FedEx Trade Networks began construction Tuesday on its new distribution center in the Town of Tonawanda, giving hope to local development officials that the company’s expansion will boost the Buffalo Niagara region’s efforts to become a distribution and logistics hub.
“It really drives home the value of this region as a center for logistics in the global economy,” said Kenneth Adams, president and chief executive officer of Empire State Development, the state’s main economic development agency.
“It plays to the inherent strength of the region,” Adams said. “There could be no better seal of approval for a logistics business in this location.”
The $10.6 million office and distribution center will consolidate the office space that FedEx currently leases on Ensminger Road and the warehouse that it leases on Kenmore Avenue, both in the Town of Tonawanda, and expand the company’s local workforce by an estimated 82 people within the next two years.
The company, which currently has 168 jobs at the two Town of Tonawanda sites, also considered sites in FedEx’s hometown of Memphis, Tenn., and Indianapolis, development officials said. FedEx Trade Networks is the freight forwarding arm of FedEx, the worldwide delivery and cargo transport firm that employs about 650 other workers in the Buffalo Niagara region, many involved in its delivery business.
To lure FedEx, state and local development agencies are providing more than $4.5 million in tax breaks and tax credits – a sum equal to more than 40 percent of the project’s total cost. That works out to almost $55,000 for every new job that the project is expected to create, or about $4,500 for every job that FedEx has pledged to create or already has in the region.
The incentives include $2.56 million in Excelsior Tax Credits from the state, along with more than $2 million in tax breaks through the Erie County Industrial Development Agency.
“Smart economic development programming played a major role in securing these critical jobs,” said Thomas M. Montante, chief executive officer of the business park’s developer, TM Montante Development.
“This project and those jobs are not in distribution, but are highly mobile in nature. They could be located anywhere in the country that FedEx Trade Networks believed to be the best place to conduct its business,” Montante said.
The FedEx project, which is expected to be ready to begin operations late this year, will give the region a strong selling point within the logistics industry, said Thomas Kucharski, president of the Buffalo Niagara Enterprise business development and marketing group, which worked with FedEx on the project.
“It shows we can compete with anyone,” he said.
“Logistics can be one of the area’s strengths,” Kucharski said. “But we need to create awareness of the assets we have here and how much traffic flows through the region.”
“It puts Buffalo and FedEx in our branding,” he said. “It validates what our message is, which is that this is a binational area where you can move goods across the U.S. and Canada.”
Adams said the region’s location as a shipping port on Lake Erie, with two major airports and highways that make much of the eastern seaboard within a one-day drive, make Western New York attractive to logistics firms.
“It’s a reminder that you have a confluence of transportation infrastructure that’s critical to the Northeast,” he said. “All of these transportation assets are concentrated here in a unique way. Plus, it’s right next to southern Ontario.”
Fred Schardt, president of FedEx Trade Networks, said the environmental benefits of the company’s 14-acre site within the Riverview Solar Technology Park off River Road also were a selling point. “We understand the importance of doing business in an environmentally sustainable way. It’s very, very important for us,” he said. “This park allows this to happen.”
The FedEx building will include a 100-kilowatt solar array that will be integrated into the design of the structure. Those solar panels are expected to generate 1 million kilowatt-hours of electricity during the term of the company’s lease, reducing the company’s consumption of fossil fuels by the equivalent of 80,000 gallons of gasoline, Montante said.