March 11, 2009
Take Depreciation on Your DC Labor
[Place cursor over image to enlarge]

The tax code doesn't permit you to depreciate human capital, but a new technology adopted by retailers Staples and Zappos can approximate this financial benefit.

Kiva Systems has developed robots that eliminate employees and conveyor, with remarkable success. You can read more about it here:
Bot-In-Time Delivery.

Aside from the labor savings described in the article, there are other advantages not cited:

  • Lower benefits costs. Fewer employees means less vacation, health insurance, etc.
  • Lower property taxes. Several states don't tax personal property at all, or tax it at lower rates than real estate. So bots are no/low tax items compared to conveyor taxed as real property.
  • Faster depreciation. Bots can probably be depreciated for property tax purposes much more quickly than conveyor.
  • Fewer labor union problems. Fewer employees means your DC is less attractive to labor union organizers.
  • Lower power costs. Electricity consumption can be reduced by lower demand for heating/cooling, and running "lights-out" in aisles and other unpopulated spaces.

The Walker Companies are experts at nationwide location analysis for distribution centers and manufacturing plants, and structuring ownership and occupancy to maximize tax advantages for
our clients.

*Image provided by Kiva Systems: