Boyd Report

Boyd Co. reports point the way for industry recruitment

For the first time in Adams County history, a concentrated effort for economic development is underway.
Support from county, city and port district leaders plus a rejuvenated economic development council has resulted in a flurry of activity to attract new industry to the region as well as provide support for the existing industry.

The biggest investment so far has been commissioning the Boyd Company, Inc., to analyze the county. This work included the -development of the target industry study, Comparative Distribution Warehousing Costs in Port and Intermodal-Proximate Cities. It also included the identification of target industries in a Blueprint for Action Report, which showed a locational fit and market ability for the Adams County Development Council (ACDC) to focus on.

The study examined the costs of construction and operating a 500,000 sq. foot distribution warehouse employing 150 non-exempt employees in Ritzville in comparison with similar locations around the country. Each site selected for comparison against Ritzville is already an area that is being talked about within the industry.

“This reports documents very compelling operating costs for Ritzville, it positions Ritzville at the forefront of the national dialogue in terms of where warehouses will be sited in the 11 western states,” John Boyd, Jr., of The Boyd Company said.

Out of 25 cities nationwide, Ritzville is rated as the second lowest cost of operation and the city with the lowest cost of operation on the west coast at $11.3 million in annual operating costs. Because of -favorable land prices, competitive electricity rates from Big Bend -Electric Co-op and the overall low cost of doing business in Adams County the release of the study has resulted in a flurry of activity. Each of the 25 cities examined in the study are consistent with site selection trends, which favor cities with connections to the global market and intermodal transportation.

Both Ritzville and Othello, the two largest communities in the county, have meaningful access to major highways and the Burlington Northern Santa Fe Class 1 mainline, which runs through downtown Ritzville.

Big Bend Electric Co-op boasts some of the most attractive energy rates nationwide, according to the Boyd study, which makes the county ideal for energy intensive facility. With an industrial service rate of 5.04 cents per kilowatt, the study estimated an annual power cost of $392,736.

One company already utilizes Ritzville’s central location and access to railway and major highways, The Ritzville Warehouse Company. Just east of Ritzville the company owns a loading facility with a rail spur. The facility can load a 110-car unit train in 10 hours or less. Since -beginning operation in 2002, more than 200 million bushels of grain have been shipped through the facility.

Since the release of the study, dozens of businesses from across the nation have requested the full report from the Boyd Company. “Economic development is extremely competitive, we liken -economic development to the second war among the states,” Boyd said.“There are only a handful of projects each year. All a region, all a county can do is put its best foot forward and speak to a company in a -sophisticated manner.”

In the Cost Comparative Analysis Ritzville was identified as the lowest cost city on the west coast to operate a 500,000 square foot -distribution center with 150 employees. The highest cost city with access to west coast ports is Idaho Falls, Idaho, with an annual operating cost of $14,576,733 compared to $11,351,481 in Ritzville. Interestingly, Cliff Bar broke ground on a $90 million facility in Twin Falls, Idaho, leaving California.

Campbell’s has also relocated their facility in Sacramento, California, to Texas. Texas, however, is another market that Adams County is positioned to recruit from.
“Texas has become a victim of its own success, we’ve actually documented rising operating costs in Texas,” Boyd said. “Adams County can compete with Texas from a real-estate perspective and for an energy intensive facility, like a food production facility, Adams County can compete very, very strongly because of utility savings here.”

The second document delivered to Adams County, The Blueprint for Action Report, focused on industries that Boyd identified as good fits for the current economy within the west end county around Othello, the largest city in the county. These industries include Hummus Production, Energy Bar and Snacks, Craft Soda, Freshwater Aquaculture, Medical Devices and Supplies, Contact Centers and Drones for Crop Management and -Environmental Surveys. The study also targeted the introduction of a Tim Hortons into the city of Othello.
Each industry was selected because of its fit with Adams County and because each is currently experiencing consistent growth.

Hummus Production was selected as a target because of Adams -County’s proximity to the Palouse region, which grows two-thirds of the nation’s supply of chickpeas.
The Boyd Company report also expected the popularity of hummus to increase as the younger generation is exposed to it. Under the 2014 Farm Bill the United States Department of Agriculture will spend $10 million over the next five years to purchase pulse crops for use in school offered breakfasts and lunches.
The Farm Bill also provides $25 million over five years to study the health benefits of pulse crops. Once these are established, Boyd expects the amount of acreage dedicated to dry peas, lentils and chickpeas to increase dramatically.

The energy bar and snack sector is another area the Blueprint for Action Report identified for the ACDC as an industry that would fit well into Adams County.
The $36 billion industry, like hummus production, is thriving on American’s interest in nutritious and healthy eating. The craft soda industry, like the craft beer industry, is seeing consistent growth, according to the report.

Freshwater aquaculture is another target industry that Boyd identified as being a good fit into Adams County. Heavily impacted by the mega drought in California, aquaculture is one of 12 subject areas eligible for federal grants from the Small Business Innovation Research program. They are also eligible for grants through the USDA’s Agriculture and Food Research Initiative. Grants up to $10 million are available to non-profit and for-profit groups looking to establish programs that meet the AFRI’s goals of combating hunger by establishing sustainable farming to increase food production.

Because of the low cost of doing business in Adams County, Boyd identified the Medical Devices and Supplies Industry as an area of -industry that Adams County could recruit from. The Affordable Healthcare Act and the excise tax it imposed upon medical device sales are driving companies to seek lower cost areas for their manufacturing facilities.
Contact centers were identified as another key industry because of its labor market. According to the report, customer service centers are returning to the United States and seeking labor markets with Spanish-speaking capabilities. The Hispanic market is the fastest growing in the U.S., according to Boyd, and Adams County is well positioned to leverage its available workforce.

The final industry target identified in the Blueprint for Action Plan provided by Boyd is Drones for Crop Management and Environmental Surveys. According to the report, the use of drones for crop surveillance can dramatically increase crop yields at a lower cost comparative to an aircraft flying over or walking the fields. Boyd expected the industry, dominated by small, privately held companies, would find Adams County attractive for manufacturing and product development. Especially with the aerospace industry represented throughout the state and with composite skillsets being developed nearby in Moses Lake at SGL Automotive, the main supplier of carbon fiber to BMW.

After reviewing the Blueprint for Action with Adams county commissioners, the Port of Othello and the City of Othello it was decided to focus on developing a target industry study focused on food processors in the Othello region of the county. With McCain Foods, J.R. Simplot Food Group, SVZ Industrial Fruit and Vegetable Ingredients already in the area, Othello and the Port of Othello are already familiar with the needs of food processors. Othello also has Lineage Logistics facility offering frozen storage, blast freezing, product tempering and import and export services. This study will be delivered to the county by late summer.

“There are a number of national and global trends that position Othello and the Port of Othello to attract a lot of new industry, and we’re very excited about this report,” Boyd said.
With over $100,000 invested into the two studies, there is a level of cooperation throughout the county that many have not seen in a long time. “I think this whole Boyd study has brought about a county-wide cooperative effort that hasn’t happened. I think the last time that some large economic cooperative happened would have been back when the irrigation came into our area,” Adams County Commissioner Jeffery Stevens said. “That would have been the last great economic development boom that Adams County’s seen where pretty much the county was together on it at the time.” With the California mega drought and the mass exodus of major food processors from the state Adams County is poised to offer a home for companies looking for a more favorable business climate.

The Food Safety Modernization Act and its expensive regulation passed by the federal government is also adding impetus to the hunt for affordable business climates.
“The food and beverage industry is already a very cost sensitive industry, with the Food Safety and Modernization Act the industry’s going to get even more expensive,” Boyd said.
With the rising Asian middle class, Adams County is uniquely positioned to take advantage of an expanding export market. The region’s proximity and easy access to the Asian market is the final factor that make sites in Adams County, like the Port of Othello and Othello attractive to the food and beverage industry.
“Asians cannot get enough of U.S. branded food and beverage products,” Boyd said.

With the significant investment into economic development, Othello, the Port of Othello, Ritzville and the county are examining their infrastructure and developing plans to increase their infrastructure to handle the demands of any new industry. Such a favorable business climate in Ritzville and Othello is the reason the Boyd Company offered its services to Adams County as these reports are rarely commissioned. “We have a sense of where Adams County ranks, if we didn’t believe in this we wouldn’t bother doing analysis,” Boyd said. “There’s a very competitive case to make for Adams County and we’re happy to do these reports to document these operating cost savings here.” The Boyd Company has also delivered copies of its findings to Congressman Dan Newhouse as well as Senators Maria Cantwell and Patty Murray. “Adams County is now entering the discussion, it’s being thought about,” Boyd said. “Decision makers, quite frankly, would not think about Ritzville. Historically there are other markets that people think about.” More than including itself in the discussions for new industry siting, Boyd also said the studies will help Adams County retain industries that already have sited within the county by marketing its strengths.

With a significant step forward in industry recruitment and retention as well as a united development front Adams County’s next biggest step will be successfully recruiting a new industry to the region. Those interested in reviewing the full reports may contact the Boyd Company at 609-681-5670 or via email at contact@theboydcompany.com or by contacting Adams County Economic Development Director Stephen McFadden at 509-331-2025 or stephenm@co.adams.wa.us.

Article by Tyler L. Fryberger II