"Due to tremendous growth in worldwide sales -- particularly in Europe -- we already need the capacity we anticipated for the year 2000," said Karel Lauwers, Nike's director of governmental and external affairs. "Fortunately we anticipated the greater capacity and incorporated it into the design of the structure that originally opened in 1994. Then we built on a 32 hectare site (roughly 80 acres). Now we've purchased an adjacent 30 hectare plot (75 acres). There we'll construct a low bay area for processing apparel, a handling and receiving sector for footwear, and six high bays for automated pallet storage and retrieval. The new building should be finished by the middle of this year, with operations starting in early 1998."

The Nike site receives footwear from the Orient, and apparel from the U.S. and Europe. One factor Mr. Lauwers cites as critical to Nike's continued endorsement of its location is easy access for containerized inbound product. Just 25 to 30 miles from Antwerp, one of Europe's busiest ports, intermodal boxes are barged via canal to a receiving facility, less than a half mile from the distribution center. That means boxes arriving in Antwerp in the morning can be at Nike's loading docks that same day.

"We use the containers strictly for inbound," said Lauwers. "Once they're at our facility, we unload them and return the empties to the local loading area. We're very pleased by the efficiencies of this transportation link, and the reduction in the need to send trucks to the busy harbor area in order to get our containers."

According to a report issued by the U.S. Embassy of Belgium, when the new facility opens, some 300 new jobs will be created. Right now Nike's distribution center handles 6.5 million pieces of textile and 5.2 million pieces of sport shoes for distribution throughout Europe, as well as the Middle East. The report also says that during fiscal year 1996, Nike's turnover in Europe amounted to $11.3 billion, a period during which the company enjoyed 33 percent growth compared to the same 1995 time frame.

Caterpillar runs two distribution centers in Belgium: one, opened in 1965 in Grimbergen, is
for its own products bound for Europe and the Middle East; the other is Caterpillar Logistics Services in Puurs, site of distribution efforts for a dozen firms, including Chrysler Corporation. Caterpillar Logistics handles automotive replacement parts distribution for Chrysler in Europe, Africa and the Middle East.

Other CLS clients include the Rover Group, Perkins Engines Ltd., Massey Ferguson, Mitsubishi Caterpillar Forklift, Sun Microsystems, Hewlett-Packard, Husqvarna Sewing Machines, Iscar, Hiab, and Hyundai Motor Co.

This two-year-old site -- 365,000 square feet -- is about to be expanded by another 200,000 square feet, according to David Ecklund, Commercial Manager, Europe.

"Caterpillar and Cat Logistics have over 40 cumulative years of experience with distribution operations located in Belgium's Flemish region," said Ecklund. "Our experience has been outstanding in terms of the quality of the work force and their work ethic, as well as the language skills that are typical of people from Flanders. Grimbergen is also the location for Cat Loitcis corporate offices for Europe."

This language skill factor is critical, Ecklund advises, since dealing with Chrysler involves contacts with customers in many countries.

"Those abilities are much more prevalent in Dutch-speaking Flanders, than with those of the French heritage who predominate in Wallonia," he says.

Further endorsement is evidenced by Caterpillar Logistic's decision to open a third Flemish facility in Lummen between Brussels and Antwerp, this time for traffic in marshaling and distributing Hyundai replacement parts for their customers in Europe. Building will commence later this year, with completion set for 1998. Initially the structure should be 350,000 square feet with a potential for an additional 160,000 square feet.

Ecklund stresses that, while Caterpillar has had three decades worth of positive experience in Belgium, it always goes through a vigorous, virtually zero-sum, reexamination whenever a new facility is contemplated. That scrutiny includes access to airports, seaports, and the motorway system; the communications infrastructure; availability and capability of manpower; availability and cost of land and buildings; and the interest/support of government authorities.

For the facility that will handle Hyundai, he says locations in Germany and the Netherlands were also weighed before Belgium was once again selected.

"One major consideration was having excellent sea and airport facilities, as well as superior motor ways we can access to meet our high delivery performance standards," Ecklund adds. "For emergency parts deliveries that means a day to a day-and-a-half; for stock replenishment, that means within 72 hours."

Consolidating operations
For Baxter Pharmaceuticals, operational consolidation is the name of the game at its new distribution center next to its prime European manufacturing plant in Lessines, some 30 miles south of Brussels in Wallonia.

Baxter's product output includes hospital and health merchandise, including IV solutions, operating room equipment including gloves and masks, and a line of specialized goods targeted at patients undergoing renal (kidney) therapy.

According to the Center's director, Louis Tryquoit, in 1992 the company decided to centralize European warehousing and distribution centers at a single facility, one that would handle goods bound for France, Germany, and the Netherlands, as well as Belgium. The Center was also intended to be the resupply point for other European facilities in Italy and the UK.

"We decided to build an automated warehouse capable of holding 50,000 pallets," said Tryquoit. "Ultimately its dimensions became 140 meters long, 75 meters wide and 29 meters high. Supplying for Belgium, the Netherlands and Germany did indeed commence in 1996, with France being added later this year."

Advantages this structure brings to Baxter include reduced inventories, consolidated supply, reduced lead times, and a wide range of operational gains including automated handling and retrieval.

"While initial studies indicated we should be in Reims, France, there were very specific advantages Wallonia offered that made us reconsider," Tryquoit explained. "First and foremost, Wallonia is an 'objective one' European region, an area where standards of living are deemed lower than the EC average."

Like other firms opting to site in such territories, Baxter got subsidies both from the Wallonia regional government, as well as from the EC.

"Those subsidies were equal to 36 percent of our total investment," said Tryquoit.

And, while enjoying these fiscal supports, the Center, approximately a two hour drive from Reims, also offers superb highway links.

"There's a highway directly behind us that goes directly to Brussels and Lille, France," he said. "From Brussels there are fine highways going directly to Germany and beyond."

At press time, the former German warehouses are now history, with the two left in France scheduled for shutdown later in the year.

Cost plus 5 percent
Thomas & Betts also depends on a Belgium facility to be home base for its electronic parts inventory that numbers in the thousands of different pieces. Much of this is directed towards major construction projects.

The $2 billion firm, with its U.S. headquarters in Memphis, opened its 12,600 square meter distribution center at the end of 1994. Recent corporate acquisitions have lead it to start work on an expansion to the new building, an area that would occupy part or all of an additional adjacent 45 acres.

"For us, being in the heart of Europe means superior road and rail networks," said Michel Hayoit, European Distribution Manager. "For us, that means being at the intersection of E-19 that links Holland and Paris, and E-42 connecting Germany, Luxembourg and Lille.

"Two years ago the Belgian authorities decided to grant special tax advantages to service companies such as distribution centers and call centers," he said. "Thomas & Betz was the first to apply for a tax ruling that is similar to what you can get in Holland. Essentially this means our center is taxed based on a cost plus 5 percent basis. Since we do not have any revenue nor own any goods -- we are owned by Thomas & Betts UK Ltd. -- this is fictive revenue based on our expenses. These rulings apply as long as we perform our task of picking, packing and shipping goods to our customers."

Hayoit also talked about what he calls the region's liberal way of dealing with business and customs relationships.

"We also have a bonded warehouse from which we only pay duties when goods leave the warehouse, and only pay the VAT where needed," he said. "For instance, if we reexport certain items to non-EC countries, we do not pay the duty. And here at our distribution center, we have a customs office right on our site."