About 125 employees at a Fleming Cos. Inc. grocery wholesale division in Salt Lake City will lose their jobs as part of several closures of poorly performing wholesale divisions.
The shutdowns, announced Thursday, will affect about 800 people, or 7 percent of the bankrupt Texas-based company's work force. The changes will result in Fleming leaving the market.
The division's Salt Lake activities, operating at a 500,000-square-foot facility, served mostly independent supermarkets within about a 200-mile radius, according to Fleming spokesman Shane Boyd.
The Salt Lake operation is located at 2455 W. 1500 South. Unaffected by Thursday's announcement are convenience distribution centers, including one in Salt Lake at 3130 S. 1030 West.
Operations will end at the affected centers by mid-June, and their inventory will be transferred to other Fleming facilities. Boyd said Fleming leases the Salt Lake facility, but no decisions about its future were announced Thursday.
"Certainly, if there are opportunities to transfer (affected workers), we would want to look at how to make that happen, but we are in a consolidation mode in the company, so that does limit the number of transfer opportunities," Boyd said.
About a year ago, the division's largest customers were Kmart, Harmons and Fleming-owned Food4Less. Fleming ended its supply relationship with Harmons last fall, and the one for Kmart ended early this year.
Earlier this year, Boise-based Albertsons purchased three Salt Lake-area Food4Less stores from Fleming.
"We're selling all our retail stores," Boyd said. "That removes a substantial volume from the distribution center. Unfortunately, that's meant it's no longer profitable in its current state. There simply aren't growth opportunities to remedy that."
Among other chains Fleming supplies are IGA, Target, Albertsons, 7-Eleven, Phillips 66, Maverik, Walgreens and Jubilee Foods.
The other affected divisions are in Warsaw, N.C.; Northeast, Md.; and Phoenix. The company also will close a general merchandise distribution center in King of Prussia, Pa. Together, they represent about $1 billion in annualized revenue, the company said.
"While the decision to exit any market is difficult, it makes excellent sense for us to scrutinize our operations and concentrate our human and financial resources on those business units and markets in which performance is highest and opportunities are greatest," Bill May, president and chief executive officer of the wholesale division, said in a prepared statement.
"The previously announced loss of business at these divisions and their limited growth opportunities has made it impossible for us to continue in these markets as a core part of Fleming operations. After careful study and consideration, it was decided to take this necessary action to advance our restructuring, which is important to our company and our aggregate customer base."
May said Fleming would try to help affected retail customers transfer to a new supplier.
The company also said it is considering what to do with its Minneapolis division, which solely supplies the company's Rainbow Food stores. Fleming has an agreement to sell 31 of the stores and has filed a motion with the U.S. Bankruptcy Court to establish an auction for the stores' sale.
Fleming filed for Chapter 11 bankruptcy protection April 1. It had sales of $15.5 billion last year.
Also, the company is launching operations at a new convenience distribution center in Denver, which replaces a facility destroyed by fire late last year.
Contributing: Dow Jones/Associated Press
E-mail: bwallace@desnews.com