Construction says this will be the third Amazon center he has worked on, adding it will be complete in 11 months. Some 300 construction workers will be needed during the busiest months of the Visalia project.
City of Visalia officials would not comment for this story, but advise to “stay tuned.”
A typical scenario played out in Fresno with the distribution center built and open in less than a year. In Fresno’s case, “During peak times, the fulfillment center ships over 1 million packages per day and has created over 3,500 jobs within the immediate area,” according to a report.
Bakersfield too now has seen completion of a four-story Amazon complex near the airport, expected to open Sept. 6, according to the “Bakersfield Californian” newspaper.
The new general manager told the press there, “This is one of the most advanced buildings that Amazon has,” he said, adding that the building — four stories, each about the size of 11 football fields — is the company’s 26th “fulfillment center” in California.”
Make that the 27th — counting Visalia.
Like UPS, Amazon is not just hiring robots to do the work. Amazon has more than 110 active fulfillment centers in the US and more than 185 centers globally.
Property owner Newport Beach-based CapRock Partners has been working on this 1.3 million “spec building” for over a year and just received City of Visalia approval to begin construction, with grading of the empty site starting last week. Electric power to the site for construction is being added this week to the new address- 3315 N. Kelsey St. The building has a million square feet at ground level and a 300,000 square-foot mezzanine.
CapRocks’ President Patrick Daniels said he could not comment on who the tenant was for the big building, which will be, by far, Visalia’s largest — almost 10 Costcos for comparison. Daniels has been working on the 640-acre industrial park — they call it the Visalia Logistics Center — since 2006, when he first visited Visalia. He was drawn by developer Richard Allen and his successful effort to bring in VF Corp to Visalia in 2005. VF, a major local employer, is another big UPS customer who came to town because UPS ships by ground from Visalia to most of California in less time than almost all other competitive locations. Scores of other firms have suggested that is why they too chose Visalia.
As for jobs at Amazon, the Bakersfield location is a close model, offering warehouse jobs paying $15 an hour to start, the company said. Full-time employees immediately qualify for comprehensive health benefits, as well as a 401(k) program with a 50% company match. Amazon also offers to pay 95% of tuition for college courses in in-demand fields, regardless of whether that education relates to their current job with Amazon.
Amazon.com also said last week it received federal approval to establish a fleet of drones, and will begin limited tests of package deliveries to customers in the US, although a number of key steps remain before widespread use of the technology is allowed.
Aside from drones, both UPS and Amazon promise a green fleet of delivery vehicles based in the Visalia Industrial Park.
What will be the impact on government of a new Amazon logistic center here? A summary of Amazon’s 2019 self-reported US taxes includes:
- — Over $1 billion in federal income tax expense
- — More than $2.4 billion in other federal taxes, including payroll taxes and customs duties
- — More than $1.6 billion in state and local taxes, including payroll taxes, property taxes, state income taxes and gross receipts taxes
- — Last year alone, Amazon collected and remitted nearly $9 billion in sales and use taxes to states and localities throughout the U.S. The recent enactment of “marketplace laws” by 40 states allows Amazon to legally collect state and local sales and use taxes on behalf of third-party sellers who sell their goods on their platform.
If Amazon is the golden boy company, UPS and its stock has been on a tear recently as well, propelled by a surge in e-commerce activity this year as a result of Covid-19. UPS stock has doubled since May.
UPS is developing more so-called super hubs across the US, handling more shipments using automation technology. The trend is continuing as demand for same-day service accelerates, fueled by more internet shopping and door-to-door delivery.
With all of those internet orders, a recent analysis expects that e-commerce will require more than three times the logistics space of brick-and-mortar sales, according to 2019 data.
Global e-commerce sales are projected to more than double to $6.5 trillion by 2023, according to Statista. The Boston Consulting Group estimates US e-commerce sales will double as well, to $1 trillion — growing at six times the rate of all retail transactions.
Those projections came before the coronavirus pandemic, which has prompted an explosion in online shopping by people avoiding brick-and-mortar stores. Best Buy recently reported that e-commerce sales grew 242% from the year-ago quarter, and now represents 53% of total sales.
VF Corp recently posted e-commerce earnings, enjoying a surge as well.
The side-by-side locations of UPS and Amazon in Visalia may encourage a mutual feeding frenzy in the future. Amazon is UPS’ largest customer, accounting for almost 12% of UPS’ $74 billion in revenue last year.
Besides taxes, payroll and job impacts of the double powerhouses of UPS and Amazon, the developments will clearly draw more companies to Visalia, officials say. Already five more spec buildings are nearing completion within a country block of the two centers.
CapRock itself has 300 more acres just to the north of the Amazon/UPS sites. Fresno developer John Brelsford, who already has a dozen tenant-filled big buildings in the industrial park, has 150 acres nearby. CapRock too has plans to build another 500,000 square-foot spec building just north of Amazon.
All of this new industry along the city’s northern edge is going to further juice homebuilding and spur other development along Riggin Avenue that now ties to Highway 99 — a continuous four-lane artery. To the west of Plaza Drive, Brelsford plans several million square feet of new industrial space.