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The Amazon fulfillment center in Beloit and the Dollar General distribution center in Janesville are two examples of the growing warehousing and distribution sector of the local economy.

JANESVILLE

As local private and municipal economic development officials peer into the crystal ball of a new year, they say one new prospect is coming into view in 2021: More warehousing, distribution and supply-chain jobs could be headed to Janesville.

During a conference call with chamber of commerce group Forward Janesville on the future of the local economy this week, city of Janesville Economic Development Director Gale Price said he is seeing a sudden, dramatic uptick in interest for industrial developers.

Price said talks he is involved in are in “early stages,” but right now, his office is working on nine development deals that could range from new industrial development to the reuse of existing commercial space.

Two of those negotiations, he said, revolve around prospects in e-commerce distribution. More specifically, those prospects are in warehousing and distribution developments that would take advantage of Janesville’s location—along a major Interstate highway and within short driving distance of several larger metro areas—to bolster the supply chain in a growing trend: delivery of retail goods straight to consumers.

The talks have emerged as major retailers continue to shift their models during a pandemic that has turned consumer shopping habits upside down. Retailers are adjusting to be able to mix brick-and-mortar sales with e-commerce sales shipped directly to customers, including everything from packaged foods to cleaning supplies to clothing.

Some companies in the e-commerce shipment sector act as third-party vendors for retailers who channel shipments of individual products from manufacturers straight to the homes of people who ordered the products online.

These distributors are growing in number in certain centrally located areas. They operate in a manner that is in some ways comparable to e-commerce giant Amazon but at a smaller scale. Some also operate as hubs for existing parcel delivery companies such as UPS or FedEx, Price said.

Price explains the model through the lens of a typical, pandemic-era shopping order.

“What now happens is you make an online product purchase or an order from a local box retail store. Half of that comes from the actual local store. During this pandemic, maybe you drive over and pick up half the order curbside in the parking lot. But a handful of the other products you ordered instead comes straight to you via UPS because it’s products from a different warehouse,” Price said.

“That’s what we’re talking about with e-commerce (distribution). It’s an entity that in and of itself has evolved dramatically very recently, and it’s out of necessity because of the pandemic.”

Price said pending ongoing talks, he is not authorized to identify the e-commerce distribution companies. He said they are just one piece of prospective industrial growth here, but he said he views the potential of job growth in local distribution linked to e-commerce as “potentially significant.”

That growth potential can be seen at large-scale distribution hubs such as the new Amazon distribution center in Beloit and Janesville’s 1-million-square-foot Dollar General distribution center: Officials say that when both are operating at full capacity, they could employ at least 2,500 people combined.

They are two big drivers in what is poised to be the single fastest-growing segment of the local job market in Janesville. The two facilities alone have over the past five years transformed part of the local workforce and reoriented workers toward a set of skills that is different than that used in typical manufacturing jobs.

Price said Janesville’s labor force—and its central location—will continue to drive interest from distribution companies of different types and sizes.

“Continued industrial distribution has continued to be a great strong point in real estate development, especially in the Midwest and in Wisconsin. There’s continued interest in Janesville because of its geographic location in the center of huge Midwest markets for distribution, and it just continues to bolster our position,” Price said.

Starting pay for some local distribution jobs now is around $15 to $16 an hour, according to federal wage data. The data shows that distribution has outpaced average pay in other semi-skilled professions.

That means those jobs have pay that could woo workers away from manufacturing in the local labor shed and from nearby labor markets in northern Illinois.

Data from the U.S. Department of Commerce and the census shows that over the past five years, the influx of daily commuters into Janesville’s labor market has continued to grow, Price said. He said industrial developers, distribution companies included, view that as evidence of a stable labor market.

The new interest in industrial development projects in Janesville comes in the wake of a short-term shakeup in the job market. The state measures Janesville’s unemployment rate now at about 5.3%, which roughly aligns with the state average.

That is certainly not full employment, but it comes months after the pandemic derailed the national economy, including the local job market, particularly for workers in the restaurant and hotel sectors.

In Rock County, unemployment spiked to about 15% during the state’s initial COVID-19 lockdown in April.

Local and national analysts say the hotel and restaurant sectors likely will continue to struggle mightily until at least this summer when the pandemic’s grip might start to loosen with the hoped-for proliferation of coronavirus vaccines.

But lingering unemployment in some segments of the job market could bring opportunity for both new and existing local distribution and logistics companies.

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