Saving Money with Enterprise Zone Warehousing

Storage services operating in tax-advantaged enterprise zones can reduce warehousing costs for businesses.

Why Storage Services Thrive in Enterprise Zones
Enterprise zones, also known as empowerment zones, developed throughout the United States in the early 1980s. Political and business leaders in communities faced with underutilized industrial space lobbied lawmakers to offer tax breaks for companies willing to make long term commitments to filling old factories and warehouses. By eliminating many corporate and sales taxes, new tenants or owners of these buildings could compete more aggressively for business by operating with lower overhead than similar businesses.

As a result, lawmakers hoped to increase the value of commercial real estate, expand local jobs, and reduce crime in their jurisdictions. Although not all enterprise zones have achieved their stated goals, many communities have enabled storage services to thrive by granting tax breaks to warehouses located near major highways, airports, and rail facilities. Many of the most successful enterprise zones include large factories and mills that can easily be converted into public warehousing and shipping facilities. Warehousing companies that move to tax-advantage properties from in-demand urban neighborhoods can realize significant savings and, in many cases, secure easier access to shipping services.

Selecting Warehousing Vendors That Pass Along Enterprise Zone Savings
As more companies use third-party storage services companies to handle warehousing instead of operating their own facilities, saving money through enterprise zones may require some legwork. In some cases, public warehousing specialists may already have set up shop in enterprise zones with only subtle clues to their overall cost savings. By cross-referencing product delivery addresses with public enterprise zone records, company leaders can determine if existing warehousing vendors qualify for tax incentives. If so, this knowledge can provide some leverage during future pricing negotiations.

If current vendors have not already reaped the benefits from locating warehouses in enterprise zones, business leaders may wish to explore strategic options with successful partners. Encouraging a current warehousing provider to consider opening a new facility can result in multiple benefits for a company. Beyond the cost savings of reduced overhead, a companys long-term commitment to a struggling community can generate the kind of goodwill that positively impacts branding and public relations campaigns. Many companies that locate in empowerment zones enjoy the benefits of community partnerships and visibility that end customers appreciate.

When vendors see no benefit to relocating to enterprise zones, companies may want to solicit bids from competitors who already understand the benefits of this strategy. Although changing storage services may seem like a daunting and expensive task, many companies can spread their relocation costs over multiple weeks or quarters. For instance, shipping remaining product to customers from a previous warehousing site creates a measured andquot;wind-downandquot; in advance of new inventory arriving at a new location. By running a cost analysis on prospective storage services vendors, company leaders can discover the potential net impact of this strategy over the long term.

Sources
InfoSys
State of Connecticut
State of Florida
WisBusiness