Giant to build large center in Howard

Incentive package offered by county, state is deal-maker

Jobs won't move to Virginia

368,000-square-foot facility will distribute perishable foods

May 16, 2002|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

Giant Food Inc. said yesterday that it will build a distribution center in Jessup, a move that keeps 550 jobs from moving to Virginia and ends a months-long bidding war between Maryland and the neighboring state.

The distribution center for perishable food, to be built on Dorsey Run Road near two other distribution centers maintained by Giant, will be financed with state help.

As part of the incentive package aimed at keeping the Giant center in the state, Maryland Economic Development Corp. is working on an offer to build the 368,000-square-foot facility and give the company a long-term lease-back arrangement, said David S. Iannucci, secretary of the Maryland Department of Business and Economic Development.

Such an agreement would ensure that the cost of construction was not reflected on the company's balance sheet, Iannucci said. The state also is offering tax incentives, work force development grants and training grants, said Barry F. Scher, Giant's vice president for public affairs.

Giant is owned by the Dutch food retailer Royal Ahold NV.

Iannucci called the deal fair and worthwhile for the state.

"These are good, family-supporting jobs," he said. "We'll get our money back very quickly by those workers still being in Maryland, by them paying taxes in Maryland, by Giant building in Maryland and paying taxes here."

Scher said the company considered sites in Delaware and Spotsylvania, Va., along the Interstate 95 corridor, but that Maryland won out because of the tax breaks and other incentives offered by the state, Howard County and Maryland Economic Development Corp.

The new building will replace an outdated distribution center in Landover, where the company plans to maintain its headquarters.

"We always said it would be an economic decision on our part," Scher said. "The incentives won out. It boiled down to work force grants, property tax credits and training grants."

Scher said the state also offered a grant from the Economic Development Opportunity Program, known as the state's sunny day fund. Howard County offered property tax credits and agreed to fast-track the building permits and accelerate the adequate-public-facilities review.

Specifics not given

Iannucci would not comment on the specifics of the incentive package, saying some of the incentives had to be approved by the state's legislative policy committee.

Hans F. Mayer, executive director of quasi-governmental MEDCO, said his organization was brought into the discussions late and that it has not made the deal final.

Mayer offered no details on how the building would be paid for, and Giant does not have a final cost for the facility, which is being designed.

Scher said Giant will purchase the property, which is owned in trust by several people, with plans to break ground this summer so that the center can be operating by midsummer next year.

"It really puts us in position for growth into the future and provides opportunity to improve service to our stores and to our customers," said Dan Currie, executive vice president for operations.

Expansion possible

The perishable-foods center will distribute produce, meat, deli products and seafood. It is three miles from Giant's other distribution facilities for frozen foods and dry goods, Currie said.

The center is expected to bring 550 warehouse and driving jobs from Prince George's County to Howard.

Scher said the new facility will have enough space to enable the company to expand, but that the company has no plans to hire more workers for the site.

"This is a significant economic development retention win," Iannucci said. "Giant has been identified with Maryland for so long that there's no other decision other than staying in Maryland that we could've lived with."

Howard County Executive James N. Robey said having another distribution facility in the county will help diversify the county's economy and contribute to the county's revitalization efforts for the U.S. 1 corridor.

The company announced its plans to build the distribution center in January and began researching sites in Delaware, Prince William and Stafford counties in Virginia, and Prince George's, Anne Arundel and Howard counties in Maryland.

Last month, Giant narrowed the choices to Howard and Stafford counties, but it was clear that Giant was leaning toward Howard. The company's option on the Guilford Road property - which required a large deposit - was widely reported.

Strategic location

It makes sense for Giant to build the distribution center in Jessup, because the Maryland site is more strategically located among Giant's 187 stores. The location keeps the trucks along the I-95 corridor, and the company has two other distribution facilities within 3 miles.

Giant Food has 108 stores in Maryland, 62 in Virginia and 17 in Washington, Delaware and New Jersey.

The move to upgrade and update its facilities is typical of what Royal Ahold is doing with all its subsidiaries. Stop & Shop, which operates in the Northeast, also is building a perishable-foods distribution center in Massachusetts, according to Jeff Metzger, publisher of Food World, a grocery trade magazine.

"What you're going to see is something a lot more efficient, and a lot more technology," Metzger said. "Since Ahold has taken over, they've been very aggressive in building new stores, making upgrades in technology and industry."

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