Distribution Center

David Ayres, a receiving supervisor, moves food in one of the warehouse units of the Safeway Northern California Distribution Center in 1992.

A story on the front page of the Tracy Press Jan. 16, 1992, edition provided a concise summary how 1992 was the epicenter of an explosion of warehouse and distribution centers opening in the Tracy area.

The first two paragraphs of the story read:

“The new Orchard Supply Hardware warehouse on Feb. 3 will join the list of regional warehouse distribution centers which are choosing Tracy as their new home.

“That list includes Safeway, Market Wholesale Grocers, U.S. Cold Storage and a proposed Costco distribution center.”

All were opened by 1992 except U.S. Cold Storage, which was constructed mostly in 1992 and opened in 1993.

It was indeed a time of major warehouse and distribution growth, establishing a pattern that continues today.

Market Wholesale Grocers and Orchard Supply Hardware were among the first major warehousing and distribution facilities in the city of Tracy’s Industrial Specific Plan corridor along MacArthur Drive between 11th Street and Grant Line Road.

They were the bookends of the first phase of what became the 870-acre Northeast Industrial Area: Market Wholesale Grocers on the north facing Pescadero Road and Orchard Supply Hardware on a 40-acre site on the south end facing MacArthur.

Market Wholesale Grocers was the first to land, opening in 1989 with a 166,000-square-foot warehouse and 10,000-square shop. It supplied groceries and other inventory for food stores all over northern California.

It was later closed and operations moved elsewhere. Its building was purchased in 2006 by McLane Food Service, which continues in that location today. It has 189 employees and transports food to Pizza Hut, Taco Bell, KFC, Denny’s, Buffalo Wild Wings, Long John Silver’s and A&W.

After construction was completed in February 1992, Orchard Supply Hardware, rebranded as OSH, started moving its distribution operation, including 168 employees, from San Jose to its 350,000-square-foot Tracy warehouse to serve 37 OSH stores in Northern and Central California. When $28 million in inventories of hardware, garden supplies and lumber were installed, a grand opening with an open house for Tracy residents was held April 5, 1992.

The OSH distribution center — as was the OSH retail store — was closed in 2018 after the parent firm, Lowe’s Cos., shuttered all Orchard Supply Hardware stores and distribution centers.

The Safeway and Costco warehouse and distribution centers were constructed west of town in an unincorporated area on Schulte Road in the newly formed 4,000-plus-acre Patterson Pass Business Park launched by King and Lyon development firm of Fremont.

Since the business park was not within city limits, it had to make special arrangements to receive water from the city. Byron Bethany Irrigation District, which had rights to Delta-Mendota Canal water through its acquisition of the Plain View Water District, contracted to sell water to the business park, and the city of Tracy agreed to deliver the water through an expanded pipeline system.

The city also provided sewage services.

Safeway originally considered locating in the business park in south Tracy, but decided that the site too small and looked farther west to the Patterson Pass Business Park.

The massive Safeway Distribution Center in the Patterson Pass Business Park officially opened May 1, 1992, but a major labor dispute clouded the opening process that was started in mid-March.

The Teamsters Union organized a boycott of Safeway Northern California stores in the wake of Safeway’s decision to outsource management of the Tracy center to Specialized Distribution Management Inc. (SDMI), a Sacramento firm headed by George and Brenda Crum.

A bone of contention was Safeway’s original plans to require 450 employees at Safeway warehouses in Richmond and Fremont — both scheduled to be closed — to apply for jobs with a 60-day probationary period at the new Tracy facility instead of being automatically transferred. The union claimed it was “union-busting,” but Safeway said that work rules were a major issue.

After a month of bargaining and picketing, the issues were settled, and Teamsters members voted April 26, 1992, to accept an offer from SDMI, ending the boycott.

Summit Logistics, a firm based in England, took over from SDMI in 1997, and then Safeway resumed managing the distribution center on Aug. 10, 2003.

The Safeway Northern California Distribution Center that was the center of the labor dispute included a 1.8-million-square-foot complex on 170 acres in two warehouses, the larger one for general merchandise and one smaller for perishable products.

The distribution center, which was earmarked to have 1,600 administrative, management and union employees, served 245 Safeway stores in Northern California.

Opening the Costco Distribution Center next to Safeway on Schulte Road was a smoother and more gradual process. At that time, Costco was in the midst of a major expansion program of its retail outlets, so the facilities at the distribution center were added to and enlarged over time to service Costco warehouse stores from Visalia in the south north to Yreka.

A unique segment of Costco’s Tracy distribution center was its meat-processing facility, specializing in hamburger. The hamburger plant, a subsidiary operation called Costco Wholesale Meats, makes all the ground meat, meatballs and hamburger patties for Costco stores in the United States. Eleven years after the Costco Distribution Center was opened, the hamburger plant was enlarged and continues in operation.

After OSH, Safeway and Costco were opened in 1992, United States Cold Storage came on line in the spring of 1993, completing the surge of warehouse and distribution operations locating in Tracy over five years.

The cold-storage firm, a unit of the international Swire Group, located its Tracy facility on a 12-acre site on MacArthur Drive, just north of Orchard Supply Hardware.

What was called Phase 1 of the Tracy site included 1.85 million cubic feet of convertible freezer and cooler space controlled by a central computer system and ranging in temperatures between minus 20 degrees Fahrenheit to plus 35 degrees.

At the outset, the facility had the capacity to increase storage to 7 million cubic feet.

A grand opening and public open house were held Sept. 14, 1993, with the U.S. Cold Storage chairman and president in attendance.

The Northeast Industrial Area continued adding warehouse and distribution operations in subsequent years. Firms included Kellogg’s (with a 750,000-square-foot facility), Crate and Barrel (with a Furniture Clearance Center on Chrisman Road) and Home Depot.

The Home Depot operation, opened in 2010, has a 665,000-square-foot fully automated mechanical warehouse serving Home Depot stores located as far south as Fresno and north to Oregon and Idaho and east to Nevada.

Firms other than distribution centers have located in the Northeast Industrial Area. They include Katerra, which manufactures building components and assemblies; Tracy-based Barbosa Cabinets; and Clutter, a personal and enterprise storage firm.

But the arrival of Amazon and the opening of the Prologis International Park of Commerce continues and expands warehouse and distribution growth in the Tracy area. More about that next week.

• Sam Matthews, Tracy Press publisher emeritus, can be reached at 830-4234 or by email a shm@tracypress.com.

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