That is the word that just came in from JSOnline.com:
The Kohl’s Corp. announced Tuesday that it would close its huge distribution center in Menomonee Falls on Jan. 29, 2010.
The decision affects approximately 250 workers, according to Vicki Shamion, a Kohl’s spokeswoman.
However, the workers will be offered their identical jobs at the company’s network of 10 other distribution centers around the country if they stay at the company through Jan. 29, when the center is scheduled to shut down….
Shamion said the decision to close the center was based “on the overall effectiveness of the distribution network.” She said that, after study, the company concluded that the Menomonee Falls center could not be reconfigured to “allow for expanded capacity.”
“It was a difficult decision,” she said.
The inventory at the Menomonee Falls site will be moved to the Kohl’s distribution center in Ottawa, Ill.
Left unmentioned in the article or by the PR flack are a couple of key items:
– The deteriorating tax climate in Wisconsin, specifically several mandated increases in the unemployment tax due to both the insolvency of the fund and actions of the Legislature.
– The weight limits in the not-soon-to-be-rebuilt Zoo Interchange, specifically the 30-ton limit on the northbound I-894-to-northbound US-45 ramp. Since almost all of the inbound truck traffic would use that ramp, that puts a crimp in the flow of goods into the distribution center.
I have to wonder how long until the corporate headquarters follows the distribution center to the land of the toll booths. After all, even though it is a Wisconsin company, it is called “Kohl’s Illinois, Inc.”
Missing in your analysis is that Kohls is doing very very well, which is why they have to close this center. It has nothing to do with the Zoo Interchange, and everything to do with distances between centers and stores in the network.
When that distribution center opened, Kohls was much more concentrated in the North, and the Northern Midwest. A Menomonee Falls DC made sense. Now that Kohls is in 49 states, they have to examine where it makes sense to concentrate their rebuilding and expansion of distribution centers.
Expanding a DC in one of the Northern most states simply doesn’t make sense. It makes much better sense to concentrate the distribution in a larger center that is located a little further south. If nothing else, it saves on gas to truck around the distribution network.
Far from making the point that the 30-ton limit in the Zoo Interchange has nothing to do with Kohl’s decision to pull out of Menomonee Falls, Kohl’s success proves that it does have something to do with it. Though the detour for trucks greater than 3/4ths loaded (which likely will be lowered before the DOT finally gets to the Zoo) is short, it is both an economic and psychological strike.
As for the location factor, while the Ottawa, Illinois location is marginally closer to Chicago, Kohl’s DCs in western Missouri, northwestern Ohio and southwestern Ohio blunt the southern advantage. Moreover, it’s farther between Ottawa and Minneapolis than it is from Menomonee Falls and Minneapolis, and that difference is greater than that between the two DCs and Chicago.
That “wash” brings the other factors into play, which includes the lack of expandability at Menomonee Falls, the business tax climate, and the inability to take full loads on the most-direct route to the Falls from Chicago. The Zoo may not have been the proverbial Strike Three, but it was a strike.
Hey… I never understood why I94 to Chicago was placed in a priority over the Zoo Interchange… but thats independent of tax climate. The DC doesn’t generate sales tax revenue no matter where it goes, and the income tax issue is minor too when you consider that Illinois is generally worse than Wisconsin.
Individual income taxes may be worse in Illinois (depending on where one is on the income scale; Wisconsin has higher rates but also higher deductions, at least for low-to-mid-income people), but corporate income taxes are much better down south.
As for I-94 south of the airport versus the Zoo, the answer is simple – screw Waukesha County. Seriously, that segment of I-94 south of the airport is the closest freeway to a Democrat-controlled area where the locals actually want at least the same number of lanes. The rest of the system is either in Milwaukee/the North Shore (whose leaders would be fine with 2 lanes in either direction) or in Republican-dominated areas.