Menards cried to the Eau Claire Leader Telegram that it's scrapping plans to build a seasonal warehouse near Eau Claire because those bureaucrats at the DNR are worried about preserving wetlands. Instead those jobs will go to Iowa and Ohio. Eau Claire is out 600 to 800 jobs, according to Menards'spin.
Naturally, Charlie Sykes was off and running with this story, citing it as another example of how Jim Doyle is killing the business environment. Mark Green isued a release. And no doubt that was Menards' intention.
But here's the weird thing: Wisconsin wasn't even in the running for the manufacturing/distribution facility going into Ohio.
From the 8/9 Toledo Blade:
(Menards) said Ohio, Indiana, and Michigan were all initially in the running for the complex, which will join ones in Eau Claire and Plano, Ill., as feeder facilities for the chain's stores.
I don't see Eau Claire being listed as in the running, do you? The Brawler bets Eau Claire wasn't in the running for the facility going into Iowa either.
Here's why. In Eau Claire, Menards was proposing to build a 750,000 square-foot seasonal storage warehouse.
In Shelby, Iowa, it will be building a 735,000 square-foot combination manufacturing-distribution facility. In Holiday City, Ohio, it will be building a 669,000 square foot manufacturing and distribution complex.
Note that those facilities serve different purposes than the one proposed for Eau Claire. Also note that the two facilities represent nearly twice as much space.
Menards is seeking to expand in the Midwest -- specifically Iowa and Ohio -- in face of fierce competition with Lowes and Home Depot. The Brawler would imagine that you would want to expand your manufacturing and distribution footprint in tandem with your retail expansion plans. Particularly given that we've entered an era of high gas prices. And the cost of gasoline, not to mention natural gas, has a significant impact on manufacturer/retailers like Menards that operate on tight margins.
Indeed, Menards wants to boost its store count in Ohio. From the 9/6/06 Columbus Dispatch:
A Wisconsin-based home-improvement and hardware chain is considering Columbus for expansion.
Menards Inc. competes with the Andersons, Home Depot, Lowe's, Wal-Mart and other chains, said Marv Prochaska, vice president of real estate for the family-owned business with headquarters in Eau Claire and 209 stores in 10 Midwestern states.
"We are working on (securing) sites in Ohio, including the Columbus area," Prochaska said yesterday. "The plan is to build a bunch of stores in Ohio," although the number is undetermined.
Columbus stores will not open until 2008 at the earliest, he said. As for locations, he said the company wants to be "with other retailers in the shopping areas."
The company operates four stores in the state, in Defiance, Findlay, Lima and the Toledo area. Stores are under construction in Celina and Marion, and the company owns two more building sites in Toledo.
Ohio growth will be supported by a $50 million regional distribution center under construction in Holiday City, west of Toledo. The five-building complex will include a manufacturing plant to complement similar operations in Eau Claire and Plano, Ill. The Ohio operation will supply stores in Ohio, Indiana and Michigan.
(The Brawler notes it's easier and more economical to supply stores in Ohio, Indiana and Michigan from Ohio than it is from Eau Claire.)
Columbus retail analyst Christopher Boring said Menards most likely will choose areas experiencing the most residential growth, including the Maxtown Road and Sawmill Road areas along with Canal Winchester, Marysville and Pickerington.
Getting a toehold in Columbus won't be easy, considering the competition, he said.
"I think that Home Depot and Lowe's are so dominant that it will be tough for a No. 3 competitor to be successful in Columbus."
Yancey Casey, a spokesman for Home Depot, the nation's No. 1 home-improvement chain with 2,087 stores, including 14 in central Ohio, said the company competes with Menards in many markets.
"We do quite well against them, and the competition breeds better results for the customer," he said.
Did the Brawler mention that Menards is getting a sweetheart deal courtesy of Ohio tax payers?
From the 8/9/06 Toledo Blade:
Holiday City is in the extreme northwest corner of Ohio, six miles south of the Michigan border and 13 miles east of the Indiana line. The complex is about a mile from Exit 13 of the Ohio Turnpike.
"We chose Ohio because it has a good railroad system, a good community to work with, a good state to work with, and the land was available," he said. Menards has amassed 640 acres, enough for the current project as well as expansion, Mr. Prochaska said.
Menards needs such a large manufacturing complex because it makes many of the products that are sold in its stores -- including the one in the village of Holland -- such as concrete landscaping blocks, siding, trusses, and lumber.
In June, 2004, the State Controlling Board approved a $500,000 business development grant for costs associated with water and sanitary sewer improvements for the Menards project and a $980,000 roadwork development grant.
In May of that year, the Ohio Tax Credit Authority approved a Job Creation Tax Credit to begin in 2008.
That agreement was amended and is now a 10-year Job Creation Tax Credit (70 percent for the first six years and 75 percent for the last four years) for the creation of 668 jobs.
Oh, and the DNR was right to have concerns about the proposed Menards facility. Menards' commitment to environmental -- not to mention employe issues -- has been suspect. From teh Sept. 4, 2006 Home Channel News:
Like any large business, Menards has run into legal issues, with various outcomes. In August 2005, the company was ordered to pay more than $2 million for dumping paint and chemicals down a maintenance drain that eventually lead to a tributary of the Chippewa River.
This year has not been that much different. In March the Environmental Protection Agency issued an administrative order against Menards, alleging that the company damaged a stream in Sioux Falls, while building a new store.
According to the EPA, the retailer discharged dredged and fill material into a stream flowing from a store property in Sioux Falls. Specifics of the discharge include 1,350 feet of stream being filled with a parking lot being built over the top of it. The stream is a tributary to the Big Sioux River. An additional 40 feet of the stream was damaged by fill to construct a storm water control structure on the downstream end of the 66-inch storm sewer pipe. The issue has yet to be resolved, according to the EPA.In its latest legal excursion, Menards has launched a suit against the Chippewa Valley airport, a dispute over a lease agreement. According to Menards, it was over-charged for parking fees where it keeps its corporate jets. "We feel its discriminatory of the airport to ask us to pay nearly four times the amount they charge two separate rental car companies to park side by side with us in the same area parking lot," Jeff Abbott, Menards spokesman, said in a statement.
The state Airport Commission said both parties are exchanging settlement offers.
In June, Menards settled a class action suit in Illinois for more than $3.8 million. A handful of former employees charged that they never receive unpaid vacation time or bonus money they were entitled to from Menards. Employees and former employees of Menards who worked for the company full-time or at least 1,000 hours between Jan. 24, 2000 and May 1, 2006, may be entitled to settlement funds, according to documents obtained by HCN.
Menards settled the case but still disputes the claims, according to the documents.
Desipite its forays in court, the company's biggest battles are with its competition in the form of the national big boxes, especially the two major home centers. If the past is any indication, Menards will continue its home-cooked strategy with a Midwest flavor.