BusinessTN

In early March, Nike Inc. settled on a north Memphis-area location where the athletic footwear and apparel pioneer would make its home away from home, so to speak. The $107 million, 125-acre stretch in the Raleigh neighborhood of Memphis is the future site of what will be the second largest Nike development in the United States after its home headquarters in Beaverton, Ore.

Construction of the new one-million-square-foot facility signals the consolidation of two plants, including one of the two already located near Memphis, which Nike will fold into the new Nike Tennessee operations. Nike Tennessee is already one of the largest distribution facilities in Memphis, with dozens of miles of conveyor belts and well over a thousand employees.

The reason for the vast ramp-up in the city is exactly what one would expect—shipping. And it’s another in what city leaders hope will be a string of relocations to Memphis by leading companies that rely on shipping in the continental United States to remain competitive.

“Nike is pleased to increase its investment in the Memphis community with this state-of-the-art facility,” says Nick Athanasakos, vice president of Nike Supply Chain. “This distribution center will be great for our employees, retail customers and consumers while expediting our time to market. Cost efficiencies will total more than $200 million, reduce shipping times and increase service capabilities.”

To lure the major manufacturer to the Bluff City, the Memphis and Shelby County Industrial Development Board proffered a sweetheart, 13-year tax freeze through its oft-criticized payment-in-lieu-of-tax (PILOT) program that will save Nike $21 million on its planned facility. The upside for Memphis is almost 250 new middle-class jobs earning more than $10,000 over the city median.

Nike stock has been running erratically of late, pleasing Wall Street with profits that outperform analysts’ estimations and global growth rising almost double digits. But problems with two major U.S. athletic footwear retailers hampered Nike’s growth stateside—a discouraging 2%.

Memphis-based Belz Enterprises sold Nike the new site, and officials were quick to note Nike’s move means more than merely corporate relocation or land sale.

“This project will provide economic opportunity to the Frayser area in north Memphis that vitally needs additional jobs and commerce,” says Ron Belz, president of Belz Enterprises.

Nike’s Memphis expansion is in stark contrast with the strategic plans of once local competitor Adidas. That German-based brand, which acquired fellow footwear giant Reebok for $3.8 billion in 2006, recently announced that it would shutter its Memphis distribution hub by 2008, affecting 140 employees.

You might say that now, along with so many coaches, athletes and athletic teams, the city of Memphis has an exclusive association with the “swoosh.”