Wal-Mart center may be built

April 19, 2006|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

State officials were optimistic yesterday that Wal-Mart Stores Inc. will push ahead with construction of a long-planned Eastern Shore distribution center that's expected to bring as many as 900 jobs to struggling Somerset County.

Plans for an up to 1 million-square-foot distribution center south of Princess Anne, the county seat, were delayed by state legislation that will require Wal-Mart to spend more on employee health care.

The fight in the General Assembly drew national attention and sparked debate over whether states should require the payment of medical benefits as a way to reform the health care system. Wal-Mart lobbied heavily against the bill and hinted that passage could derail the project. But a Wal-Mart spokesman said yesterday that the retail chain would complete the purchase of the roughly 175 acres within a month because its final option on the land will expire and cannot be extended.

The company expects to announce a timetable for construction shortly after closing on the property, said Keith Morris, the spokesman. But he stopped short of saying the project will go forward. The distribution center is to serve 75 stores, including those on the Eastern Shore.

"There's still no timetable for the project to move forward," Morris said. "We wouldn't establish one until after the closing process. The hope would be that it would move forward."

Wal-Mart initially planned to open the Somerset center later this year, but apparently it would be at least 2008 if the project goes ahead.

The retailer has already announced its 2007 plans for new distribution centers in Wisconsin, Florida, Indiana and Wyoming, said John Dobbs, a logistics official for Wal-Mart. He said Wal-Mart also plans to expand its center in Pottsville, Pa.

Aris Melissaratos, secretary of the state's Department of Business and Economic Development, said yesterday that he took Wal-Mart's decision to purchase the land as a positive sign.

"I've always felt they were going to go through with this move, no matter how shabbily the General Assembly treated them," said the secretary.

"The Maryland team sold them so well that I felt they will come through and build what they promised. We have the work force, the location, the right incentives. It's unfortunate that the legislative bodies slammed them as hard as they did."

The Fair Share Health Act will require companies with 10,000 or more workers in the state to spend 8 percent of their payroll on health benefits or pay the difference to the state.

The act affects only Wal-Mart because it is the only employer of that size in Maryland that doesn't meet that threshold.

Democratic state legislators voted to override Republican Gov. Robert L. Ehrlich Jr.'s veto of the bill, which goes into effect Jan. 1, 2007.

The bill's supporters applauded the legislation as a start in reforming a health care system in which many working poor have no insurance. But opponents argued that businesses, including Wal-Mart, would bypass a state that dictates what businesses pay, hurting economic development in areas that need jobs most.

"On the Lower Eastern Shore, we need to diversify the economy with more year-round jobs," that extend beyond the seasonal jobs in resort areas such as Ocean City, said Melissaratos. "The Lower Eastern Shore really needs it."

The distribution center in Somerset would employ about 600 people initially and could add 200 to 300 more jobs after the first three years of operation, Morris said.

With the distribution center, Wal-Mart would become one of the largest private employers in Somerset County and provide employment for residents of nearby Wicomico and Worcestor counties, said Daniel K. Thompson, executive director of Somerset County Economic Development Commission.

"We're very much excited they're going through with the purchase of the property," Thompson said. "We have been excited for this economic development project for two years. It certainly would be a tremendous boost to our economy," in a county where the unemployment rate is 6.3 percent.

The retailer had been pursuing the site since 2004 and had signed a contract before the introduction of the health care bill.

"That was something we had to look closely at," said Morris, the Wal-Mart spokesman. "It did potentially have an impact on anyone creating retail jobs in the state."

Because the option to purchase the property is about to expire, "We have to purchase the land or walk away," Morris said. "We're not ready to walk away." Morris said he could not disclose an anticipated purchase price.

The retailer belongs to a trade group that has challenged the state law in federal court. In its suit, the group, the Virginia-based Retail Industry Leaders Association, contends it is illegal under the federal Employee Retirement Income Security Act of 1974, which prevents states from setting benefits for employees.

Wal-Mart opened its newest distribution center in the Mid-Atlantic region last year in Delaware, Morris said.

The chain plans for new distribution centers as existing ones get close to capacity.

"The impetus behind this facility and planning for it is based on the existing distribution centers building up a larger base of stores they are serving," Morris said. "At some point we need another facility in the region."

lorraine.mirabella@baltsun.com

Sun reporter Andrea K. Walker contributed to this article.

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