M. JODI RELL – Seeks workers’ benefits
The company that purchased the soon-to-be-abandoned Stop & Shop distribution center in North Haven hopes to eventually lease it to another company for the same use, a development that would please state and local officials upset at the loss of 850 Stop & Shop jobs.
Stop & Shop announced on Jan. 23 it would close the facility in mid-2006 and shift operations to its Freetown, Mass., location and to a third-party supplier. Three days before the announcement, Stop & Shop closed a deal to sell the facility – and another in Maryland – for $90 million. The company also signed a five-year leaseback agreement on Jan. 20 with the new owners of the property, Pennsylvania-based Preferred Real Estate Investments.
The lease holds a two-year termination clause, but neither Preferred Real Estate nor Stop & Shop disclosed plans for the immediate future.
Stop & Shop spokesman Robert Keane said the company’s first priority was to aid the laid-off employees in their search for new work. Finding a new tenant to use the facility as a distribution center would be the best solution to tempering the effects of the job losses, according to North Haven First Selectman Kevin J. Kopetz.
“You hope that it stays as distribution,” he said.
A new distribution center in the space could allow Stop & Shop employees to use their existing skills and could help minimize the ripple effect of the layoffs, Kopetz said.
Although it is older, the facility – which was owned by Stop & Shop’s sister company Giant Food – has been renovated over the years, and is in an ideal location for distribution, Kopetz said. And there has been demand for the space as a distribution center, according to Preferred Real Estate spokesman Jonathan Morein.
But Stop & Shop will hold the lease for at least the next two years, and the company did not specify its plans.
The news comes a week after another announcement that the Winchester firearms factory in neighboring New Haven would also close. The factory employs about 200 people.
‘The Ripple Effect’
The loss of 850 jobs will have several levels of impact on the region, Kopetz said. The individual employees will be the most affected; the distribution center is one of the largest employers in the region. Finding new jobs for the Stop & Shop employees is the first priority, he said.
“It is important both for us to try to work with the state and other entities to get suitable employment,” he said.
The unfortunate trend is that new jobs coming into the region have been lower-paying and without the comprehensive benefits to which employees in existing jobs are accustomed.
The loss of jobs will also have an effect on other businesses in the area that are supported by the Stop & Shop employees, Kopetz said.
“I’m certain there will be an impact on immediate neighborhoods,” he said. “The ripple effect will extend.”
But Kopetz said he hopes the ideal location of the facility will attract a new distribution center. If that does not work in the long term, there is the possibility that the facility could be converted to house retail, according to Morein. But keeping it as a distribution center is the “first rung on the ladder,” he said.
The closure of the North Haven facility and the consolidation to Freetown, Mass., is intended to make Stop & Shop’s distribution and transportation system more efficient in order to remain competitive, according to a prepared statement from the company.
“After completing a strategic review of our distribution network, we have made the very difficult decision to close our North Haven, Conn., distribution center,” said Marc Smith, chief executive officer and president of Stop & Shop, in the statement. “Unfortunately, the location, size and age of this facility limit our ability to service our stores in the most logistically effective way and our markets that are experiencing growth cannot be supported by it. In connection with the closing of our North Haven facility, by midyear 2006 we will transition the work currently handled at that facility to our Freetown, Mass., distribution center and to a third-party supplier. In order to take on the additional work at the Freetown facility, we will begin to increase our staffing there. Freetown is well positioned to serve our distribution needs in New England. We believe that these changes will generate the efficiencies we need to compete in these markets and to deliver value to our customers.”
The closure of the North Haven facility will affect both union and non-union employees. The company is offering career center assistance to employees, according to a release. Gov. M. Jodi Rell has mobilized a team from the state departments of Labor and Economic and Community Development to make sure workers get the benefits they are entitled to, according to the Associated Press.
“Our primary concerns now are treating associates affected by this change fairly and respectfully and providing meaningful support to them in their future career planning,” Smith said. “We will assist our associates in finding alternative employment by offering targeted retraining, job counseling programs and access to information about other job opportunities. There also may be opportunities for some North Haven associates at our Freetown distribution center or elsewhere within the company.”
Stop & Shop is a unit of Ahold Ltd., a grocer based in the Netherlands. Stop & Shop employs more than 58,000 people at 376 stores in Massachusetts, Rhode Island, Connecticut, New Hampshire, New York and New Jersey.
