California company keeps Cape facility open, looks to future

Sunday, February 19, 2006

When the biggest pharmaceuticals wholesaler in the country bought D&K Healthcare Resources Inc. last summer, it no doubt caused the 115 workers at D&K's Cape Girardeau facility several sleepless nights. That's because for several months, San Francisco-based McKesson Corp. considered closing the local distribution center and consolidating its operations in St. Louis and Memphis.

Local D&K manager Terry McKinley said then that 80 percent of the workers at the distribution warehouse at 1823 Rust Ave. thought they would probably lose their jobs.

But that didn't happen. In November, McKesson decided to keep open the local operation, which ships pharmaceuticals to pharmacies and hospitals.

"When I announced the news, there was some shouting," McKinley said at that time. "Some people broke down and started crying. We feel like we're having a party."

Mark Walchirk, McKesson's senior vice president of customer operations, said a variety of options are considered any time the company makes an acquisition. He said McKesson -- No. 15 among Fortune 500 companies in 2005 -- did consider several, including consolidating.

"We felt very good about the facility in Cape Girardeau," Walchirk said. "It's a highly automated facility. It has an excellent work force, it covers a wide service area and we wanted to make sure we had a strong presence in that area. So we felt it was very important to keep that facility."

In addition to an extraordinary employee base, Walchirk said the Cape Girardeau facility has a good accuracy rating in filling orders and has excellent customer service.

"We looked at all of those things," Walchirk said.

McKesson, with more than $80.5 billion in overall sales in fiscal 2005, is one of the world's largest distributors of pharmaceuticals, serving more than 20,000 pharmacies nationwide as well as hospitals, health plans, physicians and government agencies.

Customers include the federal Centers for Medicare and Medicaid Services, Costco, Target, Duke University Health System and John Muir Health System.

In August, 172-year-old McKesson acquired St. Louis-based D&K Healthcare for $206.8 million in cash. D&K has facilities in Aberdeen, S.D., San Antonio and Flower Mound, Texas, Lexington, Ky., Birmingham, Ala., and Minneapolis, Minn.

McKesson recently reported third quarter revenues of $22.6 billion, which is up 9 percent. D&K completed its new 60,000-square-foot distribution center in 1997 at an estimated cost of $24 million.

In May, Walchirk said, the operating system that the Cape Girardeau facility works under will be converted to McKesson's operation systems. That also means the name will change to McKesson, he said.

At this point, there is no plan for expansion, Walchirk said.

"The facility is a very well run facility," he said. "It has capacity for many years to come. It should continue to be business as usual."

As the business grows, he said, there could be a need for additional employees. "But that's going to have to happen over time," he said.

smoyers@semissourian.com

335-6611, extension 137

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