Canadian procurement co-op Federated Co-operatives Ltd (FCL) will be making 200 staff redundant. The move follows an earlier decision by retailer Calgary Co-op to cease purchasing from FCL, which will result in a CA $400m reduction in FCL’s revenue.
In July Calgary Co-op announced it would be switching suppliers to the Alberta-based distribution arm of supermarket chain Save-On-Foods, a private company. The retailer said at the time that this would enable it to “better serve members and ensure long-term sustainability” while enabling it to add exclusive private brands to its range.
FCL says Calgary Co-op’s supplier shift means it will need to close its Calgary Food Distribution Centre in April next year, which is also the date the retailer will stop sourcing from the federation. Around 200 jobs will be eliminated as a result.
“We’re deeply saddened by this avoidable development,” Vic Huard, FCL executive vice-president for customer experience and Stakeholder Engagement, said in a statement. “In a city that’s already experiencing significant economic challenges, Calgary Co-op’s decision has led to more jobs being lost, and more families facing challenges. By aligning itself with a competitor, Calgary Co-op has directly and negatively impacted our employees, their families and Calgary’s economy.”
According to FLC, over the past five years (2014 – 2018), Calgary Co-op has received CA $186.4m in profit sharing from FCL.
“There’s been a Co-op warehouse in Calgary for 70 years, and we know that the negative repercussions of this decision will be felt for a long time in Calgary,” said Mr Huard. “Calgary Co-op members have contacted us asking how this decision to move to a competitor happened without Calgary Co-op’s members being consulted. That’s not something we can answer – it’s really a question they need to ask the CEO and board of the co-op that they, as members, own.”
With the closure of the Calgary warehouse products for other co-ops in Alberta and British Columbia will gradually be shipped through other FCL warehouses in Edmonton and Saskatoon.
“For now, we’re obviously focused on our employees and trying to give them as much time as possible to make transition plans since we know this puts them in a difficult spot,” said Mr Huard. “We’ll also continue to evaluate all aspects of our operations to determine if further steps need to be taken,” he concluded.
Calgary Co-op did not respond to a request for further comments.