The planning and execution of an ecommerce fulfillment center relocation is a massive undertaking. The budgeting of one-time costs, startup costs and ongoing expenses alone involves a rigorous process (read more about budgeting for a warehouse move here).
Identifying the right labor market for a new DC is highly dependent on performing a three pronged analysis. The analysis must:
More: Read “Developing a Warehouse Move Plan”
This blog outlines the data and process for identifying the right labor market.
As we have commented on recently, the country is approaching full employment. Yet 38% of the potential workforce is sitting on the sidelines, waiting for full time positions. Moving into a new labor market means accurately determining the wages and benefits that give you the desired workforce.
Bureau of Labor Statistics (BLS) compiles and publishes a comprehensive set of labor statistics about all MSAs on a monthly basis. This data should only be a starting point. It is the best data available but it has limitations. In performing these studies, we often find BLS data understates the hourly wage rates. As comprehensive as BLS statistics are, we have found that their salary data can be 20% too low for some job positions.
Also, the BLS definitions of the types of workers and description will not exactly line up with position descriptions in your DC.
Senior positions of fulfillment centers can be defined differently by title and responsibilities, and therefore the salary can vary widely.
BLS does not address company benefits, either, which can be 5% to 25%+ or more of the hourly rate.
County or regional development agencies will have an analysis of your target county and the sites they are promoting, along with demographic data, including BLS data. Find ways to validate what they are telling you. Remember their job is to sell you on moving to their area. It doesn’t mean they are deceptive, but we have seen agencies continue to promote regional development even after the area was reaching full employment. The right building may be there, but is the labor at the hour wage rate and benefits you are willing to pay?
Boots on the ground. This isn’t just a data analysis exercise. It’s going to mean traveling to regional sites to truly get an accurate analysis of the labor market. Our recommendation is to talk to other warehouse employers and exchange wage and benefit data. Follow local ads and recruiting websites.
Most markets are at an unemployment rate of around 5% or less. What will you have to pay to attract the right complement of people? Use the public data as a starting point.
Further reading: Warehouse Planning: How Much Space Is Needed in a Distribution Center?
Here is an outline of the process for identifying the right market:
Read: 3 Imperatives for Labor In Your Warehouse Operations
Be methodical in the process and data analysis; but use site visits to validate and improve your analysis and conclusions.