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NC: Industrial MRO Distributor Creates 400 Positions at $31M Co-located HQ

21 Jun, 2012


MSC INDUSTRIAL DIRECT CO., INC., “MSC” or the “Company,” one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States, announced plans to co-locate its corporate headquarters in Davidson, North Carolina, which is located in the Charlotte area, in addition to its current location in Melville, New York in order to support its growth strategy. The final decision of Davidson is subject to receiving formal governmental approvals from Davidson and Mecklenburg County.

Upon receiving the necessary approvals, the Company will expand capacity through the construction of a new 180,000 square foot Customer Service Center (CSC) in Davidson, North Carolina. The Company plans to maintain its existing facility and operations in Melville, NY. With tax and other incentives provided by the State of North Carolina, The Town of Davidson, and Mecklenburg County, totaling $14 million over 12 years, MSC plans to create over 400 jobs in Davidson by the end of calendar year 2017.

In order to implement this strategy, the Company would purchase a 14-acre open space in Davidson, break ground on its new facility in the second half of 2012, and complete construction in 2013. The facility will be designed to accommodate future expansion as the Company continues to grow.

“We are excited to announce this co-location strategy designed to support and prepare for MSC’s strong future growth trajectory,” said David Sandler, Chief Executive Officer of MSC. “After conducting a national search and careful consideration, the Charlotte area provided the most compelling opportunity and flexibility to strategically grow our business in a cost-effective manner in a region that is also an attractive community for our associates. New York has been our home for over 70 years and will continue to be a home to MSC going forward. However, Davidson provides the optimal environment for expanding our business further in the coming years and we believe our decision will be in the best long-term interest of our Company and all of our stakeholders.”

Sandler continued, “We are grateful for the efforts and leadership of Governor Beverly Perdue, Mecklenburg County Commission Chair Harold Cogdell Jr., Davidson Mayor John Woods, the Charlotte Chamber of Commerce and the Lake Norman Regional Economic Development Corporation for working with us to make this co-location possible. We look forward to building our presence in the Davidson community and beginning this exciting new chapter for MSC.”

“Creating a positive employment environment for our state is one of my top priorities,” said Governor Perdue. “Our skilled workforce, top-notch business climate, and job training programs are key reasons why leading companies locate and grow their businesses in this state. MSC knows that North Carolina is a great place to do business and we welcome their increased presence in North Carolina.”

“We are excited that MSC has chosen to expand in Davidson,” said Mayor Woods. “Their move will enhance our local economy and bring a significant number of high quality jobs to the area. MSC has a strong track record of corporate citizenship and community involvement, and, in addition to its economic impact, we can also look forward to the many ways in which its presence will enhance our community.”

The new co-headquarters will be populated by some current MSC associates who will be offered relocation packages, as well as new hires made in the Charlotte area. There will not be any layoffs as a result of implementing the co-location strategy. New York has been MSC’s home since 1941, and the Company remains fully committed to maintaining a presence there and to having an executive presence in both Melville and Davidson. MSC plans to maintain its Melville location; however it is expected that the majority of future additions to all departments will be made in Davidson.

The Company expects to invest approximately $31 million in capital expenditures to construct and outfit the facility in Davidson. Approximately $5 million of this capital is expected to be spent in the remainder of fiscal 2012 with the majority of the remaining balance to be spent over the course of fiscal 2013. Additionally, as a result of associate relocations, the Company has estimated one-time costs of approximately $7-10 million, depending upon the number of associates who choose to relocate, to be incurred primarily in fiscal years 2013 and 2014. Including the afore-mentioned incentives, as well as lower operating expenses, the Company expects to generate ongoing annual savings of more than $3 million by fiscal 2017, with initial savings beginning in 2015 and increasing in the following years. Over the long-term, it is expected that the cost of further expanding the Company in Davidson will be substantially less than doing so in Melville.

The company has been awarded a grant of up to $1.05 million from the state’s One North Carolina Fund. This fund assists the state in industry recruitment and expansion by providing financial assistance through local governments to attract business projects deemed by the governor to be vital to a healthy and growing state economy. One North Carolina Fund grants require a local match, and this grant is contingent upon approval of local incentives.

The state Economic Investment Committee voted to award a Job Development Investment Grant (JDIG) to MSC Industrial Direct. JDIGs are awarded only to new and expanding businesses and industrial projects whose benefits exceed the costs to the state and which would not be undertaken in North Carolina without the grant.

Under the terms of JDIG, the company is eligible to receive a grant equal to 70 percent of the state personal income withholding taxes derived from the creation of new jobs for each of the 12 years in which the company meets annual performance targets. If MSC meets the targets called for under the agreement and sustains them for 12 years, the JDIG could yield as much as $11.7 million in maximum benefits for the company.

In addition, up to $3.92 million could be added to the state’s Utility Fund for infrastructure improvements in economically distressed counties. When a JDIG is awarded in the state’s more economically prosperous counties such as Mecklenburg, 25 percent of the grant is allocated to the Utility Fund to encourage economic development in less prosperous counties.

Other partners who assisted with this announcement include: The N.C. Department of Commerce, N.C. Community Colleges, Mecklenburg County, Town of Davidson, Lake Norman Regional Economic Development Corporation, Charlotte Chamber, Charlotte Regional Partnership and Duke Energy.

About MSC Industrial Direct Co., Inc.
MSC Industrial Direct Co., Inc. is one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States. MSC employs one of the industry’s largest sales forces and distributes approximately 600,000 industrial products from approximately 3,000 suppliers to approximately 325,000 customers. In-stock availability is approximately 99%, with next day standard delivery to the contiguous United States on qualifying orders up until 8:00 p.m. Eastern Time. MSC reaches its customers through a combination of approximately 19 million direct-mail catalogs, 108 branch sales offices, 1,081 sales people, the Internet and associations with some of the world's most prominent B2B eCommerce portals. For more information, visit the Company's website at http://www.mscdirect.com.
 

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