Rural Towns, E-Tailers See Fulfillment as Win-Win Situation
The bait iPartner-Ship is using to lure e-tailers to the area includes affordable land, plenty of skilled workers and a location that can reach two-thirds of the U.S. population within three days by ground.
Though Parcel Logistics Expo set a record attendance, iPartner-Ship did not come away from the conference with many leads. The organization blamed the poor results on the conference attracting more managerial contacts rather than company executives.
iPartner-Ship wants to attract more than 10 firms to Central Illinois during the next two years. The company plans to run direct mail campaigns targeted at e-commerce companies and advertise in Web-oriented magazines, said Jack Schultz, president of industrial consulting firm Agracel Inc., a locally based partner in iPartner-Ship.
However, he admitted iPartner-Ship was learning about promotions on the run.
"How are we going to attract e-commerce companies, I guess, is the $64,000 question right now," Schultz said.
iPartner-Ship, Effingham, IL, was formed primarily to generate jobs for Coles and Effingham counties, both located in a central Illinois area that has gone through economic difficulties in recent years.
The area has an unemployment rate of 4.3 percent, more than double the 2 percent reported in larger cities in the region, according to the U.S. Department of Labor's Bureau of Labor Statistics. Coles and Effingham counties, with a combined work force that exceeds 119,000, have more than 5,100 people out of work.
Meanwhile, the area's work force is known to be productive, Schultz said.
"This isn't a situation where the unemployed are the dregs of society," he said. "These are people who grew up on farms who think that a 12-hour workday is a piece of cake."
To start iPartner-Ship, the Coles County Economic Development Council and the city of Effingham, IL, partnered with Agracel Inc. to pool land owned by the three parties. They also set up a Web site at www.ipartner-ship.com.
All parties stand to profit from the organization, Schultz said. He added that the government groups were interested primarily in improving the local economy. After considering other markets to target for economic development, Coles and Effingham county leaders decided e-fulfillment was where they needed to focus economic development.
"We've seen companies who are moving to e-commerce and have noticed its impact on manufacturing and commodities," said Jeanne Gustafson, a spokeswoman for the Coles County group. "We thought it was in the best interest of the area to try and keep pace."
The organization is also touting the area's availability to a major share of the U.S. consumer market.
According to logistics consulting firm Iogistics Inc., central Illinois is within 1,000 miles, or three-day delivery via ground service, of 67 percent of the U.S. population. Additionally, 24 percent of the U.S. population lives within 500 miles, which translates into next-day or two-day ground service by most carriers.
Iogistics also said real estate located near an interstate highway typically costs tens of thousands of dollars per acre in areas more populated than central Illinois. iPartner-Ship has land near interstate highways 57 and 70 that has been estimated at $5,000 per acre.
"We were just talking to a custom golf clubs company that opened up a fulfillment center in Silicon Valley," Schultz said. "I'm not sure if you can get more expensive real estate than Silicon Valley."
Central Illinois' inexpensive labor costs will likely be the feature that captures the attention of marketers looking to extend their back-end capabilities, said Bill Spaide, principal consultant at Spaide, Kuiper and Co., Bala Cynwyd, PA, a fulfillment consulting firm for direct marketers.
"The central location and the relatively inexpensive real estate won't hurt [iPartner-Ship], but the real driver here is the labor market," he said. "A work force that doesn't demand the highest wages is something that can be used to attract companies who want to build [fulfillment] facilities."
Spaide said he knew of a half dozen other rural communities that have made similar economic development projects successful.