Warehouses, I-81 have big impact on area’s economy

Kevin G. Gilbert/Chief Photographer
A tractor-trailer drives past a sea of warehouses north on Interstate 81 looking west from Kriner Road south of Chambersburg, Pa. With its easy access to a large portion of the nation’s population, the region from Shippensburg, Pa., to Winchester, Va., and beyond has become home to warehouses serving many major retailers. It’s also become a key component of the region’s economy.

L. Michael Ross remembers when 300,000 square feet was big for a distribution center along Interstate 81 in Franklin County, Pa.

“Now everything is a million-plus,” said Ross, who took the helm of the then-new Franklin County Area Development Corp. in 1986. The organization has been involved in more than $1.8 billion in new investment in the county, much of it spurred by distribution pathways that rely on I-81.

Today’s growth is fulfilling the vision of futurists from the 1960s, Ross said. At that time, people were predicting a megalopolis would one day extend from Washington up the Eastern Seaboard to Boston.

“This valley is in the middle of that movement,” he said, noting that the area is within a 12-hour drive of 50 percent of the population of North America.

And “this valley,” from Winchester, Va., through West Virginia and Maryland up to Carlisle, Pa., remains ripe for transportation- and logistics-related businesses, Ross and other area experts said.

The movement toward e-commerce, just-in-time supply chains and overnight delivery has enhanced those opportunities, they said.

Highway studies reflect how much businesses rely on I-81. In Maryland, daily truck volume on the interstate was 19,444 in 2016, according to figures from the Hagerstown/Eastern Panhandle Metropolitan Planning Organization.

That number is projected to climb to 25,708 in 2025 and 29,360 in 2045.

“Roughly 12 percent of the nation’s GDP travels on 81 at some point or another,” said Matt Mullenax, HEPMPO executive director.

The route’s importance as a freight corridor is one of the factors that played into widening the road to three lanes each direction in Berkeley County, W.Va. There’s a four-phase plan in mind to widen the highway through Maryland, Mullenax said, and the first phase — work on the Potomac River bridges — is underway.

Mullenax said that’s important not only for safety, but for reliability so workers and freight aren’t stuck in traffic.

“That translates into money lost, production lost, all kinds of things,” Mullenax said.

But for the foreseeable future, there are no plans to widen I-81 in Pennsylvania, according to Greg Penny, a spokesman for the Pennsylvania Department of Transportation.

“We recognize the need, but the money’s currently not there to do it. … I think right now our challenge is maintaining what we have,” Penny said.

Powerhouse employer

Job numbers show the area’s reliance on the distribution and warehousing industry, reflecting the large employers that are situated along or rely upon I-81.

For example, the FedEx Ground operation near Hagers-town, Md., employs about 900 people, according to HEPMPO. More than 700 work for Bowman Logistics, also based in Hagers-town.

Fulfillment centers such as the Macy’s center in Martinsburg, W.Va., and the Target center in Chambersburg, Pa., are some of the largest employers in their communities.

According to the U.S. Bureau of Labor Statistics, the transportation, trade and utilities sector employed more than 26,000 people in the Hagerstown-Martinsburg metro area in April, making it the top employment sector in that region.

In Franklin County, Pa., employment stats show more than 6,000 people work in transportation and warehousing.

Ross, Mullenax and other observers expect that trend to continue.

In Franklin County, Ross noted, “There’s going to be a new interchange at mile 12 just south of Target,” opening more land for development.

And he said ripples from the new Procter & Gamble plant in Martinsburg will travel throughout the region’s employers. The plant in the Tabler Station Business Park is slated to open in the fall with about 300 employees.

The number of employees will increase to about 700 by the fall of 2019, according to Ryan Moore, P&G human-resources department leader.

In a presentation to the I-81 Corridor Coalition in April, Moore estimated 60 to 80 trucks will arrive at the plant each day with materials, and 130 to 200 will head out each day with finished products.

Moore also said a key factor in P&G’s choice of location was access to the company’s supply chain via I-81.

“I think they are elevating the profile of West Virginia in a big way,” Ross said.

He predicted other companies, following P&G’s lead, will look to the area.

“They are all looking at what’s going on on 81 between Carlisle and Winchester,” he said.

Labor demands

Ross said warehouse operations have become more sophisticated since he started with the development corporation in the 1980s.

“Everyone’s doing e-fulfillment now. … Essentially what we’re doing with e-fulfillment is we’re moving retail to warehouses. … Your market region is the world now,” Ross said.

That means many warehouses and distribution centers are not simply packing identical boxes with identical products, he said. It means they are filling unique orders.

“The warehouse’s demands on labor are at levels we’ve never seen before,” Ross said. “There are far more ‘touches’ involved in a fulfillment setup. The orders are more specific.”

The demand for truck drivers also continues to increase, he said.

“If we need 500 to 600 people (for a major new business), where do we find them? The labor pool’s only so deep,” Ross said.

State lines

Some people who deal with economic development in the region talk about a quad-state area, including parts of Virginia, West Virginia, Maryland and Pennsylvania.

“It’s important to not think we’re operating in our own vacuum here,” Ross said, noting that businesses often get their employees, supplies and even some resources such as natural gas, from other states.

Still, he said, state lines “absolutely matter.” Largely, he said, that’s because of regulatory and tax policies that differ from state to state.

“That can work either way. … Regulations can be good or bad” in the eyes of businesses, he said.

“West Virginia is considered the path of least resistance from a regulatory standpoint,” he said of I-81 communities in the region.

Maryland has perhaps the most developed stretch of I-81 and is what Ross considers the retail and commerce center of the region in Hagerstown. Franklin County, he said, has available and developable land close to the interstate.

“We’re all impacted by one another,” he said.