The new centers will allow the maker of Tide, Crest and Swiffer, among hundreds of other products, to cut down on wasteful distribution processes and respond quickly to customers’ needs in the shortest possible time.
“We want to be able to get 80 percent of our product to those customers within one day of transit,” LeRoy said, referring to retailers that carry P&G products, such as Walmart and Target. “To do that, the distribution centers have to be strategically located near the population and near the infrastructure. If you look at Dayton, you’ve got I-70 and I-75, and it’s a perfect location in the Midwest, centralized around major population centers.”
The new distribution centers will also be strategically located near major railways, LeRoy said, allowing P&G to limit truck transportation — the most costly, energy intensive, and polluting form of surface transportation.
“Using rail as much as we can, I think we reduce the overall truck capacity by something like 7 percent,” he said. “That’s significant. Obviously, it helps with costs.”
During a conference call with investors last month, P&G officials said consolidating manufacturing and distribution operations would result in cost savings of $200 million to $300 million annually over the next three to four years and contribute to both sales and profits.
The company posted third-quarter earnings of $2.6 billion, or $1.04 a share, for the quarter that ended March 31 on sales of $20.6 billion.
Earnings for the quarter came in two cents above analysts’ expectations, but company is facing a slower-growth environment in a still sluggish economy and increased competition, which will require the company to operate leaner, analysts say.
In addition to minimizing carrying costs, the new distribution centers will help P&G keep its labor and building costs under control because the company is leasing the new facilities.
Industrial real estate developer, Prologis Inc., will lease the Union center to P&G, while third-party logistics providers Excel and Quality Associates will run the facility and facilitate the hiring process, expected to begin in November.
“When you think about the P&G presence there, it’s our products and our brands, but this model of leasing from another company and having them develop it works best for us,” LeRoy said.
For the local area, the new distribution center in Union will provide a needed boost to economic development and the job prospects for hundreds of displaced factory workers, many of whom lost jobs during the Great Recession.
“The skilled workforce across the region allows for celebratory wins like Procter & Gamble,” said State Sen. Peggy Lehner, R-Kettering. “A local investment by one of the world’s most recognizable companies validates the workforce efforts here in the Dayton region and across the state of Ohio.”
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