Operating Costs
Operating costs for warehouse and distribution operations in the Luzerne/Lackawanna County compare favorably against operating costs in three competitor locations: Dauphin County, PA; Hightstown, NJ (Exit 8 on the New Jersey Turnpike); and Middletown, NY. The Luzerne/Lackawanna and Schuylkill sites offer the overall lowest cost environments of all the sites studied, followed by Monroe and Dauphin. The three Northeast Pennsylvania sites and Harrisburg offer considerably lower relative operating costs than Middletown and Hightstown. The table below presents the relative rankings of the six locations for the major cost categories (e.g., labor, zoned and fully-serviced land, construction, occupancy, electric power and natural gas).
| Operating Cost Comparison – Relative Rankings* | ||||||
| Cost Factor | Luzerne / Lackawanna County, PA | Schuylkill County, PA | Dauphin County, PA | Monroe County, PA | Middletown, NY | Hightstown, NJ |
| Labor Cost Index | 1 | 2 | 3 | 4 | 5 | 6 |
| Land Cost Zoned and Fully Served | 2 | 1 | 4 | 4 | 2 | 6 |
| Construction Cost – Good Class C Warehouse / Distribution | 2 | 4 | 1 | 2 | 6 | 5 |
| Occupancy (base rent, utilities, operations / maintenance, property taxes) | 2 | 1 | 3 | 4 | 5 | 6 |
| Electric Power Cost | 2 | 2 | 1 | 2 | 5 | 6 |
| Natural Gas Cost | 3 | 2 | 3 | 3 | 1 | 6 |
*Rankings based upon WDG’s comparative analysis of cost, by factor, among six locations.
Freight Costs
The outbound freight cost assessment measured and compared the relative costs of shipping outbound freight from the three representative locations (e.g., Luzerne / Lackawanna County, Schuylkill County, and Monroe County) and the three competitor locations (e.g., Hightstown, Middletown, and Dauphin County) to 20 locations in 17 states, plus Toronto and Montreal in Canada. Using representative shipping assumptions based on local company experiences (class 85 rates, population density based distribution, combined TL and LTL shipments-assuming 1.5 billion pounds TL and 19.6 million pounds LTL per year), Monroe County offers the lowest cost-origin location, followed by Hightstown, Luzerne / Lackawanna County, Middletown, Schuylkill County and Monroe County. Using the project-established parameters, shipping from Monroe County has an annual cost savings of $1.075 million over Dauphin County, the highest-cost shipping location. The total costs and cost differentials resulting from the outbound freight cost assessment are presented in the table below.
| Total Costs and Cost Differentials – Six Origin Locations | |||||
| Origin Location | Annual Outbound Freight Cost | Annual Differential vs. Low-Cost Origin Point | |||
| LTL Shipments | TL Shipments | Total Cost | Cost Penalty | Percentage | |
| Monroe County, PA | $1,816,446 | $30,092,192 | $31,908,638 | $ – | 100% |
| Hightstown, NJ | $1,876,600 | $30,271,332 | $32,147,932 | $239,294 | 101% |
| Luzerne / Lackawanna County, PA | $1,849,481 | $30,589,728 | $32,439,209 | $530,571 | 102% |
| Middletown, NY | $1,966,332 | $30,663,516 | $32,629,848 | $721,210 | 102% |
| Schuylkill County, PA | $1,844,778 | $30,840,836 | $32,685,614 | $776,976 | 102% |
| Dauphin County, PA | $1,865,992 | $31,117,788 | $32,983,780 | $1,075,141 | 103% |
Combined Costs
An abbreviated cost analysis to highlight the relative cost differentials among the six locations is presented in the table below. A comprehensive cost analysis is not presented, as it would be misleading to operations that do not match the parameters used in the model. The analysis demonstrates, however, that Luzerne / Lackawanna County and Schuylkill County offer a distinct cost advantage, assuming the parameters used. Monroe County and Dauphin County annual costs are $2.65 million and $3.05 million higher, respectively to Luzerne / Lackawanna County the lowest cost location. Annual costs in Middletown and Hightstown are dramatically higher versus Luzerne / Lackawanna County, at $5.21 million and $7.20 million, respectively. Labor costs in Luzerne / Lackawanna County and Schuylkill County are lower than in the competitor locations, and it is these labor-cost differentials that are major contributors to the operating-cost savings at these locations.
| Abbreviated Cost Comparison – Estimated Annual Costs | ||||||
| Factor | Luzerne / Lackawanna County, PA | Schuylkill County, PA | Monroe County, PA | Dauphin County, PA | Middletown, NY | Hightstown, NJ |
| Lease Cost* | $5,400,000 | $5,200,000 | $5,950,000 | $5,750,000 | $7,000,000 | $8,000,000 |
| Wage Cost ** | $29,254,400 | $29,485,600 | $31,885,600 | $31,406,400 | $32,674,400 | $34,145,600 |
| Shipping Cost *** | $32,439,209 | $32,685,614 | $31,908,638 | $32,983,780 | $32,629,848 | $32,147,932 |
| Total: | $67,093,609 | $67,371,214 | $69,744,238 | $70,140,180 | $72,304,248 | $74,293,532 |
| Differential to Lowest Cost Location: | $ – | $277,605 | $2,650,629 | $3,046,571 | $5,210,639 | $7,199,923 |