United Natural Foods, Inc., the $6 billion-strong natural foods distribution firm set to open in Gilroy within weeks with promises of upwards of 500 jobs will instead delay the start of business until February and lay off dozens of workers, some of whom began work today.
In a confidential note emailed to Gilroy Mayor Don Gage, following a phone conversation, and shared with the city council this afternoon, July 21, Sean F. Griffin UNFI’s Chief Operating Officer, said “Our people always matter in our decisions and this is what makes this one so difficult, however the business dynamics require it.”
Griffin said the decision is “due to a just announced loss of a key customer in our NorCal market, Safeway.”
On Wednesday, Griffin said from his Rhode Island office that UNFI and Safeway had worked together since 2011, but recently “…reached a point where it was in the interest of both organizations to part ways.”
He confirmed work will continue on building and equipping the Gilroy plant with an eye toward opening in February and a “go-live” in the Spring of 2016, meaning that’s when the plant goes into full operations.
Gage called it a “temporary setback” and lamented that jobs will be lost. But he stressed Griffin’s commitment to giving those laid off “first priority” when the firm begins hiring again.
“It’s understandable when something like that happens, they lost a mayor customer and have to reposition the company,” Gage said, adding “There is no way they are going to leave Gilroy, they’ve put a lot of money into that building.”
Gage said Griffin assured him the plant would open in February.
In his note to Mayor Gage, Griffin he went on to say, “UNFI is proud of being located in Gilroy and we have big plans to grow the business and we consider this a delay only.”
On Wednesday, the executive said, “Our reception in the City of Gilroy has been nothing short of spectacular, adding that the number of people who sought jobs with the company “really blew us away.”
In a couple of years, this will be looked back on as a non-event,” Griffin said.
After more than a year of construction, the firm is nearing completion of a 400,000 square foot regional distribution hub that would be expanded to 700,000 square feet as the business grew, it has told Gilroy city and business leaders, who have lauded the company and its plans.
UNFI provides natural foods to grocery chains such as Whole Foods, Costco and Wild Oats. It’s the largest publicly traded wholesale distributor of natural, organic and specialty food in North America.
In the note, Griffin wrote that 38 employees already hired, most of whom began work today at the sprawling plant in the McCarthy Business Park near the intersection of highways 101 and 152, will be “released Friday with a two week severance” payment.
Other new workers who recently received and accepted job offers from UNFI and have given notice to current or former employers “will be provided a two week ‘good will’ payment,” Griffin told Mayor Gage in the note, stamped 2:38 p.m. July 21.
In early June 84 Gilroyans were among 140 job seekers offered employment with UNFI, which predicted about 500 jobs when the plant was in full operation.
The new facility is part of the firm’s plan to expand into the Bay Area and build upon its distribution network in California, which now includes similar facilities in Rocklin and Moreno Valley. With the Gilroy plant’s completion, the firm will have 18 such facilities in the country.
Construction on the Gilroy plant began in June 2014. The official opening had been planned for early August.
