(The Rockford Register Star published the following story by Sarah Roberts on its website on August 27.)
ROCHELLE, Ill. — Union Pacific?s $181 million cargo hub doesn?t officially open until this afternoon, but already it has lured at least a dozen businesses to the region, each wanting to take advantage of what often is called the future of transportation.
Union Pacific Global III, which celebrates its grand opening today with a barbecue lunch and guided bus tours, is expected to spur more growth.
During the next decade, the Rochelle intermodal hub will add $2.8 billion to the Rock River Valley’s economy, according to a preliminary analysis by Insight Research in Dallas.
Even that may be a conservative estimate.
“The level of interest from companies looking to relocate to the area continues to be quite high,” said Neil Palmer, a suburban Milwaukee-based consultant who worked with Union Pacific on the Rochelle hub. “It gives you reason to believe that the facility will continue to attract new business as well as keep business in the region.”
Business growing quickly
The hub is where trucks and trains exchange cargo from Midwest, West and international ports.
Intermodal hubs represent the fastest-growing segment of Union Pacific?s business and are attractive because cargo can be shipped via air, rail or port without having to be repackaged at each stop.
The total economic impact in Rochelle takes into consideration the impact of new business attracted to the hub.
It includes $140 million in new warehousing and distribution centers that will employ 700 construction workers.
The cost to equip and furnish those facilities is estimated to be an additional $140 million.
Within 10 years, those businesses are projected to add 1,800 jobs to the local economy.
Palmer said those estimates are likely to change, based on actual economic impact from a smaller intermodal hub that Union Pacific built near Dallas.
In 1995, Union Pacific expanded an existing rail yard into the Mesquite intermodal hub.
Beating expectations
Experts predicted the economic impact would be $506 million over 10 years, yet in eight years it already has generated $617 million for the region’s economy.
Palmer said the most important increase was in related industrial development, which brought in $111 million more than expected.
If the smaller Mesquite hub can surpass its projected impact, Palmer said, it?s logical to assume Rochelle will follow suit.
At 1,250 acres, Global III in Rochelle is Union Pacific?s largest intermodal hub in terms of acreage. It also has the potential to be the company’s largest cargo transporter, with the capacity to handle 720,000 containers each year.
Union Pacific’s Los Angeles hub now handles the most cargo, at an average of 650,000 containers a year. Add in Rochelle’s proximity to Interstates 39 and 88, and the Greater Rockford Airport, and proponents say it makes sense to expect a greater economic impact than an initial analysis would indicate.
“We’re pretty comfortable with the economic analysis for Rochelle, and frankly, it?s quite conservative,” Palmer said. “It would appear that this region is on track to exceed expectations.
“If the economy continues to improve and if what’s already been going on in Rochelle keeps up, you would expect it to.”
Ken Wise, Rochelle’s director of economic development, pointed to various businesses that already have settled or expanded in Rochelle as proof that the truck-rail hub is making a significant impact.
Centerpoint Properties recently paid $4.9 million for 366 acres next to the hub. The Chicago-based company, which owns and leases industrial land and has developed land for Union Pacific, plans to build a business park and attract some of its customers to Rochelle.
Union Pacific also plans to increase its presence in Rochelle by building warehouses on extra land inside the rail yard.
Erie Foods, Holiday Inn, Rayovac and DP Partners have built facilities in Rochelle or have committed to do so. Wise said Wal-Mart plans to build a distribution center west of Sterling and use the hub for shipping merchandise.
Idaho-based Boise Cascade is building an 80,000-square-foot warehouse with office space near the rail site. Company spokesman Mike Moser said the intermodal hub was an important factor in the company’s decision to locate in Rochelle.
“We run a building materials distribution that requires a lot of product shipped into the distribution center and then redistributed to customers in the greater Chicago area,” Moser said. “One of the considerations for us locating there was the proximity to the rail and highways that serve the Chicago area.”
It?s a sentiment echoed by many businesses.
Time is money, and congested Chicago rails are becoming less attractive for companies looking to streamline their shipping and stay ahead of the competition. One reason the Chicago rail yards are so clogged is that the city is a gateway for eastbound and westbound trains. When too many trains converge in Chicago, the result is shipping delays.
It?s why Union Pacific has such a vested interest in the Rochelle hub and is dedicated to making it a model of efficiency.
“We needed a local facility to improve productivity and movement,” said Mark Davis, Union Pacific’s regional director of public relations in Omaha, Neb. “This is one of our top investments.”