A Tale Of Two Facilities

Moving to a new location takes preparation, patience and partnership.

Moving a compressed gas or welding company’s headquarters, branch location or fill plant—or some combination of the three—is an undertaking that cannot be entered into lightly, caution distributors who’ve been there. Two distributors with recent experience in the art of moving share the challenges they faced, the advantages moving has brought to their companies, and some hard-fought advice from those who’ve engineered a major move and lived to tell the tale.

Like a Tornado and An Earthquake
Alliance Gas Products (Oakland, CA) President Marvin Rodgers Jr. succinctly sums up his perception of moving: “It’s like going through a tornado and an earthquake at the same time.”

Rodgers’ company closed two separate locations in Oakland, California, and consolidated them into a single new location starting in November 2006. The process of moving took several months, and the transition is not expected to be fully complete until September of this year.

Alliance Gas Products' 77th Avenue, Oakland, branch was the first to move to the new location in late 2006. Alliance Gas Products' new headquarters serves as the company's core distribution and gas filling facility, as well as a retail operation.
Alliance Gas Products’ 77th Avenue, Oakland, branch was the first to move to the new location in late 2006. Alliance Gas Products’ new headquarters serves as the company’s core distribution and gas filling facility, as well as a retail operation.

The move came about due to Alliance Gas Products’ need for a new fill plant. “For a while, we tried to fill cylinders for the Oakland market out of our Watsonville location, which is 100 miles away, but that didn’t work,” says Rodgers. “Then we sold our Watsonville business and wound up without a fill plant. Our suppliers delivered us filled cylinders, but we just weren’t competitive that way. We needed to go back to filling our own cylinders, which meant we needed a fill plant.”

The company decided to add a fill plant in Oakland, its primary market, and to relocate its Peralta Street headquarters and its 77th Avenue, Oakland, branch to a single location. In September 2006, Alliance Gas Products signed a lease for a 20,000 sq. ft. facility in an industrial zone that would allow the company room for a fill plant, as well as offices, distribution and a retail operation. The new location is eight miles from the company’s former headquarters and three miles from its former branch store.

The 77th Avenue location moved first because its lease was due to expire at the end of December. The company began moving the branch around November 15 and completed the process in late December; the Peralta Street headquarters started its move in January. Employees moved the company themselves over a series of weekends and late nights.

A facility on Peralta Street in Oakland previously served as Alliance Gas Products' main location. A new 20,000 sq. ft. facility in the heart of Oakland serves Alliance Gas Products customers who previously were served by two smaller locations.
A facility on Peralta Street in Oakland previously served as Alliance Gas Products’ main location. A new 20,000 sq. ft. facility in the heart of Oakland serves Alliance Gas Products customers who previously were served by two smaller locations.

“It was hard work!” says Rodgers. “We moved the inventory of the 77th Avenue facility first and set up the retail area in the new building. We didn’t start moving the Peralta Street store until we already had a retail operation up and running at the new facility. Then we started boxing up inventory in the Peralta Street store and did that as a stock transfer. We wrote down what was in each box and created internal tickets to facilitate the stock transfer, then brought all of that inventory to the new location, but didn’t put it on the shelves. When we took inventory of everything that had come over from 77th, we took the stock transfer tickets and added those, so we came up with what we believe is a pretty accurate inventory.”

Rodgers describes the move’s biggest challenges as finding the right location, securing permits, and getting out of the company’s old facilities on a timely basis. “One lease was expiring, but the other had two years to go,” Rodgers explains. “We were able to sublet the other facility, but for about three months we were paying double rent.” The company is still in the process of obtaining permits and awaiting the installation of three-phase power for both its hydrostatic testing facility and fill plant, which Rodgers expects will be complete by September.

Five Steps to a Successful Move

Luckily, the consolidation of the two Oakland facilities did not require eliminating staff, although some who left in the last two months of 2006 were not replaced. The company also retained the vast majority of its walk-in customers following the move. “I don’t think we did as good a job as we could have in notifying our customers,” Rodgers admits. “We haven’t suffered significantly, but we could have eased some frustration for our customers.” Prior to the move, Alliance Gas Products salespeople notified each of their customers face-to-face, and the company also enclosed notices about the move with invoices. “If I had it to do over again, I think we would have done separate mailings instead of enclosing notices with invoices,” says Rodgers. “We might even have used the mass media—talked to the press or taken ads in the newspaper—and done some special pricing at the locations we were closing as an incentive for people to come in there. Then we wouldn’t have had to move the whole inventory!”

Altogether, Rodgers estimates it cost at least $100,000 to move the company to a new location, which included not just improvements to the new facility, but changes to the old. “When you leave a facility you’re leasing, you have to put it back the way it was when you moved in,” he points out. “In many instances, you have to tear out improvements you’ve made. For instance, a hydrostatic testing facility requires you to dig a big pit, so we had to fill up the pit at our previous location and dig a new one at the new location.” Rodgers predicts the company should see a return on its investment within 18 months.

Rodgers’ advice for other distributors contemplating moving is simple: “Do it. You have to continually invest in your business in order to grow it, and you won’t grow unless you’re in the right facility.”

Plan Carefully and Move Slowly
Central Welding Supply’s (Smokey Point, WA) move in 2006 involved consolidating two previously separate facilities, though in a different way than the experience of Alliance Gas Products.

“Over the last 30-plus years, we had outgrown our previous facility in a dramatic way,” says Vice President Dale Wilton. “We were operating a very small fill plant in Lynwood, Washington, which was where this company was started in 1975, and we’d already had to move our office staff to a leased office space about a half-mile away. For the last decade, we’d been looking to build a facility to bring everything back under one roof.”

Five Expenses (Other thane Real Estate) Involvedin Moving

The search for the right location took so long in part due to a tight real estate market. “Here in the Puget Sound area, real estate values are extremely high and space is in extremely short order,” says Wilton. “There’s not a lot of industrially zoned land.” The company looked into several opportunities over the years, and even began initial construction at one site before deciding the location wouldn’t do any more than accommodate the current size of the operation. Finally, Central Welding Supply located a two-acre site in Smokey Point, Washington—about 20 miles north of its previous location—that would allow it to build an 8,000-sq. ft. facility to house its corporate offices and fill plant, giving the company not just enough room to handle its current business, but also to allow for future expansion.

After ten years of searching for a new home, Central Welding Supply was prepared to take action. Wilton already had on hand some plant and office designs he’d drawn up for other possible sites, so the company had a sense of what the facility would look like physically and how it would operate. “The first step was to get back in contact with consultants I was using and figure out the most efficient way to build the building and utilize the site from an in-and-out production flow standpoint,” says Wilton. “Besides the fill plant, we had to design office space sufficient to house 15 people within the building.” Partnering with the right consultants and contractors was an essential part of the process, Wilton notes. “There were probably a half-dozen such people who were invaluable in making this happen. Some were people we’ve worked with on other projects, and for others we got recommendations from people we trusted.”

Construction of the facility was completed in August 2006, and the corporate offices relocated to the new building over the course of a weekend. The company had taken the opportunity to upgrade its office equipment, including the phone system, photocopiers and fax machines, so the actual move involved primarily people and company records. The most challenging aspect at this stage, however, was moving the company’s server without an interruption in business activity.

Central Welding Supplies new headquarters in Smokey Point, Washington, occupies two acres of land and houses both office space and an 8,000 sq. ft. fill plant

“We have nine other locations and a couple of divisions accessing this central server, which handles all our inventory, accounts receivable and payable, etc.,” says Wilton. “Physically moving it from one office to another—whether across town or 20 miles away—meant re-routing our entire network to have everything pointing to another location. We had to coordinate with multiple carriers to get the circuits changed.”

Central Welding Supply’s fill plant was not relocated to the new site until December 2006. “The on-site construction work got done much sooner than all of the new plant equipment was able to arrive,” Wilton explains. “We took very little equipment from the previous plant because it would have been almost impossible to do it seamlessly and not have an interruption of service. With the exception of a few components that were easy to move, all the equipment in the fill plant is brand new. But that meant waiting six to eight months for a very large cryogenic storage tank.”

Shifting filling operations to the new plant took careful planning. Over the course of four days, Central Welding Supply began bringing empty cylinders to the new facility, while still shipping full cylinders from the old fill plant. With the older facility receiving no empty cylinders to fill, eventually its volume of cylinders was depleted. In the meantime, the new facility had begun building its inventory, so that when the old facility ran out of cylinders to ship out, the new fill plant was ready to go. “We felt like this transition would be a huge success if our customers couldn’t tell we’d made the change,” says Wilton. “Our truck still showed up at the same time, with the same order. They didn’t know it dispatched from a different facility.”

Five Ways to Spread Word of Your Company's Move

The new fill plant has already begun to prove its worth to the company. Central Welding Supply’s previous fill plant, built in the early 1980s, was designed to fill 5,000 cylinders per month; by 2006, the company had been filling cylinders at three times that rate. In the new fill plant, the company currently is filling 20,000 cylinders per month, and has the capacity to fill up to 45,000 cylinders per month. Says Wilton, “Before, we were in a position where growth was painful and costly. Now, we’re at a very comfortable business level, and we will be able to ramp up business at a faster clip over the next five to ten years than we ever would have dreamed of at our old facility.”

The total price tag for the move—including land, building, equipment and other assorted costs—was around $2.5 million. Wilton estimates that a company starting from scratch would take seven to eight years to realize a return on the investment. However, because Central Welding Supply had been preparing for the transition for so long, “It’s paid for itself already. We’ve known we’ve needed this facility for almost a decade, and we’ve been pulling together our resources and banking those resources for a very long time. So we’re not in a position where we’re suffering from a large debt load.”

The most important thing Wilton has learned from the experience of moving is the value of planning carefully and moving slowly. “Because it was so difficult for us to find a location that would suitably house our business, it forced us to take a lot of time to make sure we had a long-term plan as to how the transition was going to happen,” he says. “From the beginning of construction to the time we moved our fill plant, it was almost a full year of work. There are so many aspect of a move that need to be reviewed and thought through and planned for that there really is no such thing as too much time to plan for a move.”

Gases and Welding Distributors Association