Federated Department Stores — Portland, Tennessee

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In Middle Tennessee, near the state line, just south of Kentucky, an economy is in transition. For decades, families in this rural area made their living farming, primarily tobacco. But now the economy is becoming increasingly industrial.

In February 2006, ground was broken at a site that will become a 595,000-square-foot distribution center. It is part of a $130 million, two-year effort by Cincinnati-based Federated Department Stores. Federated’s center, to be staffed by 500 new hires, will handle the direct-to-consumer orders. These orders constitute Federated’s fastest-growing segment, and are expected to reach $750 million in 2008.

The center’s location, in Portland, was a good fit with Federated’s plans. “Portland was an optimal site for this important new facility because the location was central to our customers and suppliers, as well as having easy access to the I-65 transportation corridor,” said Federated Vice Chair Tom Cole.

State and local authorities also assembled an incentives plan. It included applicant screening and assessment, on-the-job training, state jobs tax credits, sales and excise tax credits, an infrastructure grant, a utility rate discount, utility consulting and technical services, and local property tax abatement.

But before the project became a reality, several obstacles had to be overcome. Federated needed a new water tower, an interstate interchange, roadwork leading into the site, a new power substation, and other development. Also, the company was concerned about the potential workforce, but state officials arranged interviews with human resources executives from the Gap, Bridgestone-Firestone, and other companies in the region. Ultimately, Federated cited both workforce quality and low operating costs as compelling reasons to locate in northern Middle Tennessee.

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