SIOUX CITY | Growing sales and a rapidly expanding footprint forced Bomgaars Supply to consider various options to add warehouse space.
The fourth-generation family business considered sites in neighboring Nebraska and South Dakota before opting to stay in Sioux City, where the regional retailer got its start in 1944.
In October, Bomgaars announced plans to build a $17 million addition to its central warehouse and distribution center at 1805 Zenith Drive.
The project, which also calls for eventually renovating the corporate offices at the same site, is expected to retain 177 local jobs and create at least 15 new positions.
Construction on a 150,000-square-foot addition to the existing 200,000-square-foot Zenith warehouse was scheduled to begin in mid- to late March, with completion anticipated for the fall of 2015.
The expanded distribution center will not only solve a pressing immediate need for warehouse space, it will also position the company for future growth, said Torrey Wingert, Bomgaars vice president and chief financial officer.
In the last decade, the company's network of farm and ranch stores has exploded from 15 in Iowa and the neighboring states of Nebraska, Minnesota and South Dakota, to 66 locations in a sprawling territory that also now includes the states of Colorado and Wyoming.
Bomgaars President Roger Bomgaars said the distribution center is "critical to ensure that product flows seamlessly to the stores and ultimately to the customers."
"It is time to look at expanding this important element of our growing business," Bomgaars said in October.
Company officials spent the last six months planning and designing the undertaking. The initial work calls for dirt work and clearing trees next to the existing Zenith Drive complex, which is near the intersection of Hamilton Boulevard and Interstate 29.
"We're ready to see some machinery start moving here," Wingert said.
Once the addition is finished, all of the company's central warehouse operations will be consolidated under a single roof, he said.
Bomgaars officials had the same goal when the company moved to its current location -- a one-time Zenith TV factory -- in 2006. But the retailer's continual expansion forced the company to keep on storing some products in its former warehouse, the Battery Building at 323 Water St. From 1973 to 2006, the historic downtown structure at Third and Water streets also housed Bomgaars' headquarters.
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Two years ago, the Bomgaars family agreed to sell the Battery to Sioux City Entertainment, the company developing the Hard Rock Hotel & Casino Sioux City, which is under construction and scheduled to open in late summer.
The $128.5 million gaming and entertainment venue is designed around the four-structure brick warehouse, known for its signature six-story clocktower. Fifty-four hotel rooms are under development on the top two floors, while the main floor is being converted for two restaurants and various back of house functions.
After the Battery sale, Bomgaars again turned to the former Sioux Tools factory along Floyd Boulevard for temporary storage. The aging structure, which Bomgaars acquired in 2002, was mothballed after the move to Zenith Drive.
"Once the Battery went away that kind of forced our hand to reopen (the former Soo Tools) and put some money in it," Wingert said.
Expanding the Zenith space from 150,000 to 200,000 square feet will not only consolidate the warehouse and distribution functions at a single site, but also supply enough room for Bomgaars to eventually handle as many as 100 to 110 stores, he said.
"This will really set us up down the road," he said.
This year, Bomgaars is planning to add stores in Canton, S.D. and Glenwood, Iowa, raising the total to 68, Wingert said.
The new warehouse addition will feature 35-foot-tall ceilings, compared to 17 feet in the existing warehouse. The added height will allow the company to stack certain products on shelving from floor to ceiling.
Automated racking equipment also is expected to create greater efficiencies.
The design includes a second-level mezannine storage area for smaller items, such as gloves and caps and parts and small tools. A conveyer system will deliver the merchandise directly to the shiping area, reducing much of the manual work now required to complete that task.
Wingert said the existing warehouse will be converted to bulk storage.
The city and state are providing more than $3.5 million in tax incentives to help finance the expansion, which is expected to create 15 new jobs and retain 178 existing positions at the Sioux City corporate offices and warehouse and distribution center.
The assistance includes $1.35 million in investment tax credits and $433,000 in Targeted Jobs tax credits. The latter program allows new or expanding employers in border cities like Sioux City to divert a portion of state payroll tax withholding to finance infrastructure for a job-creation project.
Bomgaars also is eligible for $420,000 in refunds of the state sales tax on construction materials and warehouse racking and shelving.
Under a separate agreement, the city will provide $1.25 million in property tax abatement, or $250,000 per year over five years. The company will agree to at least $10 million in additional property tax assessment, increasing the total assessment to more than $13 million.