GRAND UNION DEAL TO HIKE C&S SALES $500 MILLION

LISA A. TIBBITTS

BRATTLEBORO, Vt. -- C&S Wholesale Grocers here will add approximately $500 million to its annual volume when it begins supplying 103 stores operated by Grand Union Co. early next year.

Grand Union Co., Wayne, N.J., announced last week that it intends to close two distribution centers -- a 650,000-square-foot facility in Mount Kisco, N.Y., and a 250,000-square-foot facility in Carlstadt, N.J. -- and shift the facilities' supply responsibilities to C&S.

The move increases the list of supermarket chains supplied by C&S, which is expanding its perishables warehouse to accommodate the increased

volume, said spokeswoman Kim Keyes. The move also enables Grand Union to free up cash flow that could be used for lowering retail prices, analysts said.

Joseph J. McCaig, president and chief executive officer of Grand Union, said the chain could save as much as $14 million each year for the next seven years by closing the two sites.

This means that C&S will become the retailer's primary supplier as Grand Union discontinues self-distributing food products. When the switch to C&S is completed, Grand Union will self-distribute only general merchandise and health and beauty care items through a warehouse in Montgomery, N.Y.

Grand Union is one of several new customers C&S has attracted over the past year and its sales have improved dramatically. For the fiscal year ended Sept. 30, C&S's sales jumped nearly 40% from $1.8 billion to $2.5 billion.

C&S first began supplying Grand Union in June when it picked up the 127 stores in the chain's Northern region division after Grand Union decided to close a distribution center in Waterford, N.Y.

In November 1994, the New England wholesaler began supplying stores along the East Coast operated by Wal-Mart Stores, Bentonville, Ark. In January, C&S began supplying stores operated by Edwards Super Food Stores, Windsor Locks, Conn.

The final decision to shutter the two distribution centers came after two months of negotiations with Teamsters Locals 560 and 863, which represent employees in Carlstadt, and Local 456, which represents employees in Mount Kisco.

Grand Union approached the unions to attempt to renegotiate the terms of their agreements. But the unions "failed to even submit a proposal aimed at saving the jobs involved," McCaig said in a statement. Together, the two distribution centers employ about 450 people.

"Therefore, when weighing our options, we could not ignore the tremendous benefits and efficiencies presented by the C&S proposal as we work to maximize the future growth of our company," he continued.

Union representatives contacted by SN claimed they did not have adequate time or complete data on C&S's offer to prepare a proposal.

"It was clear to us that they weren't serious [about negotiating] from the beginning, that they just wanted to get out of the distribution business," said Sandy Pope, an organizer with the International Brotherhood of Teamsters Warehouse Division, Washington.

Keyes of C&S said that efficiencies such as modern warehouses are the reasons her company is able to offer such a cost savings to Grand Union.

"Before adding this new [portion of the Grand Union business], we were supplying over 800 grocery stores with products, which is significant buying power," she told SN.

The wholesaler's trucking system is also a part of its efficient operations. In addition, C&S, with some 2,000 employees, is a non-union company.

Grand Union will be supplied out of C&S's own warehousing facilities in New England, Keyes said. C&S operates grocery and freezer facilities here and another grocery facility in Hatfield, Mass.

In addition, C&S is building a 300,000-square-foot freezer facility in Westfield, Mass. The company is also expanding a perishables facility in North Hatfield, Mass., by 110,000 square feet. The 335,000-square-foot perishables distribution center was completed in July 1994 but the increased volume made it necessary to build this addition.

The first layoffs at the Mount Kisco and Carlstadt distribution centers will take place Jan. 19 and the two centers will close their doors Feb. 21, he said.