Giant to shut Silver Spring main bakery

Many of 320 workers are to be offered new jobs or severance

Chain absolves new owner

80% of its baked goods will be made by H&S

store bakeries continue


January 08, 2000|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Giant Food Inc., the Baltimore-area's largest grocery chain and one of the few chains still manufacturing its own baked goods, will close its 51-year-old Silver Spring bakery in May.

Many of the bakery's 320 workers, including bakers, sanitation workers, drivers, engineers and officers, will be offered new jobs or severance packages, the company said yesterday.

H&S Bakery Inc., of Baltimore, the nation's largest independently owned bakery, will start producing about 80 percent of the baked goods sold in Giant bakeries, primarily breads, rolls muffins and bagels. H&S will also distribute all Giant's baked products, Giant said. Several small vendors will bake Giant's sweet goods, the company said.

All in-store bakeries will continue producing fresh baked products daily and are likely to add new items, said Barry F. Scher, a Giant spokesman.

Manufacturing private-label goods for supermarkets and bakeries makes up more than half the business of H&S, said John Paterakis Sr., president of 57-year-old H&S. The company also supplies Super Fresh, Shop Rite and Pathmark.

"The difference is, we're going to use all the formulations that Giant has been using," Paterakis said. "That was part of the agreement" and an unusual one.

To accommodate manufacturing for Giant, H&S will hire an additional 70 to 80 people and install new equipment.

All of Giant's baked goods will be shipped through the new H&S distribution center opening in May in the Holabird Industrial Park in Southeast Baltimore. Giant bakery workers will have first priority in filling the new H&S positions, Paterakis said.

Giant, a nearly 64-year-old chain with 176 stores, began making its own baked goods in 1948.

That's when it took over the Sheridan Bakery on King Street in Silver Spring to supply the 15 stores it ran at the time. The supermarket chain has used the same facility since. But it can't be expanded because it's hemmed in by roads, rail tracks and park land.

"The facility is in critical need of being updated," Scher said. "It's a four-story building, and all modern bakery facilities are on one floor."

Giant ruled out the possibility of building a new plant because costs would have approached $100 million, he said. "We have decided it is much wiser to invest our money in the major core business of the company, which is selling groceries."

The central bakery and the Bakery Depot, a small distribution center in Columbia that employs about a dozen workers, will close by May.

Labor unions representing the Giant bakery workers will begin negotiating severance packages next week.

Employees could get an average of nearly $12,000, depending on their length of service, under a contract with Local 118 of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents the bulk of Giant's bakery workers. Severance benefits apply only to employees with the company three years or more.

"We were expecting the shutdown of the bakery," said Allen Haight, president of Local 118. He said Giant had told the union that the chain was studying the cost-effectiveness of building a new bakery.

Scher said closing the bakery has nothing to do with Giant's ownership by Dutch food retailer Royal Ahold NV, which bought the supermarket chain in 1998. Giant still makes its own ice cubes and dairy products, including ice cream, but over the past year has closed its print shop, truck repair and vending machine divisions, Scher said.

"We feel that Ahold's ideals are different than when Izzy Cohen [the son of the company's founder] was alive," said Haight, the union official. "He wanted to be integrated and have all the facilities make products for stores. Ahold, they look at other things."

To others the closing is a sign of the tougher climate in which supermarket chains must compete. "The bottom line is the bakery was extremely labor intensive, and over the last several years there have been more opportunities to out-source that work than there were before," said Jeffrey Metzger, publisher of Food World, the trade journal in Columbia. "The grocery business is a different animal. The need to synergize and create efficiencies is far greater."

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