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Associated Food Stores closing Helena, Billings warehouses

2013-01-30T17:23:00Z 2013-02-05T11:18:52Z Associated Food Stores closing Helena, Billings warehousesBy JAN FALSTAD Billings Gazette Helena Independent Record
January 30, 2013 5:23 pm  • 

BILLINGS — The second major shake-up in the grocery industry in Montana this month will result in the loss of more than 100 jobs in Helena and Billings.

Utah-based Associated Food Stores announced Wednesday that on April 14 it will close food distribution warehouses in Helena and Billings that serve more than 100 independent grocery stores in Montana and Wyoming.

The closures will eliminate jobs for 50 people at the Helena warehouse at 2705 Airport Road and 56 at the Billings warehouse at 332 S. Plainview St., off Monad Road.

The retail stores will be supplied from a much larger warehouse in Farr West, Utah, just north of Salt Lake City.

Because Associated Food is a cooperative, the retail grocery stores that it supplies own the company and will share in the efficiency savings, said Kelly Atkins, senior vice president in Helena.

“This decision will ultimately allow our independent grocers in Montana to continue to be strong competitors in their markets,” he said.

The food cooperative will retain four drivers in Helena, six drivers in Billings, and 25 retail service workers. These employees, specializing in produce, meat or other products, work with the retail stores.

Even with adding about 550 miles of one-way travel from the Utah warehouse to Billings, Atkins said improved efficiency will cut costs to its retail grocers by 3 percent. That is significant in an intensely competitive grocery industry operating on net margins of 3 percent or less, he said.

“The upside is significant or we would not be putting our team through the pain we have,” Atkins said.

The Farr West warehouse has one million square feet, compared with 180,000 square feet in Billings, so retailers will have more product choice, said company spokesman Kris Romeril in Salt Lake City.

Associated Food provides wholesale groceries to more than 400 independent stores in eight Western states and owns 43 grocery stores in Utah and one in Nevada.

The wholesaler is privately owned and doesn’t report its finances publicly. Last June, the Salt Lake Tribune reported that Associated had $5.9 million in profits last year, compared with a loss of $6.5 million in 2011. Those profits were shared with retailers, Romeril said.

No interviews with Billings warehouse employees were allowed.

“Generally in Montana, our profits have been strong,” Atkins said, including this fiscal year, which is 75 percent complete.

The closures of the Associated Food warehouses means the Supervalu warehouse in Billings is the only food wholesaler left in Montana, Atkins said.

Three weeks ago, Minnesota-based Supervalu announced that it was selling 877 U.S. grocery stores, including all of its Albertsons stores. The buyer is a company owned by Cerberus Capital Management, a private equity company in New York City that buys distressed assets.

When asked what he thinks will happen to the local Albertsons, Atkins said everyone is waiting to see.

“Cerberus is known as a company that buys assets and spins them off,” he said. “Who knows what could happen.”

Copyright 2015 Helena Independent Record. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(12) Comments

  1. InPlainSight
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    InPlainSight - February 08, 2013 9:13 pm
    Montana Mike, I agree with you that our government (not just Obama and no I did not vote for him) plays a role in how the economy pans out. However that article I quoted below was written in 1996. Obama wasn't in office then, so it's not so easy to pin the tail on the donkey with that one. You make another good point, that jobs are being eliminated due to technological advances. I can't argue with you on that, however, that is clearly not the case in this situation. If you do your homework, when AFS decided to purchase millions of dollars worth of Albertsons about two years ago, several more AFS stores closed. Ultimately, its bad business decisions that dumped on these workers not governmental penalties. Conveniently the bad times of the economy helped them cover it up. Another commenter mentioned the Christmas parties, who gets a Christmas party like that from their work? Does that give you an indication of how company money is spent and decisions are made. There are multiple factors that enabled this outcome, but it starts within.
  2. Montana Mike
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    Montana Mike - February 02, 2013 8:01 am
    InPlainSight, you quote an article stating that they are eliminating facilities to reduce operational costs. Your quote only reinforces my point. One of the biggest operational costs of a business is employees. Obamacare is increasing costs to businesses that employ over 50 employees.
    Employers see these penalties coming, and they are adjusting their workforces accordingly. The evidence that employers are economizing on workers is all around us. More supermarkets and drug stores have self-scanning machines at checkout. Large department stores have price-scanning machines scattered around the stores, so that shoppers can check prices without asking a clerk. Food trucks line the streets in New York and Washington, D.C., enabling restaurants to sell their food without waiters. These workforce adjustments are just one reason that employment growth has been slower than usual during this economic "recovery."
    While you rant on about these dirty businesses only concerned with their profit margins you are missing the underlying "cause and effect" of governmental policy on the private sector.



  3. claysbury
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    claysbury - February 02, 2013 6:40 am
    It's hard for people to lose their job in this shakey economy and regardless of who you blame for the economic conditions in America, if you are able to spend a bit more at a local store, but choose to shop at the box stores, you are part of the problem. No doubt, the people that will be layed off at AS will have to shop at the box stores, but they don't have a choice. You do! Support your local stores!
  4. feelin it
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    feelin it - January 31, 2013 8:04 pm
    thank you. I can speak for all of the affected Helena employees, your support means the world to us. Our "member stores" have been so much more to us through out the years, you've all been family. We truly wish you well in the days ahead and will miss you.
  5. feelin it
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    feelin it - January 31, 2013 7:45 pm
    Thank you for your support. I'm one of those that is losing my job. So many co-workers have given their lives to Associated Foods. So sad indeed, I wish the best for our member stores. Will miss you all.
  6. InPlainSight
    Report Abuse
    InPlainSight - January 31, 2013 7:40 pm
    AFS biggest concern is for the well-being of the workers? What about the health benefits these workers won't receive for their daily chronic pain due to the repetitive and hard labor they endure. At least those cushy desk jobs are safe. AFS enjoyed a 5.9 million profit last year and lay off 106 workers instead of selling some of their sour deal Albertsons Stores aka Fresh Market. Consolidating the services sounds like AFS is trying to become another Wal-Mart chain. The whoppedy-doo 3% "savings" is now going to compensate for one truck load driving 550 miles one way. Keep your eye out for the retail stores that will now lay off workers because they won't be able to get product for their shelves. You sacrifice quality for quantity. Shame on you AFS.
  7. you'reoblivious
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    you'reoblivious - January 31, 2013 6:16 pm
    Nothing like making the rich richer and pooping on the grunt workers that have kept the company sucessful all these years. The severance pay is worth as much as my used toilet paper. But... good job guys your hard workers and we are sorry. None of them are going to be losing sleep over this only the great guys that have helped the company maintain their customers. Lets buy expensive Christmas presents (flat screens, multiple gaming systems... everyone goes away with something) so our employees will show up the Christmas party but tell everyone that the profit margin isnt there so we have to lay you off.
  8. InPlainSight
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    InPlainSight - January 31, 2013 12:44 pm
    I doubt the increased cost of Obama care and social security had a role in this. Again, its all about operational costs and retailer savings...

    read this quoted from a website:

    Article from: Supermarket News | March 18, 1996 | Zwiebach, Elliot | Copyright
    inShare

    SALT LAKE CITY - Associated Food Stores here plans to close its 187,000-square-foot distribution center in Pocatello, Idaho, by mid-May.

    The facility, whose volume is roughly $90 million, services 100 customers, Associated reported. Upon its closing, those customers will be serviced by the company's Salt Lake City and Boise, Idaho, distribution facilities.

    Closing the Pocatello facility will create an immediate savings of almost 1% in operating costs for most of the supermarkets serviced by the warehouse, according to Richard Parkinson, president and chief executive officer of the cooperative wholesaler.

    "These operational savings will enable independent retailers …
  9. tyjackson
    Report Abuse
    tyjackson - January 31, 2013 11:12 am
    While we are members of Associated Foods, we do not agree with the closing of these Montana Facilities. In conversations with Associated Food Stores managment, I expressed my disapproval of this move by the board of Associated Foods. The article makes it seem as if this action will be a benefit to the retailers who purchase from Associated Foods. Our perspective is that an increased "bottom line" has come at the expense of our neighbors and friends who have provided us excellent customer service for the more than 20 years that we have purchased goods from the Helena warehouse. Our biggest concern is for the well-being of all those wonderful people that worked in the Helena warehouse.
  10. steeline
    Report Abuse
    steeline - January 31, 2013 10:34 am
    Private sector businesses don't have the luxtury of printing money to pay the bills like Obama does. Private sector businesses have to modify and adjust their operations in order to maintain a balanced and profitable operation. Not like Obama has to. The private sector business has to compete for the Peoples money and Obama only has to raise taxes on the People for his money, plus get loans from overseas. It would be nice if Washington knew this and would practice the private sectors business model.
  11. InPlainSight
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    InPlainSight - January 31, 2013 9:06 am
    What a wonderful society we live in... These companies are more concerned about their bank account and profit margins than providing jobs so people can support their families. There is hardly any mention of the workers in this article, it's all about the company's greedy money. Since this is supposedly cutting costs for retailers, I hope to see more job creation there.
  12. Montana Mike
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    Montana Mike - January 30, 2013 8:38 pm
    A second major shake-up of the grocery business in Montana with the loss of 100 jobs. It seems to me that free-enterprise is responding to market conditions (ie. a lean and efficient business adapting to the environment). So what are the environmental conditions? I believe Obama care and increased social security costs are the driving forces behind these changes that you are seeing. The result in the end is increased governmental jobs and decreased jobs in the private sector. Call me the antipathy of a flaming liberal....but it is what it is.

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