As published in Toledo Business Journal - September 1, 2000
Walgreen Company is planning to construct a distribution center in the northern Ohio region. “We have not contracted or even committed to a site,” stated Michael Polzin, a company spokesman, in mid-August. “We did receive approval for some incentives from the state… but we are still pursuing other incentives; we have not obtained property at this point… It’s very preliminary at this time.” However, Walgreen has eliminated Michigan and Indiana and set their sights on a northern Ohio location.
The City of Toledo has provided Walgreen with three possible site locations.
Perrysburg is also attempting to meet the needs of the company. Perrysburg Township and the Rossford School Board are working together to provide Walgreen Company with significant local property tax exemptions. The exemptions are for a 113 acre site located at State Route 795 near Oregon Road. Jeremy Gutierrez with the Wood County Economic Development Commission stated, “At the local level, there will be tax abatement, however at this point it is still being negotiated – what percentage and for how long. The company has also committed to making payments to the Rossford school district and Penta County in lieu of taxes.”
According to the Ohio Department of Economic Development, it is expected that Walgreen Company will finalize a Community Reinvestment Area and Ohio Enterprise Zone tax exemption agreement with the Township and Board.
Walgreen is in the middle of a major expansion. “We’re also in the process of building new distribution centers in Texas and Florida right now,” stated Polzin. “We’re opening 450 new stores this year. We have over 3,100 right now. Our goal is to have 6,000 stores by 2010.” The Ohio distribution center will be their thirteenth in the nation.
“We’d be looking to serve Ohio, Michigan, possibly parts of Indiana, possibly parts of Kentucky… We do have a distribution center in Pennsylvania that serves that state and New York and New Jersey,” stated Polzin.
“We’re looking to serve a growing store base – not only in Ohio, but also in Michigan, particularly in Detroit,” Polzin explained. “That’s a market we’ve just entered in the last three years and it is growing rapidly. Cleveland and northeast Ohio is a market we entered about five years ago; we’ve also seen a lot of growth in that area.”
Walgreen Company is a drugstore retailer serving customers throughout the United States. Walgreen operates more than 3,100 retail drugstores, as well as two mail service facilities. The drugstores are engaged in the retail sale of prescription and non-prescription drugs and carry additional product lines such as general merchandise, cosmetics, toiletries, liquor and tobacco. Walgreen Company offers prescription fulfillment services via telephone, fax and the Internet.
Walgreen Company will be constructing and operating a new 650,000 square-foot, state-of-the-art warehousing and distribution facility for pharmaceutical products and other general merchandise, according to the state. Investment in real property is expected to be $59 million, including land and building. Tangible personal property investment, including machinery and computer equipment, but excluding inventory, will total approximately $76 million. Average annual values of inventory investment will reach $70 million by the end of the third year, and $170 million at full operation in the seventh year, according to the state.
Automation will be a key element in the new facility. Polzin explained, “We have a very sophisticated computer-driven automated storage and retrieval system. Using a very complex conveying system, we use bar coding technology to move cases from one spot to another… Our inventory management system connects our stores and our distribution centers. We have an automated reorder system. Of course, a store manager can adjust his order as he feels is necessary, but we do make use of an automated reorder system.”
As a result of this project, the company will create 318 new, full-time jobs with three years of the project’s initial operations, according to the state. There will be subsequent expansions in years five to seven bringing total employment at the facility to 788 by the end of year seven. The average wage of these employees will be $14.00 per hour, plus $3.50 in benefits.
On July 31, 2000, the Ohio Job Creation Tax Credit Authority approved an average of 65 percent, ten-year tax credit for the Walgreen Company, for the construction and operation of the warehousing and distribution facility in Perrysburg Township, Wood County. The credit will be structured such that company will receive a 55 percent credit for the first five years of the term and a 75 percent credit for the remaining five years of the term, for an average of 65 percent over the entire term. As part of the tax credit agreement, the Authority is requiring the company to maintain operations in Perrysburg Township for at least 20 years.
The Ohio Job Creation Tax Credit enabled Walgreen Company to select a site in Ohio over rival sites in the states of Michigan and Indiana, according to the state. The tax credit will begin in 2002 and will end in 2011.