True Value originally wanted distribution center to stay open
True Value calls it the huband-spoke model, a network involving a central hub and corresponding regional distribution centers, which serve as the spokes. The company, one of the largest hardware wholesalers with thousands of independent retailers, successfully implemented the model in the Midwest in late 2018.
When the company then turned to its Northeast presence, a region responsible for more than 40% of its volume, it realized it had a problem, spokeswoman Jennifer Born said. True Value quickly determined it needed a larger facility than it had there, a region that includes a distribution operation in Upper Macungie Township. That distribution center, and a nearby satellite site, were out of capacity and aging.
Born said True Value couldn’t find enough available space in the booming Lehigh Valley market for a new distribution hub here.
While it’s currently a difficult market to site a large warehouse, the Lehigh Valley Economic Development Corp. confirmed True Value never reached out for assistance with a potential search.
That reality pushed True Value about 60 miles north to Hanover Township, Luzerne County, where the company will lease a 1 million-square-foot space outfitted with materialhandling equipment that is slated to open this fall, Born said. At around the same time, the Lehigh Valley distribution operation, more than 40 years old, will begin winding down, the odd spoke out in a Northeast region that will include the hub near Wilkes-Barre and regional distribution centers in Manchester, New Hampshire, and Cleveland, Ohio.
“We originally hoped that we would be able to keep Allentown open in addition to our new facility in Wilkes-Barre, but our analysis ultimately showed us that it was far more efficient to service our customers in the Northeast with our largest and newest distribution center and two spokes instead of three,” Born explained in an email, noting True Value’s space near Wilkes-Barre could eventually expand to 1.4 million square feet.
The move will displace as many as 165 employees of the local operation, which is spread between the 527,775-squarefoot building at 7058 Snowdrift Road and the 150,598-squarefoot facility at 6736 W. Tilghman St.
Sean Kirchhofer, a staff representative with United Steelworkers Local 10-00554, which represents the affected True Value workers, said the cuts are expected to start in mid-October and continue in waves of 20-30 employees at a time. Further, inbound-outbound service from the Upper Macungie operation is expected to stop in November — Born acknowledged some dates could be moved back slightly based on business needs — and the local operation will close for good by mid-March.
Kirchhofer said severance agreements have been secured for the employees, and the union is looking to bring state officials to the area around late September to help workers with the transition. He estimated that about half the operation’s employees have worked there at least 10 years. The facility was one of the few unionized distribution centers in the Lehigh Valley and, as such, the workers were paid near the top of the local warehousing industry. Kirchhofer said employees there started at $17 an hour, a rate that goes up every three months until topping out just shy of $21.
“There are some people confident in their ability to find work elsewhere,” he said. “It’s the need to take large steps backward and stay in the same industry. There are warehouses in the industry paying $14 and $15 in the area, and these guys were making $21.”
Born said True Value is encouraging affected workers to apply for jobs at the distribution hub near Wilkes-Barre. Some have already done so and are in the new-hire process, she said, as True Value plans to fill 200 positions at the site.
The workers, however, will not be part of a union at the new site, as the collective bargaining unit was specific to the facilities in Upper Macungie — down to the exact addresses, Kirchhofer noted. Of the jobs listed for Wilkes-Barre on the True Value website, a janitorial worker at the new site will start between $12.10 and $14.10 an hour, while a second-shift merchandise handler will start between $14.20 and $17.05 an hour. Born said the pay ranges for the Wilkes-Barre positions are competitive with the local market.
Kirchhofer added that the future of the Upper Macungie operation was a concern for years, especially as new industrial buildings were built around the Lehigh Valley and the Snowdrift and Tilghman facilities, both built in the 1970s, continued to age.
“I think the writing was on the wall,” he said. “Once they decided to open this warehouse in Wilkes-Barre, I just think it was a matter of time.”
Also affected by the closure are about five truck drivers who serve the distribution center but are not employed by True Value. Some of those drivers, who are contracted through Ryder, have served the distribution center for more than two decades, according to a source familiar with the operation, who requested anonymity for fear of reprisal.
Even though the drivers don’t work for True Value, they deliver to True Value stores and interact daily with customers, the source said.
Now, those drivers are waiting to hear when inboundoutbound service will halt at the distribution center, leaving them to find their next ride.
Morning Call reporter Jon Harris can be reached at 610-820-6779 or at jon.harris@mcall.com.