More than 700 local warehouse workers and truck drivers represented by Teamsters Locals 730 and 639 will continue to supply Safeway’s 125 eastern division stores from its primary distribution center in Upper Marlboro, MD. That’s because Safeway and the unions reached an agreement late last month to keep the 749,000 square foot depot open, reversing a decision made last October to close that facility (along with a smaller non-foods warehouse in nearby Landover, MD) and outsource the supply to three C&S Wholesale Grocer distribution centers in North East, MD (perishables); York, PA (grocery); and Bethlehem, PA (non-foods).
C&S, under its Collington Services unit, had operated and managed the Upper Marlboro facility since 2000. The warehouse was originally built in 1998 for $91 million and distribution was outsourced to C&S two years later. When Albertsons acquired Safeway in early 2015, the Boise, ID based chain took possession of that facility with a reported plan to sell it.
After heavy industry speculation that Supervalu would gain Safeway’s distribution (potentially from existing SVU facilities in Mechanicsville, VA and Denver, PA) since private equity Cerberus Capital Management controls both Albertsons and Supervalu (and plans to take Albertsons public), C&S ultimately retained distribution rights by agreeing to shift supply to those three non-union facilities in Pennsylvania and northern Maryland. That move would have displaced union workers. When that announcement was first made in October, Teamsters president James P. Hoffa contacted Bob Miller, the CEO of Albertsons, and urged him to reverse the company’s decision to close the warehouse and shift the business out of the market to non-union facilities.
In related news, 10 days after Safeway reversed its initial decision, C&S announced that it will be closing its perishables facility in North East, MD (Cecil County) in two months. It, however, will retain supply of Safeway’s non-foods business (from the aforementioned warehouse in Bethlehem, PA) because Safeway’s antiquated depot in Landover, MD will close. About 190 union associates worked at the smaller Landover unit.
As part of the new agreement, local and state officials have pledged nearly $1.5 million in financial incentives to keep the grocery warehouse in Prince George’s County. Associates at the Upper Marlboro warehouse, who currently work for C&S, will become Safeway employees. The new agreement will also create 25 more jobs at the Collington Distribution Center and, with the signing of a new collective bargaining agreement, no outsourcing of warehouse jobs will occur through the length of the pact which expires in May 2022.
“Safeway, the unions and government leaders worked tirelessly over the last few months to accomplish the seemingly impossible. We are pleased to have the distribution center back under our operation, and the dedicated employees back on our team. Together we created an important win for the workforce, company and the community,” said Stacy Brown, VP-labor relations for Safeway’s eastern division.
According to published reports, Teamster employees agreed to $7 million in concessions to make the deal happen. Part of those concessions include agreeing to pay 20 percent of their health insurance costs, allowing a $2-an-hour wage cut, and sacrificing several holidays. Of the $1.5 million in financial incentives provided by local and state authorities, forgivable loans will consist of $1.35 million of that package. Additionally, a $97,000 grant will help keep the facility operating through the term of the new contract.
As for C&S, which recently had been recruiting new employees for its North East facility (in anticipation of the additional Safeway business), it will close that distribution center in April. Approximately 200 associates work at the distribution center. The facility was formerly owned by the now defunct Fleming Cos. C&S acquired it in 2004.