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Drug distributor McKesson seeks big warehouse expansion in Cheektowaga

One of the world's biggest pharmaceutical and medical supply companies wants to invest more than $16.1 million in a new warehouse and distribution operation in Cheektowaga that would more than triple its space in the town.

McKesson Corp. is seeking $1.24 million in sales tax breaks on new equipment from the Erie County Industrial Development Agency to make the project competitive with an alternative site in southern Indiana.

The company says it has another option for the project – and a "viable" site – in Jeffersonville, Ind., across the Ohio River from Louisville, Ky. That community and the state of Indiana are offering a $2.2 million incentive package of corporate income tax credits, real estate tax refunds and personal property tax refunds, giving that location a $1.5 million edge over Cheektowaga without the ECIDA assistance, McKesson said.

Besides the ECIDA tax breaks, the company is also talking with Invest Buffalo Niagara and Empire State Development Corp. about Excelsior Jobs Tax Credits or other benefits. The rest of the funding will come entirely from the company. If approved, executives hope to start work in April and finish by October.

The San Francisco-based company – which is ranked sixth on the Fortune 500 list – is seeking to lease a 45,000-square-foot vacant warehouse from Benderson Development Co. at 2871 Broadway. It would then spend $3.9 million on renovations and $12.2 million on equipment and furniture to create a larger "central-fill pharmacy fulfillment operation."

The project would also keep 62 full-time jobs and create 13 new ones within two years, with $2.3 million in annual payroll, according to the company's application to the ECIDA. The average salary of the new jobs would be $39,000, while the retained jobs pay $43,000 on average.

McKesson would also keep its current 17,461-square-foot facility, located up the street at 2851 Broadway, which it will use as a backup warehouse "in case something happens to the new facility we plan to open," the company said in the application. However, it will not have any full-time employees on-site.

Additionally, McKesson has a larger 139,000-square-foot warehouse facility, with 91 full-time employees, at 2700 North America Drive in West Seneca. That will remain open, and will supply products to the new fulfillment center and others out of state, with no changes.

McKesson is a global provider of products and services for health care supply chain management, retail pharmacy, community oncology, specialty care and health information technology purposes. The publicly traded company is the largest pharmaceutical distributor in the country.

The ECIDA will hold a public hearing about the proposal – dubbed Project Frost by the company – at 11 a.m. on Feb. 26, at Cheektowaga Town Hall, at 3301 Broadway. The agency board is expected to consider the project at its March 27 meeting.


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