One big project (and more in the works)

July 30, 2008
Leader-Post
Written by: Bruce Johnstone

Loblaw plans to build $350-million warehouse and distribution centre in Sask.

Regina's dream of becoming a "global transportation hub" took another step closer to reality as Loblaw Companies Ltd. announced plans Tuesday to build a $200-million distribution centre about five kilometres west of the city.

The 500,000-square-foot building is the first phase of a one-million-square-foot, $350-million warehouse and distribution facility Loblaw plans to build on the site.

The distribution centre is expected to employ 750 people within two years and as many as 1,500 by 2017, Loblaw officials said.

Premier Brad Wall said the announcement marks the beginning of the development of "one of Western Canada's most significant transportation and logistics facilities."

"Right now, all you can see behind us is a beautiful field of canola,'' Wall told a news conference. "Two years from now, there will be a half-a-million square-foot building -- equivalent to five-and-a-half football fields. It will be the precursor to ... a one-million-square-foot facility.''

The Loblaw announcement comes hard on the heels of confirmation earlier this month that Canadian Pacific is proceeding with an intermodal facility (IMF) west of the city. The IMF is part of a $93-million infrastructure project, which received $27 million from the federal government in December.

The infrastructure project includes upgrading of Pinkie Road to connect the Trans-Canada Highway and Highway 11, and improving connections to the City of Regina road network.

Jane Marshall, executive vice-president of real estate for Loblaw Companies, said Loblaw chose to build the distribution centre in Regina for several reasons.

"Loblaw Companies is Canada's largest food distributor. We have 50 million square feet of retail space across the country. Fifteen million of that retail space is located in Western Canada,'' she said.

Loblaw is currently "revitalizing" its retail store line-up, including sprucing up its Real Canadian Superstore locations and converting many of its Extra Foods locations into discount No Frills stores, Marshall said.

"This facility will serve those stores, primarily in Saskatchewan and Manitoba in the first phase. But, as we construct the balance of the facility (to) just under one million square feet, it will serve all of our stores in Western Canada.''

Being CP's largest customer, Loblaw also wanted to be close to the intermodal facility, which would help Loblaw "optimize our service levels to our stores" and "minimize our environmental impact," she said.

Peter McMahon, executive vice-president of supply chain and information technology for Loblaw, agreed Regina was the "ideal location" for the distribution centre, especially after the announcement of CP's intermodal facility.

"It really helps us with our strategy in transport of taking more and more product off the road, (dealing) with the escalating price of fuel... and dealing with the environment impact.''

Initially, the facility will hire 500 employees in its first year of operation. But McMahon said the distribution centre will "very quickly'' expand to one million square feet and distribute about three million cases of product per week.

"It's a big deal. It's a lot of trucks. It's a lot of volume going out of the distribution centre.''

With an estimated 1,400 trucks per week using the facility, road and highways in the area will have to be upgraded to accommodate the additional traffic.

John Law, deputy minister of Highways and Infrastructure, said the province will be responsible for "basic transportation infrastructure," including upgrading roads and highways serving the intermodal facility and distribution centre, which will cost around $45 million.

Mayor Pat Fiacco said the Loblaw distribution centre is the first of many similar projects that will be located close to CP's intermodal facility.

"Eventually," Fiacco said, "we will see more warehouses, distribution centres,... services and retail operations, all in an area much larger than Regina's current industrial park.''

Fiacco said the development is part of a longer-term plan to turn Regina into a global distribution hub. "The site will serve as an inland port ... where goods will move by road and rail. Easy access to the airport provides another means to ship goods around the world.

"Regina will become a central transportation hub."

Larry Hiles, president and CEO of Regina Regional Economic Development Authority, said securing Loblaw as an anchor tenant provides the critical mass the intermodal facility-transportation hub needs to get off the ground.

"This is a $200-million investment, We will easily see over a $1 billion (invested in the area) by the time we're half built out'' in five or six years, Hiles said.

While initially used for distribution and warehousing, Hiles said assembly and manufacturing operations will locate in the area, which is three times the size of Ross Industrial Park.

"The companies that want to get into those areas want to be near where the distribution hubs are. We see this happening in stages, this (Loblaw announcement) being the first positive step.''