Local Economist John Husing
BY DAVID DANELSKI AND KIMBERLY PIERCEALL
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Published: 16 June 2012 04:55 PM
Moreno Valley city officials say the economic promise of 41.6 million square feet of warehouses envisioned for the east side of the city includes paychecks for “tens of thousands” of workers.
The enticing projection, trumpeted amid some of the highest unemployment rates in the nation — 13.7 percent in Moreno Valley and 11.7 in the Inland region — grew out of an analysis by Inland economist John Husing. He calculated that the proposed World Logistics Center would put one person to work for every 2,000 square feet of warehouse space, creating about 20,000 “direct jobs.”
Another 8,000 people would find work in and around Moreno Valley at restaurants, dry cleaners and other services needed by these workers and their employers.
Husing predicts the warehouse complex will pump more than $4 billion a year into Riverside County’s economy.
But public records, surveys of existing Inland warehouses and interviews with other experts show that Husing’s jobs projection might be overly optimistic and did not reflect trends in warehousing. Husing based his projection partially on 9-year-old national jobs data that didn’t look specifically at the large, modern warehouses proposed for Moreno Valley.
Many large warehouses — some covering more than 1 million square feet — are highly automated with computers, conveyors and robotic machinery. They employ significantly fewer people per unit of space than Husing’s estimate for the World Logistics Center, according to a Press-Enterprise survey of large warehouses. For example, Target, Lowe’s, Toys R Us and UPS distribution centers in the Inland area employ about half of the 1-per-2,000 estimate for the Moreno Valley complex.
Getting it right is important, experts say.
“The public deserves and should receive accurate information from the agencies, and anything different should not be,” said Hasan Ikhrata, executive director of the Southern California Association of Governments, the regional planning agency.
Accurate information allows citizens and policymakers to better evaluate a project’s costs and benefits and gives the public confidence in the decision making, said Ikhrata and Bob Stern of the Center for Government Studies.
Conversely, inaccurate information can thwart an agency’s own ambitions, said Ikhrata, who has not reviewed Husing’s analysis.
For example, a proposed California high-speed rail system is gaining opposition because proponents underestimated its cost and overestimated ridership.
“If you over- or understate, you will lose people even when you have a good case,” Ikhrata said.
Moreno Valley stands by Husing’s figures.
The city’s community and economic development director, Barry Foster, said a city jobs survey found that many warehouses there employ significantly more people than would be expected based on Husing’s formula. The Press-Enterprise was unable to verify most of the city’s information because the companies that own or lease the warehouses would not divulge employment numbers or did not return telephone calls.
A 1.5 million-square-foot Ross Stores distribution center and a neighboring 715,000-square-foot Walgreen center collectively employee about 2,200 people, which is about double the rate predicted by Husing’s formula, according to the city survey.
“They are all different types of operations,” Foster said, so the number of employees varies widely.
Foster said the projections are “just an estimate” included in a broader Husing report that also identified economic opportunities for a city dealing with nearly 14 percent unemployment. The city paid Husing $15,000 for the report.
Even if the jobs fall short of projections, Moreno Valley stands to gain thousands of jobs if the logistics center comes to fruition, Foster said. “We need the jobs.”
He said he expects the city to attract distribution centers for discount retailers, such as Ross and Harbor Freight — companies that have beat Husing’s numbers because their warehouses are so busy. He also hopes to see more online retailers, such as the existing iHerb, which employs about 400 people in a 360,000-square-foot building that includes the company’s offices as well as warehousing operations.
Experts on warehousing, however, say the trend is toward more automation and fewer employees. For that reason, some local governments have cut parking space requirements and road impact fees for distribution centers.
Husing analyzed national data for all sizes and ages of warehouses/distribution centers that had been gathered in 2003 by the U.S. Energy Information Administration as part of a larger survey of commercial buildings to gauge energy use.
The World Logistics Center, proposed by developer Iddo Benzeevi, would have the largest, most technically sophisticated types of warehouses. They are known in the industry as “high cube” warehouses, named for their high ceilings. The buildings capitalize on robotics and other advances in automation technologies that reduce the number of workers needed to operate them.
At a public meeting earlier this year, Benzeevi said the World Logistics Center would have warehouses much like his 1.8 million-square-foot Skechers building that opened last year south of Highway 60 in eastern Moreno Valley.
“These are considered high-cube logistics warehouse buildings that essentially will be not just the majority but the core and definition of this project,” he said at the March 12 meeting.
In Riverside County, developers of high-cube buildings pay lower road impact fees because having fewer workers translates to less wear and tear on the roads, according to the Western Riverside Council of Governments.
Similarly, the city of Perris gave developers of high-cube warehouses a break on parking requirements.
“They are extremely highly automated and have a rather low employment count, therefore we are finding that these facilities … are over-parked,” Associate Planner Diane Sbardellati told Perris City Council in 2009. “Over half of this parking can be eliminated.”
The change in parking requirements allowed developers of the 1.3 million-square-foot Ridge Commerce Center in Perris to reduce the number of parking spaces from 826 to 472.
Even since 2003, when the data Husing used was collected, warehousing has become more efficient.
“The technology has made the difference,” said B.J. Patterson, CEO of Pacific Mountain Logistics in Ontario. He oversees 200,000 square feet of warehouses filled with sporting goods and grocery products. “Now you have mobile technologies that are much less expensive and easy to obtain and to integrate. We have made the workers more efficient.”
Because of such efficiencies, ratios of one job per 4,000 square feet or more are becoming commonplace, Patterson said. That’s half as many workers as Husing’s formula.
Husing said he stands by his numbers. He said he did not intend to include only large warehouses in his calculations.
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