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Wal-Mart

Has the county become too dependent upon this one-stop shop for food, clothes and jobs?

By JENNIFER LIBERTO
Published February 15, 2004

To Wal-Mart, the January opening of its Sam's Club in Spring Hill is a tiny notch on its growing Florida retail belt, which includes nearly 200 stores scattered throughout the state.

To Hernando County, the new Sam's signifies the growing shift in a local economy that is changing the county's identity. Older industries of decades past, such as mining and agriculture, are fading as the county experiences an onslaught of retail stores and restaurants, the consequences of Hernando's growing suburban population.

In the case of Wal-Mart, the addition of the new Sam's Club makes Hernando County practically a company town. With the opening of Sam's Club, Wal-Mart holds the title as the county's largest taxpayer and becomes the county's largest employer, edging out the school district.

With three Supercenters, a Sam's Club and a sprawling distribution center, Hernando County is particularly saturated with Wal-Marts, considering its population. But Wal-Mart executives said they have no particular affection for Hernando County and that expansion efforts are not targeted at any single area.

"Based on the level of customer acceptance, we felt confident in going forward with new units," said Daphne Davis Moore, Wal-Mart's community affairs manager for the southeastern United States. "And Hernando County is a great place to do business."

Hernando isn't the only spot in the Sunshine State feeling Wal-Mart's stamp. The nation's largest retailer opened 50 of its 24-hour Supercenters throughout the state during the past two years. It is also among the state's largest private employers, with 77,850 employees, far more than the 54,000 employed by Walt Disney Co.'s Disney World.

Locally, Wal-Mart's growth has sparked controversy, as residents, government officials and experts continue to debate the implications of Hernando County's growing dependence on Wal-Mart.

Wal-Mart has single-handedly created most of the county's new jobs over the past two years and helped buffer the county from feeling the fiercer pains of the recent recession.

Yet, most of the new Wal-Mart jobs pay only a few dollars above minimum wage, employees confirmed. Labor experts say those jobs drag down the county's average wage, which was $11.86 an hour in 2001, according to the federal Bureau of Economic Analysis. By contrast, the state average was $15 an hour and the national average was $17 an hour.

Wal-Mart also has a reputation for crushing smaller businesses, and several Hernando County companies say they are feeling Wal-Mart's muscle.

"It's pretty sick that I can buy my supplies at Wal-Mart cheaper than I can get from my own wholesaler," said Helen Sawyer, owner of Unlimited Cards in Brooksville.

Three months after the Brooksville Wal-Mart opened in late 2002, Sawyer had to rid her store of an entire aisle of birthday party supplies because she couldn't compete on those items.

Look no farther than a Wal-Mart parking lot to explain the company's eye-popping growth in the county. The lots never lack for cars.

And each of the county's Wal-Mart grand openings, marked by songs, speeches and flag-waving, has attracted a few hundred shoppers who have shown up hours ahead of time, peering for bargains through giant glass doors.

The fanfare is a stark change from Wal-Mart's more humble days, when it opened its first Hernando County store surrounded by miles of empty, grassy fields.

Wal-Mart assumes its throne in the county

Wal-Mart introduced itself to Hernando County in 1986, when it opened a store on U.S. 19 in Spring Hill. But the company's biggest growth spurt has spanned the past three years and can be attributed to the county's population boom, cheap land and relatively lenient zoning regulations, experts said.

Hernando County has more Wal-Mart businesses per capita than all but the most sparsely populated counties in the state, according to a St. Petersburg Times analysis. Only Baker, Washington and Bradford counties rank higher, since each has a single store serving a population of less than 30,000.

Wal-Mart, like most retailers, is drawn toward population growth and certain demographics. The company is also focused on planting its big Supercenters in areas where local governments allow them to occupy a big chunk of land, said Neil Stern, a Chicago analyst for McMillan-Doolittle Retail Consultants LLP.

"They're having more luck and success opening big Supercenters in the South and Southwest, where real estate and the ability to get deals done is relatively easy for them," Stern said. "In other parts of the country, like California, they've had zoning restrictions passed against them, and it's hard to find the kind of land they're looking for."

Hernando County has also attracted more Wal-Mart stores than other Florida counties because it is home to Wal-Mart's first and largest Florida distribution center, experts said. The distribution center on Kettering Road, near Ridge Manor West, is a stone's throw from Interstate 75 and State Road 50, giving company trucks access to most of its stores throughout the Tampa Bay and Orlando areas in an hour or less.

"The more stores they can get feeding off the distribution center, the lower their costs are," said professor Barton Weitz, director of the David F. Miller Center for Retailing Education and Research at the University of Florida in Gainesville.

Several county commissioners say that Hernando County has no control over what demographics draw retailers and that laws prevent them from discriminating against a store when they're considering whether to rezone land. But county leaders did have a hand in bringing the distribution center to Hernando.

Wal-Mart originally planned to build its first Florida distribution center in Winter Haven in the early 1990s. But residents there opposed the move and accused the city of Winter Haven of improperly approving land-use changes for Wal-Mart, according to a lawsuit filed at the time.

During the delay, Hernando County made a steal. An executive from the Withlacoochee River Electric Cooperative called Bentonville, Ark., to ask Wal-Mart executives to consider property that WREC owned on Kettering Road. The County Commission rezoned the site for the distribution center, lined up $2-million in state grants to pave and widen nearby roads and installed water and sewer lines to accommodate the company.

By January 1991, Hernando County had landed the distribution center, and government and business leaders labeled it one of the biggest economic boons to bless the county, with predictions that more development would follow along the I-75 corridor.

Much of the land surrounding the distribution center remains empty today. Still, county officials past and present say the effort to attract Wal-Mart was sound.

"Any economic developer in the state would have loved to have the opportunity that we were presented with," said Al Fluman, director of the county's Economic Development Department during the Wal-Mart wooing. "We were talking about the largest building that had ever been constructed in Hernando County with jobs that had exceeded anything we had for any one site, business or industry."

Fluman acknowledged that, like most people, he had no inkling that Wal-Mart would grow to become the powerhouse it is today. At the time, Wal-Mart's sales were equivalent to those of Kmart, and Sears Roebuck was the nation's No. 1 retailer. Today, Wal-Mart is the world's largest retailer.

The county's distribution center has undergone two major expansions. At 1.5-million square feet, it is among the largest buildings in Florida.

Company growth translates into county benefits

Wal-Mart's expansions have resulted in an immediate benefit to county coffers - to the tune of $700,000 a year in property-tax revenue, which promises to increase in 2004, when Sam's Club is added to the county's tax roll.

In 2003, Wal-Mart became the county's largest taxpayer at $1.94-million - a 55 percent increase over its 2001 tax bill of $1.25-million. That edges out Withlacoochee River Electric Cooperative, at $1.82-million. Florida Crushed Stone is in third place at $1.17-million.

Wal-Mart's taxes sent $852,290 to the Hernando school district in 2003, according to the county Tax Collector's Office.

"Wal-Mart's always been a stalwart supporter of the school," School Board vice chairman Jim Malcolm said. "We want Wal-Mart employing more people than we do. That provides us the tax base we need to operate."

Indeed, the school district lost its title as the county's largest employer last month, when Wal-Mart opened its Sam's Club. Wal-Mart employs 2,958 workers in the county; the school district employs 2,595.

"I'll gladly cede that title to a private company," Malcolm said.

The local economy has otherwise struggled over the past two years, leaving more people unemployed. Although the county's unemployment rate grew as other companies closed, local job officials said the county would have fared much worse if not for Wal-Mart.

In 2002, Wal-Mart provided 500 of the 800 jobs placed by Career Central, the agency the county pays to help residents find work. In 2003, Wal-Mart received more than 1,500 applications for 185 positions.

"Any time jobs come to the area, that's a good thing," said Lee Ellzey, executive director of the Pasco-Hernando Jobs and Education Partnership. "Would we rather have higher paying jobs than what's typically in the retail sector? Yes. But the retail sector is certainly an important part of our economy as well."

About 45 percent of Wal-Mart employees in Hernando County work at the distribution center. The jobs pay between $11 and $14.65 an hour, or roughly twice what Wal-Mart pays its Hernando County retail staff, several employees confirmed.

The county also benefited from Wal-Mart's building spree in Hernando, because county planners managed to squeeze infrastructure concessions from Wal-Mart when the company sought the county's approval for the Sam's Club on Cortez Boulevard east of Mariner Boulevard. Wal-Mart agreed to pay for additional road work that the county had been planning on doing anyway, county engineer Charles Mixson said.

Wal-Mart saved the county about $160,000 to $170,000, for example, by connecting the frontage road in front of Ryan's Family Steak House to Coastal Way Plaza, both of which sit across the highway from Sam's and a Wal-Mart Supercenter.

Another benefit cited by county officials is that Wal-Mart offers its heavily advertised low prices to the county's sizable population of seniors, many of whom live on fixed incomes. And they point to Wal-Mart's overflowing parking lots as proof that the community supports Wal-Mart.

"Wal-Mart is able to deliver the right products at the right prices, and they thrive in times when the economy is down," county business development director Mike McHugh said.

The downside to crowning Wal-Mart king

But Wal-Mart's rapid growth does raise concerns among some in the county.

From the desk of her $14-an-hour office manager's job at Florida Rock Industries' Brooksville quarry, Linda Vagts watched for two decades as the mines slowly exhausted the limerock supply. When Florida Rock closed its quarry and started laying off its 85 employees, Vagts knew a new job would probably mean a pay cut. She mailed and faxed dozens of resumes, including two to Wal-Mart, before her last day in April 2002.

Five months later, Vagts landed her first job lead when a Wal-Mart manager sought her to fill a gardening sales position in the new Brooksville Supercenter. The manager sat her down and asked her what she expected to be paid.

Ten dollars an hour, she told him.

The manager looked her in the eye and told her the job paid $6 an hour.

"I can't afford to take this job. I can't support myself on $240 a week," Vagts told the manager. She was receiving $275 a week in unemployment insurance compensation.

Although Vagts remains a Wal-Mart shopper, she took a job a year ago at Better Mix, a concrete manufacturing company in Hudson, which pays her more than $10 an hour.

But her job-hunting dilemma highlights one of the biggest community concerns about Wal-Mart: the wages and compensation it provides employees.

In Hernando County, more than 1,600 of Wal-Mart's employees work in sales. About 5 percent of those are considered managers. The rest are considered "hourly," or "sales associates," according to Wal-Mart, which declined to break down the numbers of full-time and part-time employees. The company employs more people full time than part time, Wal-Mart spokesman Olan James said.

The average wage paid at a Wal-Mart store ranges between $7 and $8.50 an hour, United Food and Commercial Workers spokeswoman Jill Cashen said.

In Hernando County, wages start a bit lower, between $5.75 to $8.50 an hour for sales associates, several employees said. At least one local door greeter with a decade of Wal-Mart experience was making $6.82 an hour in 2003.

"The jobs are about $7 or $8 an hour with either no or very, very poor benefit levels," said labor professor Bruce Nissen of Florida International University in Miami. Nissen publishes an annual report analyzing wages throughout the state. "They're not good jobs. There's no way around it."

Wal-Mart maintains that its wages are competitive. Indeed, in Hernando County, Wal-Mart wages are within the range paid by other retailers, including stores such as Home Depot, according to local employees. But they trail the pay once offered by local manufacturing and mining jobs that have been trickling out of the county over the past decade.

Hernando County retailers employ 18.6 percent of the people who work in the county, paying average wages of $8.83 an hour, according to fourth-quarter 2002 numbers compiled by the Florida Agency for Workforce Innovation. By comparison, the health care industry employs about 16.4 percent of those who work in the county, and those jobs pay about $18.50 an hour.

"Florida is largely a service economy, and I don't think Hernando County is unique," said McHugh of the county Office of Business Development. "Everyone's going to be paying a market rate, and when people are willing to work for that rate, that's the rate that's going to prevail."

Local business owners have also felt the impact of Wal-Mart's expanded presence in the county.

Several business owners - including those at Pak Mail, Unlimited Cards and Gifts, Golfer Stuff, Music Bum, Brooksville Natural Foods and the Whistle Stop Station - said they have felt some competition from Wal-Mart, but not as much as they feared. They point to what they consider Wal-Mart's cheaper quality products and smaller selection in their specialized areas. Still, many of those owners added that they had to refocus their business plan and drop inventory that Wal-Mart was able to sell cheaper.

"My stuff is a little higher end, and most people who are middle-aged or retired understand you get what you pay for," said Tom Gee, who last year opened Sun Daze in Spring Hill, which offers home and garden products.

The businesses that seem to have been affected most adversely by Wal-Mart are those that remain in the plaza Wal-Mart abandoned when it closed its first Hernando County store last April, the night before the new Supercenter opened on U.S. 19. That plaza, just north of the Supercenter, is barren and empty, lacking an anchor tenant to draw customers that would sustain neighboring tenants.

For three years, Funky Music thrived in the plaza, until Wal-Mart closed and began selling cheap musical instruments, said Donald Visceglie, manager of the store, which recently closed. He now manages a Funky Music store in Crystal River.

"It killed the center. We couldn't stay there," said Visceglie, who is now patronized by customers asking him to tune instruments bought at Wal-Mart. "They do hurt business."

Wal-Mart's biggest local impact has been on Kmart, which pulled out of the county within weeks of the opening of Wal-Mart's third Hernando Supercenter. Several former Kmart employees said that the new Wal-Mart Supercenters, both of which went up within a mile of Kmart stores, contributed to Kmart's decision to close its increasingly unprofitable Hernando County locations. The stores were among some 300 closed nationwide as a part of Kmart's bankruptcy reorganization - a reorganization that many analysts attributed at least in part to the stiff competition that Wal-Mart offered the older chain in virtually all markets.

The two Hernando stores, however, were the only two on the North Suncoast that Kmart closed.

"It's so sad, because we were already down," said Spring Hill Kmart employee Lyn Skokowski, who was among 175 people who lost their jobs when Kmart left Hernando. "And then Wal-Mart built its stores and kept beating us."

Measures aim to provide a more diverse economy

How long will Wal-Mart reign as the county's largest employer, taxpayer and retailer?

As long as the county's growing housing market and population show continued strength, Wal-Mart will likely maintain its presence, retail experts say.

But county leaders acknowledge the importance in better diversifying the local economy, even if their efforts toward that end are slow going.

"We certainly welcome Wal-Mart as we welcome others we get, but it does cause us to look and see how we balance those job openings with others," said Ellzey, with the Pasco-Hernando Jobs and Education Partnership.

After hearing criticism over the rezonings for the Supercenter on U.S. 19 and the Sam's Club, the County Commission beefed up its ordinance governing the placement of "big box" stores, giving the county more oversight and regulation of stores larger than 65,000 square feet.

Also in 2003, the commission passed an ordinance to lure higher-wage employers to the county, offering tax incentives and impact-fee waivers.

At least one of three new manufacturing companies coming to the county's corporate RailPark south of Brooksville this year will be taking advantage of those incentives. In late 2003, three companies - from Tarpon Springs, Chicago and Eighty-Four, Pa. - agreed to move into the RailPark at the Hernando County Airport and offer jobs that will pay more than the county's average wage.

So far, the new companies plan to offer a total of about 215 jobs - a number that wouldn't staff half a Wal-Mart Supercenter.

[Last modified February 15, 2004, 01:15:45]


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