Closed auto plant reborn as hub for HNI distribution network

IOWA CITY – HNI Corporation of Muscatine has created a new Iowa City hub for its North American distribution network. The 364,000-square-foot facility – a former International Automotive Components manufacturing plant – is being completely refreshed into a warehouse and distribution center for the office furniture maker. “It’s the right size building with the right […]

IOWA CITY – HNI Corporation of Muscatine has created a new Iowa City hub for its North American distribution network. The 364,000-square-foot facility – a former International Automotive Components manufacturing plant – is being completely refreshed into a warehouse and distribution center for the office furniture maker. “It’s the right size building with the right labor pool,” said Dan O’Brien, HNI’s director of distribution. In an interview with the QCBJ, Mr. O’Brien said the company is working to insulate its customers from volatility in the post-pandemic supply chain and labor pool. He explained that when everything is working well, supplies flow directly into HNI’s production centers; products are manufactured; and then transported through distribution centers to customers in a just-in-time model. Supply-chain challenges over the past few years have led the company to add flexibility to its distribution efforts. “We want to deliver to our customers what they want, when they want it, regardless of other supply chain impacts,” Mr. O’Brien said. He explained how the new Iowa City distribution hub helps them synchronize potential parts, labor, or trucking outages to minimize disruption to our customers.

Most HNI products are made to order. However, the Iowa City space allows for keeping the right amount of inventory to meet customer needs. Mr. O’Brien said when supply chain problems hit, demand increased for some items like HNI’s domestically produced laminate products. The Iowa City Distribution Center gives HNI the ability to adjust their inventory levels to quickly respond to increases in demand. Currently, HNI employs about 25 workers at the center – loading and sending out about 10 truckloads of office furniture every day. Mr. O’Brien said the company is still scaling the operation and expects to see continued growth as building improvements are completed, allowing HNI to utilize all of the space. Only about half of the warehouse is now being used. When fully operational, HNI may employ 40 to 50 lift truck operators and warehouse workers. Mr. O’Brien commented the industrial labor market in Iowa City offers an excellent pool of experienced workers to meet the company’s needs. As supply chain shifts in other directions, he said the new center helps give HNI a strategic advantage to be more flexible in its distribution model. He says that might even mean more hands will be needed. “We are essentially supporting our Regional Distribution network around the U.S. from this facility,” he said. Products made in the company’s manufacturing plants in Muscatine are sent to a local consolidation center, including the new facility in Iowa City. When a complete order is collected at the Iowa City facility and it hits its scheduled ship date, the order is loaded on a truck for final delivery through an HNI Regional Distribution Center to locations such as Salt Lake City, Utah; Cedartown, Georgia; Garland, Texas; or Mechanicsburg, Pennsylvania. HNI leases the facility at 2500 Highway 6 East in Iowa City from Phoenix Investors. Phoenix acquired the property in June 2021 from International Automotive Components (IAC), which originally used the facility for manufacturing of various automotive parts. According to a Phoenix Investors news release, the company is a national private commercial real estate firm headquartered in Milwaukee, Wisconsin. Its core business is the revitalization of former manufacturing facilities throughout the United States. Phoenix works to positively transform and restart the economic engine of the communities in which it invests. IAC operated its manufacturing plant in Iowa City for more than 50 years becoming one of the city’s largest employers. In October 2016, IAC eliminated nearly 500 hourly and salaried workers and had completely phased out operations by 2021.

“Phoenix transforms old factories or warehouses and renovates them to bring new life to an old building,” said HNI’s Mr. O’Brien. “Their track record of rehabbing buildings helped me have confidence that this project would be successful. Phoenix takes out just about everything unless it’s holding up the roof. Then they put in new LED lights and paint it top to bottom.” Now the warehouse is clean, bright, and well organized. When all construction is complete and the HNI Distribution Center is fully operational, the company will occupy more than 317,000 square feet there. An additional 23,973 square feet of former office space on the property will not be used by HNI and is available for lease from Phoenix Investors. The Iowa City property is zoned light industrial.   In the Quad Cities region, Phoenix also owns a 357,608-square-foot property in Camanche, Iowa. Located at 2011 7th Ave, the facility sits on 144 acres and is served with a Union Pacific rail spur.