Esko business park just keeps growing

Esko Industrial Park is booming, so much so that Thomson Township supervisors recently raised the price on the last two available lots.

For proof, just look at the amount of digging going on when you drive by the park, visible from southbound Interstate 35. That giant rectangle of dirt is the future site of a 163,000-square-foot highly automated warehouse that will support the medical supply needs for more than 100 Essentia Health facilities regionally, reaching to the Dakotas.

Essentia chose the site after using a third-party real estate consultant, who brought them a portfolio of about 20 possible locations, according to Brian Zuck, vice president of supply chain management for Essentia Health.

"We sat down with our requirements for a distribution center and the Esko business park was the one that best met our needs," said Zuck, who is also an Esko resident. "We needed to be close to an interstate for all of our inbound shipments, and also close to an interstate that had the junctions running up to Duluth, the Iron Range, Brainerd and back up to Fargo. So that I-35 near highways 33 and 210 really was the best fit for a distribution center for the Essentia Health footprint."

Thomson Township board chair Ruth Janke said Essentia bought a total of 20 lots for its building: 11 from the township and nine from Camping World (via Coates RV).

Filling up

Longtime supervisor Terry Hill said the township started developing the park for light industry in 2006 with construction of roads and infrastructure beginning in 2007. Fire hydrants dot the landscape, along with electrical boxes and gas-line markers.

Superior Fuel was the first to buy; it bought the first lot for $25,000. It was a lower price because it wasn't an ideal lot, but it suited their needs, Hill said. The last two lots are now for sale at $4 a square foot.

"There were originally 36 or 37 lots, but most of the tenants bought multiple lots," Hill said.

There are a variety of businesses in the park. Brown Wilbert makes caskets and vaults for caskets, and owns three lots. Old Dominion is a trucking company. Lohse Transfer is also a trucking company. Kane Transport bought three lots, but the company sold and the lots haven't been developed yet.

Part of the motivation to develop the industrial park was to help stabilize residential taxes in the township, current population 5,465. Officials are grateful for help from Carlton County and former state representative Mary Murphy for helping them obtain funds - $350,00 from the state and $200,000 from Carlton County economic development - to supplement $1.5 million in bonds the township sold to pay for the land and infrastructure development.

"It's been a long road and we've had some very, very good people that have helped us along the way," said Hill, naming former county EDA director Connie Christianson along with county board members.

That bond is paid off now, said township clerk Rhonda Peleski.

"We were able to pay it off last February," she said. "We saved $38,000 in interest by paying the bond off early."

Hill said they faced some criticism early on, when there was a housing crisis and lots weren't selling in the business park yet, but that died down when things picked up.

He gave the same reasons for the park's success as Zuck did: "location, location, location."

Essentia rising

With 20 out of 37 lots, the new Essentia warehouse will dominate the light industrial park.

Footings are going in and precast concrete walls should begin shipping in a week for the $38 million building, which will be "highly automated," Zuck said.

The vice president of supply chain management explained that the new building will have an automated shuttle system that will carry goods to and from team members, eliminating the need for those workers to use a lot of "travel time" to go find the items they need in the massive warehouse.

"We're going from a 'person-to-goods' to a 'goods-to-person' system," Zuck said. "We'll have two aisles with elevators on both ends, and a shuttle on each of 22 levels. They will shuttle down the row, grab the products from a bin and bring them back. It's a pretty slick system."

There will still be close to 20-25 workers on site, Zuck said, in part because as Essentia keeps growing, so does the supply side of things.

Zuck said there were several reasons for the new building, starting with the fact that they have outgrown the current facility in West Duluth.

Second, on the heels of the pandemic, the giant health care organization determined it could not allow supply disruptions to affect patient care in the future.

Finally, he said, the new facility should reduce supply chain costs. "In turn, that reduces our cost of care to our patients," Zuck said.

The new building is expected to be completed in September 2024.