As warehouses go, there are few like Skechers USA Inc.'s new 1.82-million-square-foot distribution center.
This warehouse is so big that it takes half a minute to drive from one end to the other at 60 miles per hour. The setup is so advanced that human hands will hardly touch the cargo as it is unpacked, categorized, stacked and prepared for delivery. The building is so green that it uses prevailing winds for ventilation instead of air conditioning.
For its new North American operations warehouse, the nation’s No. 2 footwear company chose the Inland Empire’s Moreno Valley. That’s a sign, experts said, that in the highly competitive world of international trade, Southern California is still the hub of choice.
“Skechers put it here because its products don’t have the luxury of a long shelf life. They’ve got to move them quickly,” said John Carver, who heads the global port practice for Jones Lang LaSalle, a Chicago commercial property management, leasing and investment management firm. “For time-sensitive cargo, Southern California remains the preferred gateway for international trade.”
Skechers Chief Operating Officer David Weinberg put it another way. The company relies on the Port of Long Beach for the movement of its goods, and the Moreno Valley site was the only place large enough to accommodate that much square footage in a single location. The $250-million distribution center will replace six smaller warehouses in Ontario.
“We like serving our customers as quickly as possible. It can arrive at the port that day, be here [at the warehouse] that night and be on the road the next day,” Weinberg said. “We like having it this close by.”
Together, Los Angeles, Orange, San Bernardino, Riverside and Ventura counties account for 565,000 trade and logistics-related jobs. It’s the largest concentration of those generally well-paid blue-collar positions in the U.S.
“Half of the growth in the industrial real estate market in the U.S. since the end of the recession has come in the Inland Empire,” Carver said. “Across the rest of the nation, there’s really nothing else that comes close.”
Jones Lang LaSalle rates the nation’s ports and their surrounding cargo movement infrastructure with an index that compares container counts, port growth rates, real estate occupancy levels, rail connections and infrastructure investments. On a scale of 70 to 100, only the Los Angeles-Long Beach-Inland Empire region rates above 90, at 91.4, followed by New York-New Jersey (89.5).
That’s partly why companies that are much closer to the East Coast’s biggest ports, like the New Jersey logistics, transportation and distribution firm NFI Industries, are making their biggest moves here. The company recently bought out the West Coast cargo distribution assets of Gilbert Co., including four warehouses in Chino.
“This is our biggest acquisition yet,” said NFI Industries Chief Executive Sidney R. Brown, whose clients include small to medium-size companies and some of the top apparel and footwear companies in North America. In logistics, he said, “the demand for close proximity to the ports of Los Angeles and Long Beach has only gotten greater and greater.”
Gone are the days when a warehouse was relatively small and operated with forklifts and other simple technology. The new warehouses require much larger construction crews and materials budgets and use much more sophisticated technology.
Weinberg has high aspirations for Skechers’ new facility. With six warehouses, Weinberg said, workers now handle the stock three times as it is moved from building to building, adding costs, such as the wages of truck drivers. But with the new building, Weinberg said, “now, no one will have to touch it to do the same amount of work.”
Weinberg also said that he was expecting huge leaps in productivity when the facility opens this year.
“Right now, we can move 7,000 pairs of shoes an hour. But with the new warehouse, we’re expecting to be able to move 18,000 to 20,000 pairs of shoes every hour,” he said.
The warehouse will employ about 500 people, Weinberg said. He offered no details on how many are employed at the other six warehouses, which Skechers will leave behind.
“The biggest difference is that we won’t need significantly more new people even as we grow,” Weinberg said.
Skechers’ consolidation is part of a larger trend in the distribution industry, said Darla Longo, vice chairwoman at CB Richard Ellis, who assisted Skechers with its earlier warehouse leases and also handled the deal involving the new distribution center. Consolidating into one highly automated building will allow Skechers “to get out of the trucking business,” Longo said. “They won’t need to truck products from one warehouse to another.”
Skechers’ new building on Eucalyptus Avenue near the 60 Freeway is nearly 2,900 feet long and more than 700 feet wide, big enough to hold 40 football fields, said Iddo Benzeevi, president of developer Highland Fairview Properties, which owns the site. It is so large that construction workers used bikes to get around inside it.
It will have 270 truck bays that will operate more like an airline gate system than like a traditional warehouse.
To build it took 1,100 construction jobs and 140,000 cubic yards of concrete, delivered in 14,000 truck trips. It took three businesses to supply the amount of concrete required. The building also has 800 miles of steel rebar, 700 miles of electrical wiring and 14 miles of water sprinkler pipes.
Big as it is, the Skechers warehouse doesn’t hold the record, although real estate experts describe it as one of the largest in California. The nation’s biggest warehouse is a 2.4-million-square-footer in Oconomowoc, Wis., according to real estate data provider CoStar Group Inc. Gap Inc. has a 2.3-million-square-foot distribution facility in Gallatin, Tenn. In California, Ikea maintains a 1.8-million-square-foot facility in Bakersfield.
At the Skechers warehouse, the conveyor belts that will move shoes are programmed and pressure-sensitive, unlike traditional belts that would simply let products pile up, like the scene in “I Love Lucy” in which Lucille Ball’s character winds up stuffing chocolates from the conveyor belt into her mouth as they pile up. Storage racks, far too narrow for old-style forklifts, are operated by an advanced robotic system that can pick up the smallest boxes and deliver them to a desired location.
“You can’t stuff shoes into your mouth,” Weinberg joked, “so we knew we had to design it differently.”
The warehouse also earned Leadership in Energy and Environmental Design, or LEED, certification from the U.S. Green Building Council. Weinberg said that traditional costs for climate control at such a huge structure would have been enormous, so the Skechers building will rely on natural ventilation and solar power for much of its needs.
A special lighting system activates only when there is activity in an area, and the same sensors turn off the lights when no activity is detected.
“A company our size is highly visible, so it always makes good sense to go green, and by designing it this way it will stay cooler in the summer and stay warmer in the winter, without significant additional expense,” Weinberg said.