Giant to outsource dry-goods operation
Details still being worked out with Jessup Logistics some jobs could be lost in cost-saving effort
April 09, 2010 | By Andrea K. Walker | firstname.lastname@example.org
Giant Food, the region's largest grocery chain, announced Thursday that is outsourcing its dry-goods distribution business to a Jessup firm.
The Landover-based grocer said Jessup Logistics LLC, an affiliate of C&S Wholesale Grocers, will take over the dry-goods operation by the end of the year.
It is unclear how many of the 460 union workers and 130 nonunion workers at the plant could lose their jobs once the deal is completed. Jessup Logistics has agreed to adopt the contracts that Giant currently has with three local unions representing workers in the division, Giant spokeswoman Kim Brown said.
Many of the workers will be hired at the Jessup Logistics facility or have their jobs changed or relocated within Giant, Brown said. The company isn't ruling out layoffs, but details are still being worked out between Giant, Jessup Logistics and local union officials, she said.
Ritchie Brooks, president of Teamsters Local 730 who represents workers at the facility, said he doesn't know yet if there will be layoffs. But he said the new company uses many automated processes, so he worries about layoffs in the future.
"I suspect that there will be layoffs," said Jeremy Diamond, a grocery consultant whose family once owned supermarkets in the Baltimore area. "But for Giant to continue to operate efficiently, that's what companies have to do. There are always layoffs. I guess that is part of the business."
Giant's outsourcing puts those operations in the hands of a company that has more expertise at dry-goods distribution, said Brown, vice president of public affairs for Giant. It's also a cost-saving measure, she said.
"It's being able to look at the operations and being able to look at ways to take costs out of the way we do business," Brown said.
Brown also said the grocer can now focus on distribution in the fresh produce business, which it sees as a place where it can expand.
As competition in the grocery market has increased in recent years, grocers have looked for ways to operate more efficiently, analysts said.
"Even when the economy was better than it is now, a lot of these companies thought they could run their own distribution operations and trucking facilities," Diamond said. "A lot of them are finding it's more cost-efficient for an outsider to do it."
Giant also will continue to run its transportation and recycling division. There are no plans to outsource those operations in the future, Brown said. Jessup Logistics also handles Giant's frozen-food division.
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