Project Management Institute

Holladay meets challenges to provide new facility for tech data

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When Tech Data Corporation of Clearwater, Florida, one of the nation's largest microcomputer distributors, expanded its facilities, they chose South Bend, Indiana, because of its central location in the second-largest United Parcel Service zone in North America. Although the company was working under a deadline that some doubted could be met, the commercial developers at The Holladay Corporation made their move possible on schedule.

Tech Data's new building in the Blackthorn Development Area serves as the company's Midwest distribution center, consolidating operations formerly carried out in Chicago and Cleveland. According to Jeff Howells, senior vice president of finance and CEO for Tech Data, “As we evaluated existing geographic locations and economic factors of our U.S. distribution centers, we concluded that a single, centrally located facility for our Midwestern customers would provide both cost and service efficiency. South Bend stood out as an ideal location with very strong UPS service. Since we partner closely with UPS, this was a particularly important factor, along with the favorable cost of doing business in South Bend.”

Rex Workman, customer service area manager in UPS‘s Indiana district, explained the advantage of a central location when overnight shipping is critical. “Companies like Tech Data can cover an extensive area by using next-day ground service, rather than air service, which substantially reduces costs.” Because of South Bend's strategic location, overnight shipments can be sent as far west as Davenport, Iowa, and east to Cleveland, Ohio. And almost half the U.S. can be reached by two-day ground service.

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Tech Data's new shipping facility in South Bend, Indiana.

Holladay Makes Move Possible

The Holladay Corporation hustled to make South Bend Tech Data's final selection. According to Frank Perri, project manager for Holladay, Tech Data made initial contact in January. “Ours was not the only market they were looking at,” he says, “and there was some doubt whether we could perform because they had to have access to the facility by mid-July. Because their time was short, they were looking for an existing facility.”

But Holladay convinced Tech Data that South Bend was the place to be and, because no existing facility was available to meet their needs, Holladay told them they could build. “We did a cost benefits analysis, which outlined the advantages of the new facility. We added up energy savings and tax savings based on a ten-year tax abatement that we felt we could secure.”

Holladay even showed the company how they could design the building to provide additional rack space by moving the interior columns supporting the warehouse. “We were able to get them an extra row of racks which, when you go up 24 feet, translates into a significant benefit,” Perri said. “If you asked a warehouse person from their industry to draw whatever they wanted, this is the plan they would draw. It was an ideal situation. We showed them that the new facility would cost them no more, and possibly less, than their other options.”

But the key to closing the deal, Perri said, was being able to promise that the building would be ready on time. “The only way we could overcome their hesitation was to have a stiff penalty if we did not get it done.” This involved a risk for Holladay, which started work on the project before their loan was secured and they had control of the land. “We had to start the project or we'd never have finished on time. So we started, without the land or the loans, actually doing things faster than we would normally do. We had to have confidence in the Redevelopment Commission (part of the county's Department of Community and Economic Development) and in Indiana Federal, our lender.”

The 100,000-square-foot, state-of-the-art facility opened in August 1994 with 32 new employees. John Phair, vice president of Holladay, credits the St. Joseph County community with helping Holladay get the project done in a tight time frame. “It took extraordinary cooperation from the government, the land owners, the contractors, the architects, and Project Future, the St. Joseph County economic development agency. Everybody had a piece of the pie, so it was more coordination than anything else.”

Holladay provided that coordination. As expected, the city granted Tech Data a ten-year real property tax abatement. The Redevelopment Authority, which owned the land Tech Data built on, sold it to Holladay for $108,000 and gave them a five-year option to purchase an additional 5.5 acres for expansion. By August 1, the city had provided the company with road service. The building itself was finished on time.

Tech Data Pleased with New Site

Howells said Tech Data was pleased with the results. “Holladay did a good job for us. The move reinforces our ongoing efforts to improve operational efficiency. Holladay responded in a timely manner and, obviously, we like to act quickly when we see an opportunity to reduce costs and at the same time improve customer service. The Blackthorn Development Area turned out to be an ideal location and having a facility built to specification is always preferable,” Howells said.

In fact, the company is so satisfied, they are already looking to expand the new facility. “We've asked Holladay to give us an estimate of time and expense requirements for potentially doubling the size of our South Bend facility,” says Chuck Miller, manager of corporate communications at Tech Data. “We also plan to open a 10,000-square-foot configuration and assembly services center within the existing facility early next year. Many resellers of computer products are looking to out-source this kind of service—installing software, operating systems, peripherals, etc., so they receive a “plug and play” solution that Tech Data can drop-ship directly to end-user customers.”

For South Bend this means more money and jobs for the community. And that makes the people from Holladay proud. “The people who moved here love the location and it has been convenient to their marketplace. But frankly, it was the service they got from the community that was most important,” Phair concluded.img

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network ● April 1995

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