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Utah Aims to Become Industry Hotbed

Published February 7, 2010

SALT LAKE CITY, UT (BRAIN)—Specialized decided to move its West Coast distribution center from its headquarters in Morgan Hill, California, to Salt Lake City 11 years ago after taking a look at the cost per square foot of leasing a facility, the strong labor market and the ability to deliver orders to dealers in 11 western states within one to two days.

And when its 10-year lease was set to expire, the company re-examined its decision and came up with the same conclusion: “Utah is a prime distribution point,” said Kim Peterson, corporate distribution manager for Specialized. “Other outdoor businesses have realized this as well,” he told the 200 or so who gathered at the 250,000-square-foot facility Thursday for its ribbon-cutting ceremony.

Joining Specialized executives and warehouse employees were about a dozen local dealers as well as representatives from the Governor’s Office of Economic Development (GOED), the Economic Development Corporation of Utah (EDCU) and SLC’s economic development director, property managers and landlords.

About 1,000 outdoor companies, which employ some 10,000 people, have hung their shingle in the state, according to Jeff Edwards, president and CEO of EDCU, adding that Utah has become a hotbed for companies looking to expand or relocate.

“Geography matters and Utah is blessed to be the crossroads of the west,” he said. “We have great people in our state; we offer great quality of life, where you can work hard but recreate close by.” Making note of the California flag on Specialized-branded shirts worn by execs in attendance, Edwards urged them to bring R&D to Salt Lake as well.

The state of Utah actively recruits and provides generous business incentives for outdoor companies since they make up one of eight industry clusters it has targeted as offering the greatest return on investment. Salt Lake City is the site for the outdoor industry’s major show, Outdoor Retailer, twice a year. The state is also home to major brands such as Black Diamond, Petzl and Salomon. And Quality Bicycle Products chose Ogden as the site for a new West Coast facility set to open this fall.

For Specialized, the move into the larger facility, which employs 80 full-time staff and has capacity to store tens of thousands of bikes, gives it room to expand. Chief operating officer Mike Haynes said Specialized has tripled its sales revenue in the past 11 years and now is primed for future growth.

Facility manager Rick Peterson said the company has increased productivity 25 percent in the new facility compared to its old building. It conducted a time analysis study and based on findings tightened aisles and crafted more efficient product picking patterns that have cut time and boosted order accuracy to 99.7 percent. Specialized also hired an outside firm to re-engineer its racking system to fit more product in less space.

Aside from product, the facility, conveniently near a rail yard, also houses customer service, warranty, international traffic and shipping, quality control and its service center, which can turn around wheels, forks and suspension service orders in one to two days. Inter-related departments are now next to each other to improve communication and speed of service.

—Lynette Carpiet (Story and Photo)

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