Business for the PaperWorks plant in Hastings has increased to the point that to grow much more it needs more space.
It’s with that thought in mind that PaperWorks is working with Central Logistic Services to fill Hastings Economic Development Corp.’s speculative building that has been empty since it was completed in 2010. CLS closed on purchasing the 97,500-square-foot warehouse in Industrial Park North Friday afternoon and will lease the building to PaperWorks.
“They see room for substantial growth,” said Cody Smith, chief operations officer for CLS. “They needed somebody that could help them out and help them and provide them with solutions they need to achieve that growth.”
CLS will hire subcontractors to do most of the work. While the company hasn’t purchased a building before with the intent of leasing it to a customer, Smith said the purchase is in line with CLS’s mission to meet its customers needs.
“When we have our customers call us and need a solution we do anything in our power to provide them with those solutions,” he said. “If that means being a landlord for them then that’s what that means.”
Gordon Smith, general manager of PaperWorks in Hastings, said PaperWorks considered purchasing the building and doing construction to build it out in house.
“We’re not construction guys, we make cartons,” he said. “We managed to arrive at a good deal with CLS. CLS has been a business partner of this location for years and years.”
Not owning the new building frees up capital for PaperWorks to purchase additional production equipment.
Gordon Smith has been in Hastings since September 2017, having previously run another PaperWorks location in Louisiana.
“Our philosophy was what can we do with everything we have existing here and build something great?” he said.
PaperWorks is growing business by being faster than its competitors.
“We wanted to be a large-format, fast turn-time shop,” he said. “That’s how we’re bringing new business in. From the time a customer calls to the time it goes out the back door we can do that in a couple of weeks where most people in our industry are doing it four to six. Part of it is bringing in new business just with efficiencies on the existing equipment. The end game is to grow the business to the point that we’re at our capacity and the only option is new equipment, which is what we’re after.”
PaperWorks has shifts working 24 hours a day.
The plant currently stores roll stock on site, which takes up a good bit of space in its 160,000-square-foot plant at 2000 Summit Ave., in Industrial Park West.
“Because of the way we have to store it here, there’s a lot of handling damage,” Gordon Smith said. “We have to handle the rolls more than once or twice. We have to handle it numerous, numerous times to get at what we need. So part of getting the new warehouse is to reduce our overall paper waste. We’ll only handle the rolls when they go there and then they come here and that’s it.”
Moving that storage component opens floor space at the existing site for additional service lines in the building at 2000 Summit Ave. More space for storage also will allow PaperWorks to have more materials on hand.
PaperWorks provides customers with vendor-managed inventory. PaperWorks can make the product, store it and ship it for the customer.
“A lot of customers like that and we wanted to grow that end of the business too,” he said. “With this warehouse, we can grow this location for like 10 years.”
Gordon Smith said the shifting of PaperWorks’ operations in Hastings will add at least 10 jobs initially. As PaperWorks increases production it could add as many as 30 new positions after adding lines, depending on business and the market.
“We’re looking to keep expanding aggressively,” he said.
PaperWorks currently employs 118 people.
HEDC executive director Michael Krings said it’s good that there will be activity in the spec building.
Before the spec building can be used, however, Utecht Avenue, which will be constructed nearby and will connect 39th and 33rd streets, must be completed. Members of the Hastings City Council approved a contract with Werner Construction of Hastings at their May 13 meeting for construction of the street.
Road construction is planned to start late summer or early fall and be done by November.
“We knew that in order to be able to get it done we needed to get a street out there,” Krings said.
Finishing the building for PaperWorks’ use will be quicker than construction of Utecht Avenue. The plan is for the building to be in use by the beginning of 2020, Krings said.
“Obviously, industrial development is kind of the core of what we do,” he said. “What this does, not only is it the selling of the spec building, which is obviously extremely important, but it’s going to open up some more opportunities for industrial lots in that area that we will be able to then, hopefully, parlay down the road and get sold.”
Because it is on the north edge of Hastings, the new building also is logistically friendly for the truck drivers coming from Interstate 80 who supply material to PaperWorks.
It’s with that convenience in mind that former HEDC executive director Dee Haussler initiated construction of the building in 2009.
The building was the latest of nine speculative buildings in Industrial Park North or West HEDC participated in the construction of during Haussler’s tenure.
“Our involvement in the construction of buildings, making those opportunities available for business and industry whether they be new eor ntrenched into the community — that was one of our ways of ensuring there would be some expansion of the community and creation of jobs,” he said. “There’s always a risk in anything you do. We’re just more than pleased with the growth of CLS and their efforts in taking this building.”
Dave Rippe, who served as HEDC executive director between Haussler and Krings, praised CLS and PaperWorks for growing their respective businesses.
“It underscores why the corporation undertook the development of the building,” he said. “It was to be there and be ready when companies are ready to either move to Hastings or expand in Hastings. I’m happy for CLS and certainly well pleased to see PaperWorks growing their operations here in Hastings.”