Business
California's wealthiest farm family plans mega-warehouse complex that would reshape Kern economy
California’s wealthiest farming family is proposing an expansion of industrial warehousing in Kern County that would fundamentally reshape the economy in the southern San Joaquin Valley.
Outside of Kern, Stewart and Lynda Resnick, the billionaire owners of the Wonderful Co., are better known for pomegranates and pistachios. But for more than a decade, they have also owned a master-planned industrial park in the city of Shafter, northwest of Bakersfield, that is home to distribution centers for Fortune 500 companies like Target, Amazon and Walmart.
Now, looking to capitalize on the seismic shift to online shopping, the Resnicks want to position Kern County as a new frontier for the industrial-scale warehousing that is key to connecting customers with their goods. Wonderful is pushing to more than double the size of its industrial park by converting 1,800 acres of its own almond groves into additional warehousing space.
And it’s pursuing costly infrastructure projects that company leaders say will mitigate the impacts of that expansion.
Wonderful says its vision for a scaled-up Wonderful Industrial Park is wholly different from the thousands of sprawling distribution centers that have swallowed up neighborhoods in California’s Inland Empire. The influx of mega-warehouses in Riverside and San Bernardino counties has generated thousands of jobs — but also relentless truck traffic and poor air quality that have given rise to a backlash.
Wonderful’s industrial park sits along railroad tracks on more than 1,600 acres of former farmland several miles outside the Shafter town center. With the exception of a cluster of homes on the other side of the tracks, the surrounding acreage is primarily agricultural. Wonderful describes the park as a job creator in a region hard hit by economic shifts in agriculture and oil.
Wonderful Co.’s plans for a mega-warehousing complex near Shafter include a new six-lane highway to ease traffic on State Route 43 (pictured) and other area roadways.
(Myung J. Chun / Los Angeles Times)
The company is working with local officials on plans for a new highway that would route trucks away from central Shafter. It also plans to funnel at least $120 million into an inland rail terminal, expected to be completed next spring. The goal is to move more products from coastal ports by rail to Shafter, reducing traffic on State Route 99, already one of the busiest truck routes in California.
If all goes according to plan, Shafter would be transformed from a small town, population 20,162, into an international trade hub; and Kern County — a region that long has prized what’s extracted from the ground — would become ground zero for the growing global goods movement.
Many Shafter residents say the opportunity for steady, relatively well-paying work in areas other than farming and oil would come as a welcome addition. But some are concerned that doubling-down on an industry that will bring more truck and train travel to one of the nation’s most polluted corridors can’t help but have negative consequences.
“I understand that company says it will bring jobs; this is true to some extent,” said Gustavo Aguirre, assistant director of the Delano-based Center on Race, Poverty & the Environment. “But it is also true that it’s going to bring health and environmental impacts that are going to impact the neighbors who live near the industrial park.”
The way John Guinn tells it, the Wonderful Industrial Park was created out of necessity.
Several decades ago, as big-box retailers moved into San Joaquin Valley towns, Main Street shoe shops and dry goods stores struggled to survive. Town officials were looking to create employment opportunities.
“The world was changing,” said Guinn, who worked as city manager in Shafter for 17 years. “We had to find a way to do something different.”
So Shafter rezoned a portion of land between Highway 99 and Interstate 5, along the BNSF rail line, and that became the industrial park. The first tenant was Target, which built a warehouse of roughly 2 million square feet in 2003.
In 2011, the Resnicks’ real estate arm bought the development. Guinn retired from the city in 2014 and joined Wonderful as executive vice president and chief operating officer for the real estate team. It’s a role, he said, that will allow him to bring his broader vision for Shafter to light.
Today, the Wonderful Industrial Park typically builds and leases million-square-foot warehouses. Just over half of the 1,625 acres already zoned for industrial buildings have been developed.
It’s proved a profitable form of diversification for Wonderful — which also owns Fiji Water and Justin Vineyards — at a time when almond prices are falling and water supplies are tight.
According to Wonderful, the industrial park has generated about 10,000 jobs, including warehouse employees, truck drivers and services handling shipping logistics. With the planned expansion, company leaders said, the complex eventually could support 50,000 jobs.
Warehouses are quickly becoming more mechanized, meaning more robotics and less need for people. “Warehouses are both job creators and job destroyers,” says UC Riverside’s Ellen Reese.
(Myung J. Chun / Los Angeles Times)
Marco Avendaño, 27, has worked for nearly a year as a forklift operator for CJ Logistics in the industrial park. Avendaño, who didn’t go to college, said he’s learned new skills and now finds himself interested in pursuing a management role with the company.
“Even though it just started as a job for me, it made me get a career mindset,” he said.
His schedule — 9:30 p.m. to 6 a.m. — works well for him and his fiancee, a librarian, who are raising three children. By his working nights, he said, “we still grow that bond with our family.”
Avendaño previously held two other jobs in the industrial park — at a manufacturing plant that has closed and for a contractor at the Walmart warehouse. In his current job, he said he’s received several raises and is making $22.69 an hour — “more than I’ve ever made hourly.”
As the park expands, the number of jobs created with each warehouse is likely to slow. Warehouses are quickly becoming more mechanized, meaning more robotics and less need for people. The advancements in technology could stymie Wonderful’s job projections.
“Warehouses are both job creators and job destroyers,” said Ellen Reese, co-director of the Inland Empire Labor & Community Center at UC Riverside. She noted that automation is reducing the number of warehouse employees, but not necessarily making jobs safer.
“A lot of the research actually suggests that more automated warehouses have higher injury rates than less automated warehouses,” she said.
Guinn acknowledged that more efficient warehouses will require less labor. But the remaining jobs, he said, will be more technically skilled and require higher pay.
Inside Walmart’s warehouse, for example, an automated system builds pallets tailored to the needs of individual stores more quickly and accurately than a team of humans could. The facility employs just 400 people across all shifts, many of whom are highly skilled equipment operators trained to troubleshoot technical problems. The average salary is between $28 and $29 an hour.
“I don’t think it’s bad if we’re able to do twice as much with half as much labor,” Guinn said. “What I think is bad is to have a whole lot of folks that don’t have a job, or have jobs that aren’t very good.”
Wonderful says it’s helping ease the transition with an on-site career center that trains workers for the higher-skilled jobs.
Two men take part in an apprenticeship program at the Wonderful Career Center in Shafter, using VR headsets that simulate forklift operations.
(Myung J. Chun / Los Angeles Times)
On a March morning, Luis Chapa wore virtual reality goggles inside a classroom at the career center and simulated driving a stand-up forklift. He’s training as a maintenance technician and earning on-the-job experience and college credits through a free year-long program.
Before enrolling in the apprenticeship program, Chapa, 37, worked for two and a half years in Bakersfield’s oil industry. The work on a demolition crew was strenuous and dirty, and Chapa, a father of two, said his pay stalled at $26 an hour.
He decided to make a career change and is confident the training will lead to a better-paid position with Wonderful or another company at the industrial park.
“My cap-off in the oil fields would pretty much be my starting point where I’m heading,” said Chapa.
Along with their farming empire, Stewart and Lynda Resnick are known for their philanthropy, which includes major gifts for climate research, as well as money for scholarships and wellness centers in the valley towns where many of their workers live. So Wonderful is acutely aware of the optics as the company positions the park for a much bigger footprint.
Guinn and others maintain that, with the right planning, the expansion doesn’t have to mirror the trade-offs in the Inland Empire.
The company envisions building the Wonderful Pacific Terminal at the industrial park, so that trains can ferry cargo from California ports directly to the facility. Once built, Guinn estimates that 20% of imported containers could arrive by rail, with each train replacing the equivalent of 240 trucks.
The Wonderful Company, co-owned by billionaires Stewart and Lynda Resnick, says expanding its industrial park in Shafter will generate new jobs in a region shaken by economic shifts in oil and agriculture.
(Myung J. Chun / Los Angeles Times)
Wonderful is also touting plans for a six-lane highway, the Central Valley Green Pass, that would act as a relief valve for Highway 99.
Both projects are still in the planning phase and in need of multiple approvals.
As another carrot, Wonderful has agreed to create a fund for the local park district if Shafter officials approve the company’s rezoning application. New warehouse tenants would pay 2 cents per square foot per month — or $240,000 annually for a million-square-foot warehouse — into a fund dedicated to enhancing sports programs, arts and crafts and community events.
Aguirre, with the Center on Race, Poverty & the Environment, is helping negotiate a broader community benefits agreement intended to ensure the people who live in and near Shafter get more than jobs out of the deal.
“The residents recognize that [this project] could bring jobs, but they come with a price,” Aguirre said. “Because of this, they say, ‘What are you going to do for our community?’”
Business
Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO
Lululemon, the yoga pants and athletic clothing company, has hired a former executive from a rival, Nike, as its new chief executive.
Heidi O’Neill, who spent more than 25 years at Nike, will take the reins and join Lululemon’s board of directors on Sept. 8, the company announced on Wednesday.
The leadership change is happening during a tumultuous time for Lululemon, which had grown to $11 billion in revenue by persuading shoppers to ditch their jeans and slacks for stretchy leggings. But lately, sales have declined in North America amid intense competition and shifting fashion trends, with consumers favoring looser styles rather than the form-fitting silhouettes for which Lululemon is best known.
“As I step into the C.E.O. role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” Ms. O’Neill, 61, said in a statement.
Lululemon, based in Vancouver, British Columbia, has also been entangled in a corporate power struggle over the company’s future. Its billionaire founder, Chip Wilson, has feuded with the board, nominated independent directors and criticized executives.
Lululemon’s previous chief executive, Calvin McDonald, stepped down at the end of January as pressure mounted from Mr. Wilson and some investors. One activist investor, Elliott Investment Management, had pushed its own chief executive candidate, who was not selected.
The interim co-chiefs, Meghan Frank and André Maestrini, will lead the company until Ms. O’Neill’s arrival, when they are expected to return to other senior roles. The pair had outlined a plan to revive sales at Lululemon, promising to invest in stores, save more money and speed up product development.
“We start the year with a real plan, with real strategies,” Mr. Maestrini said in an interview this year. “We make sure decisions are made fast.”
Lululemon said last month that it would add Chip Bergh, the former chief executive of Levi Strauss, to its board to replace David Mussafer, the chairman of the private equity firm Advent International, whom Mr. Wilson had sought to remove.
Ms. O’Neill climbed the organizational chart at Nike for decades, working across divisions including consumer sports, product innovation and brand marketing, and was most recently its president of consumer, product and brand. She left Nike last year amid a shake-up of senior management that led to the elimination of her role.
Analysts said Ms. O’Neill would be expected to find ways to energize Lululemon’s business and reset the company’s culture in order to improve performance.
“O’Neill is her own person who will come with an agenda of change,” said Neil Saunders, the managing director of GlobalData, a data analytics and consulting company. “The task ahead is a significant one, but it can be undertaken from a position of relative stability.”
Business
Angry Altadena residents ask officials to halt Edison’s undergrounding work
Eaton wildfire survivors’ anger about Southern California Edison’s burying of electric wires in Altadena boiled over Tuesday with residents calling on government officials to temporarily halt the work.
In a letter to the Los Angeles County Board of Supervisors, more than 120 Altadena residents and the town’s council wrote that they had witnessed “manifest failures” by Edison in recent months as it has been tearing up streets and digging trenches to bury the wires.
The residents cited the unexpected financial cost of the work to homeowners and possible harm to the town’s remaining trees. They also pointed out how the work will leave telecommunication wires above ground on poles.
“The current lack of coordination is compounding the stress of a community still reeling from the Eaton Fire, and risks causing further irreparable harm,” the residents wrote.
The council voted unanimously Tuesday night to send the letter.
Scott Johnson, an Edison spokesman, said Wednesday that the company has been working to address the concerns, including by looking for other sources of funds to help pay for the homeowners’ costs.
“We recognize this community has already faced a number of challenges,” he said.
Johnson said the company will allow homeowners to keep existing overhead lines connecting their homes to the grid if they are worried about the cost.
Edison’s crews, Johnson said, have also been trained to use equipment that avoids roots and preserves the health of trees.
The utility has said that burying the wires as the town rebuilds thousands of homes destroyed in the fire will make the electrical grid safer and more reliable.
But anger has grown as work crews have shown up unexpectedly and residents learned they’re on the hook to pay tens of thousands of dollars to connect their homes to the buried lines.
Residents have also found the crews digging under the town’s oak and pine trees that survived last year’s fire. Arborists say the trenches could destroy the roots of some of the last remaining trees and kill them.
Amy Bodek, the county’s regional planning director, recently warned Edison that a government ordinance protects oak trees and that “utility trenching is not exempt from these requirements.”
Residents have also pointed out that in much of Altadena, the telecom companies, including Spectrum and AT&T, have not agreed to bury their wires in Edison’s trenches. That means the telecom wires will remain on poles above ground, which residents say is visually unappealing.
“While our community supports the long-term benefits of moving utilities underground, the current execution by SCE is placing undue financial and planning burdens on homeowners, causing irreparable harm to our heritage tree canopy, and proceeding without adequate local oversight,” the residents wrote.
They want the project halted until the problems are addressed.
Edison announced last year that it would spend as much as $925 million to underground and rebuild its grid in Altadena and Malibu, where the Palisades fire caused devastation.
The work — which costs an estimated $4 million per mile — will earn the utility millions of dollars in profits as its electric customers pay for it over the next decades.
Pedro Pizarro, chief executive of Edison International, told Gov. Gavin Newsom last year that state utility rules would require Altadena and Malibu homeowners to pay to underground the electric wire from their property line to the panel on their house. Pizarro estimated it would cost $8,000 to $10,000 for each home.
But some residents, who need to dig long trenches, say it will cost them much more.
“We are rebuilding and with the insurance shortfall, our finances are stretched already,” Marilyn Chong, an Altadena resident, wrote in a comment attached to the letter. “Incurring the additional burden of financing SCE’s infrastructure is not something we can or should have to do.”
Other fire survivors complained of Edison’s lack of planning and coordination with residents.
“I’ve started rebuilding, and apparently there won’t be underground power lines for me to connect with in time when my house will be done,” wrote Gail Murphy. “So apparently I’m supposed to be using a generator, and for how long!?”
Johnson said the company has set up a phone line for people with concerns or questions. That line — 1-800-250-7339 — is answered Monday through Saturday, he said.
Residents can also go to Edison’s office in Altadena at 2680 Fair Oaks Avenue. The office is open Monday to Friday from 8 to 4:30.
It’s unclear if the Eaton fire would have been less disastrous if Altadena’s neighborhood power lines had been buried.
The blaze ignited under Edison’s towering transmission lines that run through Eaton Canyon. Those lines carry bulk power through the company’s territory. In Altadena, Edison is burying the smaller distribution lines, which carry power to homes.
The government investigation into the cause of the fire has not yet been released. Pizarro has said that a leading theory is that a century-old transmission line, which had not carried power for 50 years, somehow re-energized to spark the blaze.
The fire killed at least 19 people and destroyed more than 9,400 homes and other structures.
Business
Oil Prices Rise as Investors Weigh Cease-Fire Extension
Oil prices rose and stocks moved slightly higher on Wednesday as investors tried to make sense of President Trump’s decision to extend the cease-fire with Iran despite doubts about the status of another round of peace talks.
An adviser to Mohammad Bagher Ghalibaf, the influential speaker of the Iranian Parliament, dismissed the cease-fire announcement, saying that it had “no meaning.” He equated the U.S. naval blockade with bombings, with commercial vessels coming under attack near the Strait of Hormuz, the crucial shipping lane that has been at the center of a growing energy crisis.
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