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Cherokee Hy-Vee Distribution to expand

Wednesday, October 22, 2008

(Photo)
Todd Hockenson, Hy-Vee Vice President of Distribution - Cherokee, points out the tract of land where Hy-Vee will construct a 230,000 warehouse addition north of the existing Hy-Vee Distribution Center north of the Iowa Highway 3 By-Pass in Cherokee. Photo by Mike Leckband
Site work to begin in November for multi-million dollar project

A high quality, efficient work force, and strong, positive, determined leadership by Todd Hockenson, Assistant Vice President of Distribution - Cherokee, have combined to help create a proposed multi-million dollar expansion at the Cherokee Hy-Vee Distribution plant north of the City.

Carrying an assessed valuation (brick and mortar) of $3.77 million, the 230,000 square-foot expansion represents a total investment that will far exceed that number when all the residual and soft costs such as site preparation, additional warehouse and office equipment, plumbing, electrical, shelving, related construction, etc. are factored in.

The new addition will be built adjacent to the existing Hy-Vee Warehouse on the north side.

The existing warehouse and the proposed new addition lie in the Cherokee city limits, with the property also included in a county Enterprise Zone that qualifies it for a local property tax exemption as part of a tax incentive program for businesses that will benefit Cherokee County.

The result is a 75 percent tax exemption for 10 years, with the city of Cherokee receiving the remaining 25 percent taxation on the 345.47-acre parcel involved.

The project also will involve incentives from the Iowa Department of Economic Development. However, the IDED met Thursday morning with the Hy-Vee proposal on the agenda, and no announcement on IDED's level of participation was forthcoming at press time Thursday afternoon.

Hy-Vee has its own construction company and will serve as general contractor for the sizable project, but local subcontractors will be employed if at all possible, according to Hockenson, who said he has lobbied his company for the Cherokee expansion project for the past 2 1/2 years.

In planning for its future growth patterns, Hy-Vee employed the Iowa State University Logistics Department to study whether to relocate or expand certain existing distribution facilities. When all was told, it was recommended that the Cherokee Distribution Center be expanded to meet the growing demands of the superbly successful Iowa grocery chain, because of its outstanding, loyal, and efficient work force, along with the effective lobbying by Hockenson.

The Cherokee Economic Development Corporation (CAEDC), the Cherokee Industrial Corporation (CIC), the Board of Supervisors, and the City of Cherokee all played important roles in assisting in the bid to expand the local warehouse.

The massive 230,000 square-foot expansion, combined with the existing 435,000 square-foot facility, will bring the Distribution Center's total square-footage to 665,000, not including the outdoor work areas, docks, parking, etc.

The proposed expansion also will mean adding 10 more full-time employees (with full benefits) at the warehouse over a three-year period, adding to the existing 350 warehouse workers now employed.

"As far as the total Hy-Vee distribution network goes, geographically Cherokee is out in the left field bleachers," said Hockenson in explaining the time and effort involved in convincing Hy-Vee to expand in Cherokee.

"The ISU Logistics Department looked at all the options and rated them on whether to expand in Cherokee or consolidate elsewhere. We are indeed fortunate that the efficiency of our work force since day one here played such an important part in us getting this project here. Ultimately, it was decided that Cherokee was the most cost-effective strategy."

The new addition will be devoted to dry grocery storage, with the existing warehouse space housing more general merchandise, as Hy-Vee Food Stores evolve into much more than grocery stores, the thrust being to become more of a one-stop shopping experience offering consumers a multitude of general merchandise along with the long-standing "total grocery store" concept.

"We're excited about this," added Hockenson, who, with his family, is deeply involved in the Cherokee community.

"Hy-Vee's growth is three to one south to north (Cherokee is north), so our commitment to expand here is huge. This anchors Hy-Vee into this community for a very long time into the future. Since I've been here, we have nearly doubled our work force in the last 10 years. Over time, we've greatly increased our volume. Transportation is key to what we do and our employees and department heads are as good as they get. It all played a part in this expansion and is a credit to our workers, Hy-Vee, and the whole community."

Also key to the project was the fact that CAEDC and its director Mark Buschkamp collect labor shed data through studies at least every two years. This data was at the ready for Hy-Vee to use in its planning.

"We have been pro-active on this for quite some time," said Buschkamp. "We knew its value for businesses planning to locate or relocate. When everything was added up, Hy-Vee and ISU determined expansion here was the thing to do.

"I've been told that the Cherokee warehouse is the best operated distribution warehouse in the entire Hy-Vee network. That's really saying something for the employees and the Hy-Vee leadership here. It's a great tribute to the quality of our workers and of this community. This is a significant investment in our community and shows Hy-Vee's faith in us. I can't be more proud and happy to embrace such wonderful news in our town."

The news last week that a stretch of U.S. Highway 20 from Sac City to early will be four-laned within the next five years was also great news for Cherokee and Hy-Vee, both who have lobbied the four-laning of Highway 20 in Western Iowa for many years.

"A lot of our freight comes from out East," said Hockenson. "We will use 20 if it's available for east-west transportation. Cherokee is in a good location, with I-90 to the north and I-80 to the east for east-west transportation, and I-35 east of here for north-south travel. We also use Iowa Highway 3 for east-west travel, but we really need four-laners for best efficiency and time-saving."

Hockenson said he hopes the project's plans get finalized as soon as possible so they can start the site preparation work shortly after November 1 of this year. The bids for the dirtwork already have been sent out for local contractors and just need final approval by Hy-Vee headquarters to proceed full steam ahead.



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