Costco to build a regional facility

Costco announced Thursday it will build a $30 million distribution center in Salt Lake City, creating 210 jobs.

Ground already has been broken for the nearly 500,000-square-foot facility at 5600 W. 300 South.

The first phase of the project is expected to open this November with 170 jobs. The center will serve a four-state region that includes Utah, Colorado, Idaho and Montana.

Starting pay for the new jobs will be $10 an hour.

The center will be Costco Wholesale Corp.'s 11th distribution facility in the continental United States. It will act as a supply hub for pharmaceuticals, tires, electronics and groceries to roughly 30 Costco membership warehouses, including six in Utah.

Costco buys its merchandise directly from manufacturers. The company's distribution centers are used to combine various items to reduce freight and handling costs, thereby bypassing costs associated with traditional multiple-step distribution channels.

Peter Kahn, Costco's real estate development manager, said Utah's proximity to the company's Intermountain West warehouse clubs, combined with the state's superior work force, made Salt Lake City the attractive choice.

Pocatello was a close second in the running to land the center, Kahn said.

Kahn said state officials offered the Washington-based company no economic incentives to convince them to locate the center in Utah.

"We had been considering Utah as a distribution site for several years," Kahn said. "Right now most of the merchandise is shipped from a similar facility in Washington state."

Gov. Jon Huntsman Jr. said Costco could have located in any number of places, including Colorado, Idaho or Nevada.

"They had lots of states to choose from," Huntsman said. "It was brought here to Utah, which really I think further solidifies our credentials as being a crossroads of the West."

The center will add to a growing industrial and manufacturing base.

In Salt Lake County, industrial space vacancies — which includes warehousing, manufacturing and distribution businesses — fell to 7.68 percent in this year's first quarter, down from 9.97 percent in the same period a year earlier, according to a report by Commerce CRG.

In a Securities and Exchange Commission filing, Costco reported $305.5 million in net income for the 12 weeks ended Feb. 13, up from $226.8 million during the same period in 2004. Revenues for the quarter were $12.4 billion, compared to $11.3 billion a year ago during the same quarter.

Costco customers must show proof of a business affiliation or ownership and pay a $45 annual membership fee to shop at a Costco warehouse. Individual memberships are also available to government employees, utility company employees and private education institutions.

Worldwide, Costco employs 113,000 people and operates 453 warehouse clubs.

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