Posted on 02/27/2003 5:39:23 AM PST by Theodore R.
By CHRIS VAN WAGENEN A-J BUSINESS EDITOR
Fleming Companies confirmed Wednesday that it will close its distribution center in Lubbock, costing the jobs of nearly 200 workers.
The Lewisville food wholesaler told employees the plant will close in May.
"After a careful analysis of our supply system, we've made the decision to consolidate this operation. Right now our target date to close is on or about May 5," said Fleming spokes man Shane Boyd.
Market Lubbock Inc., which was notified about the development late Tuesday, said it is negotiating with Fleming for reimbursement of a substantial portion of a $1 million incentive payment to the company. The payment was made with the understanding that Fleming would create 100 new warehouse, sales and management jobs.
Fleming's bombshell will result in a systemwide cut of 1,800 jobs, including 150 workers in Lubbock, along with another 40 contracted truck drivers.
The company is arranging severance packages for the affected workers, Boyd said. He said he doubted that other opportunities within Fleming exist, given the fact the wholesaler is scaling back operations.
Kenny McKay, director of business retention for Market Lubbock, said Fleming in formed the city-appointed economic development corporation about the closure at the same time it released its layoff news.
Fleming, which operates a 750,000-square-foot distribution center at 408 E. 50th St., had recently consolidated operations from another warehouse that had been leased south of the property at 5824 Elm Ave.
Randy Egenbacher, a vice president/partner with Westar Commercial Realty, said his company is working on behalf of a Chicago client that had leased a 400,000-square-foot warehouse to Fleming up until November.
"We're talking to a lot of national companies about that property right now. Hopefully we can get someone in there," Egenbacher said.
Boyd said Fleming, which owns its warehouse on East 50th Street, has not decided what to do with the building. The Lubbock Central Ap praisal District values it at $3.7 million.
As a result of Fleming's action, Lubbock's various taxing entities will lose more than $147,000 in annual income.
Boyd said Fleming will consolidate its existing grocery operations at its main warehouse in Lubbock to distribution centers in Phoenix and Garland.
Fleming's departure from Lubbock and the loss of jobs falls on the heels of problems at Covenant Health System, which has laid off 218 workers since December.
Eddie McBride, president of the Lubbock Chamber of Commerce, said he was stunned to hear the news.
"Obviously this is a blow to lose someone of Fleming's stature, but I don't think there's anything we can do," he said.
McKay said workers affected by Fleming's decision have one thing going in their favor. "Lubbock is a strong distribution center. We're going to work hard with Fleming to help these people find jobs," he said.
Fleming had actually engineered a comeback in Lubbock after being dealt a substantial setback three years ago by United Supermarkets, which moved into self-distribution.
The company bounced back after inking a $1 billion deal to supply Kmart's grocery department.
Fleming then made a push into the grocery business, initiating what it described as "price-impact" stores in several states, including Rainbow Food stores that the company opened last year in Lubbock and Amarillo.
Boyd said there are no immediate plans to close the Rainbow Food store in Lubbock, calling it a separate issue.
Fleming's Lubbock division heavily banked on making an impact as a supplier to convenience stores, signing contracts with chains in New Mexico and Oklahoma.
It furthered that process by acquiring the bankrupt assets of Albuquerque-based Furr's Supermarkets, which it sold to other concerns, for which it became a supplier.
But the fall of Kmart, and a subsequent decision to break ties with the retailer, had a substantial financial impact on the company systemwide.
Fleming announced Tuesday that it will take a pretax charge of $290 million in response to ties cut with Kmart, which had been in bankruptcy for the past year.
Fleming also announced it is the target of a Securities & Exchange Commission probe that is examining company accounting and sales reporting.
cvanwagenen@lubbockonline.com 766-8744
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