A look ahead: 2012 could be watershed year in economic development
by Jonathan Partridge | Patterson Irrigator
Jan 05, 2012 | 4353 views | 0 0 comments | 9 9 recommendations | email to a friend | print

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Signs of both hope and distress marked Patterson’s economic development scene in 2011, a year that saw the hiring of 180 employees at Patterson’s W.W. Grainger distribution center but also a prelude to the potential closure of the 65-year-old Patterson Vegetable Co. plant.

All the while, the city’s average monthly unemployment hovered at 22.7 percent between January and November, lower than the 23.5 percent rate for 2010 but worse than the 21.5 percent rate in 2009.

Despite the possible closure of Patterson Vegetable Co., city officials and economic development experts maintain that Patterson is one of the bright spots in Stanislaus County’s economy, and they maintain high hopes for the year ahead.

“I hope we can continue those positive outcomes in this economic time,” Mayor Luis Molina said this week. “I think that our future for a better tomorrow is right at our doorstep.”

Warehouse interest grows

One of the brightest moments in the local business world came with the opening of the 820,000-square-foot W.W. Grainger distribution center in Patterson’s Keystone West Business Park.

The warehouse, a distribution hub for the Illinois-based industrial equipment retailer, offered about 180 jobs by the end of 2011. Company officials hope to hire another 25 people by late February.

The company has been pleased with both the location and the quality of its workers, said Hector Vega, director of Grainger’s Patterson distribution center.

“Our ability to get on that (Interstate) 5 quickly has been really the primary driver,” he said, noting that the western Patterson warehouse serves the Bay Area, the Central Valley and even the Pacific Northwest.

Though exact figures were not available, most workers live in Patterson and surrounding communities, such as Turlock and Modesto, company officials said.

The warehouse also made its mark with environmentally friendly features, including hundreds of skylights and low-water landscaping. The company has encouraged shared commuting and use of low-emitting vehicles by offering designated parking spots, Vega said.

The Grainger building is one of three distribution centers in the West Patterson Business Park, joining warehouses for CVS and Kohl’s in the adjacent Keystone Pacific Business Park.

“The West Side region definitely has earned its stripes as an area to serve logistical and distribution needs,” said Doug Norton, senior vice president for the commercial real estate firm CB Richard Ellis, which helped attract Grainger to Patterson.

Molina said Grainger has been a great addition to the city, adding that company officials have said they would give a plug for Patterson if other companies asked about moving here, based on their good experience with city staff.

End of an era?

As county officials ponder future West Side economic development, the operator of a plant with a longtime legacy has threatened to call it quits.

Patterson Vegetable Co., which took over the Patterson Frozen Foods plant on West Las Palmas Avenue and First Street in June 2007, notified employees last month that the plant might shut down Feb. 20, if employees did not agree to $3.6 million in annual concessions.

Those consist of pay and benefits reductions, including a $2-per-hour pay cut for all workers.

Teamsters Local 948 union members at the plant resoundingly rejected the proposal Dec. 19, voting 259-5 against the concessions.

The local processing plant has about 290 full-time, year-round employees, and its staff swells to nearly 600 during harvest season. It is the second largest employer in the Patterson area, according to figures released by the Stanislaus Economic Development and Workforce Alliance.

Butler was hopeful that the union and management would work out a solution, adding that he is encouraged that they’re still engaged in talks.

“I’ve made it clear to the PVC management team that we really want those jobs in our community,” he said.

Molina said that if closure appeared imminent, it might be time for the city to intervene — inasmuch as that’s possible.

“It’s not the city’s practice to tell companies or unions what to do, but in my perspective, if it looks like things are moving in that direction, I think it’s worth a conversation at least by the city manager to talk to union representatives and the CEO,” he said.

Retail growth

While 2011 was relatively quiet in terms of retail, 2012 should be much busier.

Last week, Walmart broke ground on a 158,000-square-foot super center, slated to open in time for the 2012 holiday season. The surrounding shopping center will include 20,000 square feet of additional retail space, and city representatives and economic development advocates said the project should be a catalyst for more retail growth.

Walmart will be a major boom,” said Ken Buehner, chairman of the city’s Economic Strategic Commission, noting that smaller retailers, such as video stores and yogurt shops, tend to group with big-box stores wherever they crop up.

The sales tax revenue also will help bolster the city’s coffers, allowing for more services, such as an increase in law enforcement, Councilwoman Annette Smith said.

“We’re keeping that revenue stream right here in town, and that’s something that’s been plaguing Patterson for years,” Smith said.

Other retailers slated to open this year include an O’Reilly Auto Parts store, to be built at Sperry Avenue west of Highway 33 near Thompson Chevrolet, and an Arco am/pm service station at the northeast corner of Sperry and Ward avenues, near Walgreens. Both will have electric vehicle chargers, similar to those installed at the Best Western Villa Del Lago Plus in November — the first on the West Side.

The Mahaffey property that includes Walgreens also has potential for retail growth, as does the KDN Retail Center, which eventually will stand north of the Villa del Lago shopping center along Interstate 5, Butler said.

Eventually, city officials hope to revitalize the downtown area, too, although such prospects suffered a major blow in the last week of 2011, when the state Supreme Court agreed that the state Legislature could abolish redevelopment agencies, which typically help fund such projects.

Bright future

Butler said the combination of Patterson’s retail potential with its Interstate 5 access, developable industrial areas and improving economy are all positive signs for the coming year.

In addition, it appears Patterson will see a small amount of housing construction within the next year or so, based on inquiries from prospective builders, he said.

Three companies are looking seriously at opening logistics centers in Patterson, he said. One of them, which could be a larger employer than Grainger, Kohl’s and CVS, might make an announcement within 30 days.

About 200 acres of business park land are ready for development off of Sperry Avenue west of Baldwin Road, and an environmental impact report is nearly complete for a 950-acre parcel northwest of Villa del Lago, Butler said.

Even so, Patterson faces plenty of challenges. West Side communities consistently have a higher unemployment rate than other cities in the county, which Butler attributed partly to the seasonal nature of agriculture-related employment.

That’s why, he said, the city would do well to diversify its economy — and why retail and logistics employment opportunities are so important.

Molina, who chairs the Stanislaus County Office of Education board, along with his service as mayor, also stressed the need to forge partnerships between industry and educational institutions. He cited Grainger’s $25,000 donation to Patterson High School’s logistics program as a positive example. The opening of Modesto Junior College’s Patterson site in 2013 also will be a major asset, he said.

The city plans to take a closer look at what businesses might be a good fit. Jim Reese, Former interim city manager, has been commissioned to conduct an economic development inquiry this year.

For now, Norton of CB Richard Ellis predicted that many of Patterson’s potential job additions for 2012 will come in industries such as food manufacturing or food distribution. While agribusiness companies in the Central Valley are focusing on modernizing their processing plants and shedding some jobs, he said, he expects that economic sector to remain vital to the Central Valley, while high-tech jobs remain wedded to the Bay Area.

Smith agreed.

“This county is still rural,” she said. “We need … to support the biggest business that we already have in this county, and that’s agriculture.”

She and others said they’re pleased overall with the city’s economic development prospects during dire economic times for the nation, noting that other parts of the county have seen far less economic activity than Patterson.

While Smith said Patterson Vegetable Co.’s problems were a setback, her economic outlook remained optimistic.

“I think that Patterson’s future is very bright in terms of industrial development,” she said. “That growth is knocking at our door.”

Contact Jonathan Partridge at 892-6187 or jonathan@pattersonirrigator.com.

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