Ceremony starts Railex expansion into wine

The new capacity will increase Railex's wine storage capability to 5 million cases.

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WALLULA -- The walk to the golden shovels was made for slow motion.

As a stream of elected officials, including the governor, tramped across the stony ground toward a line of shovels behind the Railex produce distribution warehouse Friday, the theme from "Rocky" rang out from two speakers set up for the event. In front of a crowd of about 100 people the hard hat-clad dignitaries counted down to the first dig on Railex's new roughly $20 million bonded wine storage and distribution center, projected to open in February.

Such an innovative transportation system only makes sense for Washington's wine industry -- second in the country in volume production but "first in quality," boasted Gov. Chris Gregoire before the dirt was turned.

"We in this state have the producers of the world's absolute best wines," she proclaimed against a backdrop of heavy construction equipment.

The new facility, she continued, will "allow us to leap forward in our capacity to ship our wines."

For nearly four years, Woodinville-based Ste. Michelle Wine Estates has utilized Railex LLC to store and transport its wines to East Coast markets via dedicated rail line. In a new step, Railex will build a 500,000-square-foot Railex Wine Services Distribution Center that will deepen the partnership with Ste. Michelle and its portfolio of wineries and open the doors for other wineries to ship their products.

The step is a big one for the wine industry, which has typically trucked its bottles to the west side of the Cascades for distribution, wine officials said.

But it's a concept whose time has come since Railex opened its doors in 2006 and began building a reputation for efficient transcontinental shipping in temperature-controlled rail cars.

When the operation was introduced as a way to ship produce, most officials envisioned apples, onions, potatoes and other crops affiliated with Washington state. No one could have imagined the potential it could have for wine, they said.

"Our confidence level has grown, and I think their confidence level has grown, too," Rob McKinney, Ste. Michelle's vice president of operations said of Railex.

He said it takes a lot of trust to allow another company to handle the wine, but Railex has earned it.

"It's like handing off golden precious eggs to a partner," he said.

"We're just very, very excited about this new venture together. Here's to the future."

Nine officials, including Port of Walla Walla, Walla Walla County and local legislative representatives, spoke at the event, heralding its value as a public/private partnership that wouldn't have been possible without a thriving agricultural industry and property ripe for development.

"Twenty-million-dollar developments are hard to come by in these hard economic times," said Port of Walla Walla Commission President Paul Schneidmiller.

Port Executive Director Jim Kuntz said the agency's 200-acre business park, purchased originally in 1994, is "one of the Port's pride and joys in attracting new investment to the state."

He, Schneidmiller and County Commissioner Perry Dozier said the latest project would not be possible without support from Sen. Mike Hewitt, R-Walla Walla, and Reps. Maureen Walsh, R-College Place, and Terry Nealey, R-Dayton, all of whom were in attendance Friday.

Though Friday's event was the ceremonial ground-breaking, dirt had already started moving on the project earlier in the week. Hansen-Rice Construction of Nampa, Idaho, will lead construction.

When all is said and done, the investment from Railex is expected to be $18 to $20 million. About 25 jobs will be created. An additional $320,000 in annual property taxes will be collected.

The work is also possible through an investment of about $300,000 from Walla Walla County for an access road, and about $2.75 million allocated by the state earlier this year.

The new capacity will increase Railex's wine storage capability to 5 million cases. It precedes what is expected to be an announcement in the coming year of a new shipping hub, likely in Florida. Once constructed the new location would enable Railex to double its employment and the number of rail cars leaving the Wallula facility, said Jim Kleist, who manages the Walla Walla County hub as Railex's senior vice president of West Coast operations.

The growth is a testament to the quality of the region's crops, officials said.

"Agriculture, quite frankly, has been the shining star in our state for the last few years," Walsh told the crowd of Railex employees and representatives of utilities, wine, tourism and economic development officials from the Tri-Cities to the Walla Walla Valley.

The new storage and distribution center will build capacity for more exports, officials said.

Friday's ceremonial groundbreaking, which came just over two weeks after the initial expansion announcement, also provided a chance for Gregoire to reflect on projects in which she's had a hand.

On the tail end of her second and final term as governor, Gregoire toured Southeastern Washington late last week visiting project sites where the state has invested in new construction.

Port, county and legislative officials praised her for her work on the widening of U.S. Highway 12, expansion of the Washington State Penitentiary, funding of the winery incubators at the Walla Walla Regional Airport, Railex's initial funding, the Burbank highway interchange, state veterans affairs retirement center and projects at Walla Walla Community College.

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