Sysco said eyeing big facility in Post Falls, Idaho

Company reportedly likes Post Falls site for 350,000-square-foot distribution center

By Kim Crompton Spokane Journal of Business

Sysco Corp., which claims to be North America’s largest distributor of food-service products, reportedly is considering developing a 350,000-square-foot distribution facility in Post Falls.

The Houston-based company is said to have found an undisclosed site it likes there, after having been courted by Spokane real estate agents who sought to entice it to develop the facility on the West Plains. Sysco has spent $25 million to $30 million to develop and equip similar-sized distribution centers that it has developed elsewhere.

Pete Thompson, a commercial and industrial real estate specialist with Hawkins Edwards Inc., of Spokane, says Jack D. Carlson, Sysco’s vice president of real estate and construction, told him recently that the company had chosen a site in Post Falls for the distribution center.

The Post Falls facility, if it’s developed, is expected to employ 250 to 300 people and to be designed so it can be expanded to 500,000 square feet of floor space within a couple of years, Thompson says Carlson told him.

Carlson couldn’t be reached for comment. Toni Spigelmier, Sysco’s director of investor and media relations, declined to comment other than to say, “We have indicated for some time that we have an interest in the Spokane market area, and as soon as we have a decision we will release information on it.”

Thompson says he had been trying since 1998 to interest Sysco in developing such a facility on a large undeveloped West Plains site, east of Hayford Road between Geiger Boulevard and Electric Avenue along Interstate 90. The property is where Spokane-based Inland Power & Light Co. had proposed years ago to develop the West Terrace Business Park. Efforts also reportedly were made to interest Sysco in locating the distribution facility in the Pacific Northwest Technology Park that Granite Investments LLC is developing along U.S. 2 east of Airway Heights.

Thompson says Carlson told him that Washington’s workers’ compensation rates were a factor in the company’s decision to develop the facility in Idaho, and that Sysco also would receive property-tax-abatement and tax-increment-financing assistance at the Post Falls site.

The exact site on the north side of Interstate 90 where the distribution facility reportedly is planned couldn’t be determined immediately, but Thompson says Sysco had been looking for 30 acres of land on which to develop it.

Collin Coles, a senior planner with the city of Post Falls, says Sysco hasn’t submitted any development-related documents to that city’s planning department, but he has heard that the company is considering developing a distribution facility there, possibly on property near Stateline.

Thompson says Sysco currently occupies part of the 60,000-square-foot, former Produce Supply Co. building at 4122 S. Grove Road on the West Plains. The company also has a small office at 1414 N. Fiske in East Spokane.

Although plans for the distribution facility couldn’t be confirmed immediately with Sysco, the company has made clear its interest in expanding its presence here. In an interview published last year, Sysco’s then-chairman and CEO, Charles H. Cotros, identified Spokane as a potential site for one of its new so-called “fold-out” broad-line distribution facilities.

The company’s “fold-out” growth strategy, implemented in 1995, refers to the opening of a new facility and a new operating company in an area with an established customer base that is being served from a distant Sysco location. When a “fold-out” company is formed, delivery personnel become employees of the new company, a core management team is transferred from the original or affiliated companies, and additional employees are hired locally. Sysco believes the strategy allows it to serve customers better, thus promoting more rapid growth.

In the interview, published in June 2002 by an investor-focused publication called The Wall Street Transcript, Cotros said publicly traded Sysco was evaluating North Los Angeles sites for a possible 12th “fold-out” facility and added, “We continue to look for markets where we can use this same strategy. A similar opportunity would be in Spokane, Wash., which we are now servicing from Seattle.”

Cotros retired at the end of last year, and was succeeded by Richard J. Schnieders as Sysco’s top executive. The change in leadership, though, hasn’t slowed implementation of company’s “fold-out” strategy. Two months ago, Sysco announced plans to develop a “fold-out” facility in Fargo, N.D.—its 13th overall—that will be operated by a new entity called Sysco Food Services of North Dakota Inc.

“Our ‘fold-out’ companies have been a very successful component of Sysco’s internal growth strategies and our commitment to helping our customers succeed,” Schnieders said then. “The strategy of opening ‘fold-outs’ in our larger markets continues to be viable and will now be complemented by an approach that seeks similar opportunities in smaller food-service markets.”

Sysco operates 147 distribution facilities in the U.S. and Canada that serve more than 415,000 customers, including restaurants, hotels, schools, hospitals, retirement homes, and other locations.

The company distributes a wide variety of fresh, frozen, and specialty meals; seafood; poultry; fruits and vegetables; dairy foods; bakery products; and beverages. It also distributes canned and dry foods, paper and disposable products, kitchen and tabletop equipment, medical and surgical supplies, and hotel operating supplies.

It recently reported its 27th consecutive year of sales and earnings gains. For its 2003 fiscal year ended June 28, it reported net income of $778 million on sales of $26.14 billion. Its earnings were up more than 14 percent and its sales were up nearly 12 percent from its 2002 fiscal year.

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