As far as big fish go, you can’t get much bigger than Amazon, the internet retailer that needs no introduction. Jeff Bezos’ empire appears to be looking to build distribution centers in major cities around the country in order to smooth the delivery process and have a bigger physical footprint, and Memphis is up next. For a company as large as Amazon, it would be easy for it to seek out one of the biggest contractors in the region. Two local veterans of the construction scene, however, had different plans.
Jack Yates and Chris Lee have more than 50 years of construction experience between them, and both cut their teeth at large firms in the South. Yates spent the bulk of his career at Kojima Building & Designs Group, a Japanese based general contractor. “Their national headquarters is in the United States, and I ran the Memphis office for the last 10 years of my tenure there,” says Yates. “I’ve basically worked out of the Memphis office my entire career and built over 25 million square feet of warehouse industrial manufacturing facilities in the region.” Lee started at a small contracting firm in Memphis, before putting in 20 years at the Memphis office of Industrial Developments International, known as IDI Gazeley. The co-founders, who had crossed paths many times over the course of their careers, began thinking of starting their own company.
Two years ago, in January 2016, the time finally felt right, and Lee and Yates began a new chapter at TriCore Builders. While it may have been a gamble to strike out on their own, the two had a history of quality work and excellent work relationships to call on to make the transition as painless as possible. “It was kind of a perfect storm. We had a lot of loyal, repeat clients in the area that we hoped would support us, which they have, when we started the company,” says Yates. “The start of the company came through with people who had existing work relationships in town. The biggest factor in all this is that our repeat clients trust us. When we started the company, they entrusted us with their new projects.”
TriCore Builders’ main focus is on the supply chain market, which covers the process of producing and distributing certain products. “Supply chain is basically distribution and repacking centers. They’re large facilities, usually over 200,000 square feet. The buildings we’re doing now are anywhere between 200,000 and 1.1 million square feet.”
Before TriCore, there were only a few companies that catered to that specific need, and it just so happened that Yates and Lee had extensive experience in that market. That factor is especially important, considering the advances being made in that particular sector. “People aren’t really using warehouses anymore, because they have more than just racks and product. A lot of them are fully automated and some of them are half-automated. There’s a lot more going on inside these square buildings than you’re seeing, and it’s more than just product on racks these days.”
With their expertise in the field, TriCore began sounding out potential clients and quickly acquired new projects. Having initially partnered with Roy Construction Company Inc (RCCI)., TriCore was able to get started immediately, letting RCCI handle the concrete work. The first major project was an expansion for Milwaukee Tool, and the second a Nissan distribution center outside of Nashville. Former connections came in handy for the company. “We built their [Milwaukee Tool’s] original place, and they called us and wanted to do an expansion,” says Lee. “That project was done for a place called Monmouth Realty. The Nashville project was done for IDI Gazeley.” Nissan proved to be one of TriCore’s bigger tests, with the final building coming out at 870,000 square feet. The project was completed on time, and with no issues.
That first year of hard work resulted in $36 million in contracts for 2016. Even better was 2017 when TriCore landed its biggest contract yet. When Amazon first announced its plans to open a distribution center in Memphis, TriCore found itself pitted against several much larger firms. “It was a difficult process,” says Yates. “They’ve got four or five contractors that they typically use around the country, and we had to break into that system.” However, Lee and Yates’ knowledge of the local community, connections, and final cost estimate made them stand out. Plus, their personal proximity to the project helped to convince Amazon that there would be a higher guarantee of quality. “One of our advantages is that Chris and I are hands-on. We have a small corporate structure here, so we’re literally boots on the ground type guys. We’re there at the projects on a daily basis, and our clients seem to like that mentality in our approach to running our business. We don’t just hand it off to a manager or engineer and say good luck, but we’re out there daily to ensure quality control and safety.”
The choice to build in Memphis has several benefits. When the project is completed, Amazon plans to staff around 600 people in the center, creating hundreds of new jobs for the community. Until then, TriCore has used a strictly local workforce to contribute to the project. “We’ll probably have 300 to 400 workers total on-site locally. If someone else had been awarded the project it might have been 40 percent of that. That’s an advantage for us and the city of Memphis.”
Amazon initially submitted an application for tax incentives to the Economic Development Growth Engine (EDGE) last year, promising to invest around $72 million into the project. The board officially approved the application last October. Financial projections from EDGE predict that the project will generate somewhere around $37 million in local tax revenue during Amazon’s 15-year payment plan. The average base salary for employees at the new distribution center is estimated to be around $29,000 per year, and that doesn’t include employee benefits.
Memphis’ Amazon center is on the smaller end of the spectrum at around 615,000 square feet. Euclid, Ohio’s will stand at 650,000, while Shelby, Michigan, and Staten Island, New York, will have centers at one million and 855,000 square feet, respectively. When completed, Memphis’ center will increase Amazon’s Tennessee presence, with previous projects already in Nashville, Murfreesboro, Lebanon, Charleston, and Chattanooga. While it’s telling that Amazon views Memphis as a prime location to build a new distribution center, the decision has no bearing on where Amazon is looking to build its second headquarters.
For now, construction on the new distribution center, located near the Memphis International Airport at 3282 East Holmes Road, has been smooth. A month into the project, TriCore had completely finished the foundation along with 75 percent of the floor slab. According to Yates, supply chain centers can take anywhere from six to ten months to complete, on average. Barring any huge weather delays or setbacks, TriCore should meet their end date of October 1st of this year, upon which Amazon will finish the process by installing their equipment. With a solid track record in their first two years, Yates and Lee may get a chance to work on more Amazon projects in the future.
The end of 2017 had TriCore projected to have $61.5 million in contracts, almost double what it had earned in its first year. It would also place TriCore Builders firmly above Kojima Building & Designs Group, Yates’ old employer, in revenue. That’s a huge jump, but Yates and Lee aren’t looking to stop there. “We want to continue to do this supply chain type work in town for our clients,” says Yates, “and we’d like to branch out to other markets and local regions: Little Rock, Jackson, Mississippi, and Nashville.” For the long term, Yates eyes contracts in cities farther away, with Dallas, Texas, and Cincinnati, Ohio, as two of the primary targets. Seeley and Company, a developer based in Dallas, recently purchased a building in Memphis that TriCore had renovated. They called back later to gauge TriCore’s interest in working on a property in Texas. Plus, Lee’s old employer, IDI Gazeley, has regional offices in both Cincinnati and Dallas.
While TriCore Builders may only be two years old, don’t make the mistake of calling it a small fish. Despite supply chain being the main focus, the staff has extensive experience with other facets of construction. Occasional projects have involved interior office work and tenant finish, which involves the remodeling of an existing commercial property. TriCore has extensive experience in the medical and laboratory construction field as well, with staff previously working with companies such as American Esoteric Laboratories, Millstone Medical, Smith Medical, GlaxoSmithKline, and Pfizer. Additionally, they can also provide industrial work, ranging from equipment foundations to the installation of electrical services, piping, and wiring. Finally, TriCore’s team of subcontractors are available for remodeling jobs from small office spaces to complete building overhauls.
If TriCore’s expansion continues at its current rate, it could soon be one of the top firms in the Mid-South. Yates, for his part, is ready for anything. “We hope the local engineers and architects in the region will take notice, and that this assignment gives them confidence that we can handle any projects they might throw at us.”