Two of the biggest names in retail are investing serious money in Umatilla and Morrow counties as they wage a multi-billion dollar battle for the hearts and wallets of consumers across the globe.
Walmart, which has stores in Pendleton and Hermiston as well as a massive distribution center just south of Hermiston, delivers an annual payroll of $63 million in Umatilla County. Amazon, meanwhile, has grown into the world’s largest online retailer, and has spent more than $2 billion building new data centers in Morrow County alone.
Both corporate giants have established a major presence in the area, and neither appears to be letting up as they duel for shopping supremacy. That has added jobs and grown the tax base.
Brick and mortar
Tom Heidegger, who is based in Pasco, is the market manager for 12 Walmart stores in Eastern Oregon, eastern Washington and parts of Idaho. He was at the recent reopening of the Pendleton store following weeks of major upgrades and told the crowd of associates — Walmart’s term for employees — a hard truth: Walmart did not always have a good connection to Pendleton.
Tuesday during a phone interview, Heidegger said that situation had to change. He has been market manager for 10 years, he said, and recognized Pendleton is a tight-knit community. Previous managers of the Pendleton store did not even live in town.
“They weren’t doing anything, really, as far as the community goes,” he said.
Shawna Nulf, going on four years as the Pendleton store manager, does live in town, as did her predecessor. Heidegger said their personal presence makes a difference. Nulf, for example, is involved with charities, including Relay for Life, and is a new Pendleton Chamber of Commerce ambassador.
That’s the kind of connection the corporation can’t just buy.
“Shawna has really made it her home,” Heidegger said. “She’s a perfect fit for the community.”
Nulf said she has grown to see the Pendleton crew as an extended family. She is the head of 230 people in the Pendleton store, and 70 percent work full time. Heidegger said most retailers employ 30 percent of their workers full-time and 70 percent part-time, but Walmart flips that statistic.
The Hermiston store employs around 400, and the distribution center has about 930 employees. Employees also have access to insurance, Heidegger said, and “the vast majority” have 401K plans.
The associates are part of the community, he said, and the distribution center and two stores in Umatilla County have a collective annual payroll of $63 million.
Walmart this year paid $21,933.52 in local property taxes for the Pendleton store and $32,520.99 for the Hermiston store. The company paid $35,575.29 in property taxes in 2002 for the Distribution Center in Hermiston.
The tab this year came to $186,042.79.
Heidegger said building new stores is not likely for the region, but the company remodels stores every five to seven years, and each remodel addresses specific needs of that store. Hermiston’s remodel about two-and-half years ago, for example, replaced tile throughout. One of the biggest upgrades at Pendleton took place behind the scenes — replacing the aging cooler that housed dairy products.
The remodels are two-fold, he said: They keep stores fresh and updated for customers and make them more green and sustainable. Tiffany Wilson, Walmart’s director of communications, said as the world’s largest retailer, it is important for Walmart to “use our strengths to not only further work in our own operations, but to also help create a more sustainable value chain.”
Walmart has a goal of zero waste. Wilson said the company’s U.S. operations by the end of fiscal year 2017 diverted 82 percent of materials previously considered waste from going into landfills. In Oregon, that reached 86 percent.
The company achieves this through multiple methods, she explained, from better inventory practices to food management to working to eliminate state barriers to efficient waste diversion, which also makes it easier for other companies to follow suit.
Since Doug McMillon became Walmart CEO four years ago, the company’s push has been online and planning for the future. Walmart is testing a lot of technologies and strategies, Heidegger said, including 6-foot tall robots that scan an aisle in a minute to inventory shelves. That technology to increase efficiency, he stressed, does not mean Walmart is cutting its workforce. The information from the robot goes to an associate’s tablet, and that employee stocks the shelves.
“We’re playing offense,” he said. “We’re getting out in front of this and anticipating what next big thing is going to be.”
Clicks and bytes
E-commerce, meanwhile, has been the name of the game at Amazon, which has grown into the largest online retailer in the world based on revenue and second-largest in total sales.
Every order placed at Amazon.com is stored in one of the company’s large, nondescript computer server warehouses known as data centers. The concrete structures are the physical manifestation of what techies refer to as “The Cloud,” storing everything from Tweets to downloads to Internet purchases.
Data centers require an abundance of water and cheap electricity, which is what drew the industry to the ports of Umatilla and Morrow along the Columbia River. The first data center in Morrow County came online in 2011, and construction hasn’t slowed a step.
Amazon is notoriously tight-lipped about its business in the region, operating under the subsidiary Vadata Inc. and requiring partners to sign nondisclosure agreements. Corporate communications for Amazon did not return a request for comment Monday.
A look around the two counties, however, shows the company is becoming an economic force with the rapid building of multiple new data centers. Though each facility only hires around 20-30 full-time employees, they are well-paying jobs, with experienced technicians earning between $30-35 per hour. That employment figure does not include other part-time workers and contractors.
Mike Gorman, assessor and tax collector for Morrow County, said Amazon has two main sites at the Port of Morrow’s East Beach Industrial Park near Boardman, including one on Rippee Road and one on Lewis and Clark Drive. The company also purchased a third site east of Lewis and Clark Drive for $2.9 million earlier this year.
The Rippee Road site has three data centers, Gorman said, and a total market value exceeding $703 million. Of that total, $641 million is exempt under agreements inked with the Columbia River Enterprise Zone, which provide three to five years of tax exemption as an incentive for companies to build in the region.
The nearby Lewis and Clark Drive site also has three completed data centers and a fourth building under construction. Gorman said the total market value is more than $926 million, with $836 million currently exempt.
In Umatilla County, assessor Paul Chalmers said Amazon has four completed data center buildings at the McNary Industrial Park east of Umatilla, and a fifth now under construction. Amazon also plans to build four new data centers at a site west of Hermiston, at Westland and Cottonwood Bend roads.
Like in Morrow County, the Umatilla County data centers are subject to tax exemptions through the Greater Umatilla Enterprise Zone and Oregon Strategic Investment Program, or SIP. But once those values come on the books, Chalmers said the tax base will receive a substantial boost.
“Everyone reaps a benefit from this investment, from a tax standpoint,” Chalmers said. “There is a direct benefit to having these folks develop here in Umatilla County.”
Chalmers said the added value will help to offset the recent devaluation of the Hermiston Generating Station, a change that caused some sticker shock among taxpayers earlier this year.
The data center boom has also resulted in a rising demand for local workforce. Blue Mountain Community College is in the third year of offering a data center technician certificate program, and instructor Pete Hernberg said a “very large percentage” of students who complete the program go directly to work in the field.
This year, Hernberg said he will have 17 students finishing the program, and all 17 have already lined up jobs at a data center.
“There’s a great deal of demand for those skills locally,” Hernberg said. “I don’t have a crystal ball, but from everything I’ve heard and everything I know this is something that will continue to grow for the immediate future.”