Kroger to lay off 690 workers in 3PL switch
- Penske Logistics will take over Kroger's warehouse from SouthStar in Tarrant County, Texas, but one consequence of the switch will be the layoff of the warehouse's 690 workers, effective December 10, according to a report from Dallas News.
- Some of the workers will be rehired by Penske to work in the warehouse, but "the exact number remains to be determined at this time" according to an emailed comment from Penske to Supply Chain Dive.
- Most of the workers are represented by the Teamsters and United Food and Commercial Workers unions. The unions must reach an agreement with Penske before any workers are able to be rehired, according to Penske's email to Supply Chain Dive.
Human labor bearing the brunt of a business decision is nothing new — back in June, former third party distributors for Kellogg's threatened to sue the packaged food giant for terminating their contracts as Kellogg switched distribution models.
Kroger's move isn't as dramatic as Kellogg's, and the end goal appears to be a more streamlined supply chain: Penske is currently Kroger's logistics provider in many other locations across the U.S., so it makes sense that Kroger would seek uniformity.
Furthermore, Penske is a big-name brand with both strong history and credibility, and it's no secret that Kroger is racing to keep up with the logistical prowess of companies like Walmart and the new Amazon-Whole Foods union. Penske might just be able to give Kroger the leverage it needs to efficiently meet consumer demands in the e-commerce age.
But there's still a human cost. Mass layoffs never look good — even if it's a good business decision — and moves like this usually produce a backlash. That's something companies should always keep in mind: labor issues (especially when one's workers are backed by unions) can create severe supply chain havoc, so treating employees well — especially when layoffs are necessary — is always a priority.
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