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Loblaw's deal could hit warehouse jobs

Loblaw Cos. Ltd. is in advanced negotiations to have Atlas Logistics Retail Services LLC operate a big distribution centre in Ajax, a move expected to affect up to 600 employees but one that will help the embattled grocer get a handle on its supply-chain woes.

Loblaw said yesterday that contract warehouse services provider Atlas Logistics, a division of the former Atlas Cold Storage, would run the 870,000-square-foot dry and perishable food distribution centre starting next spring. Atlas Cold Storage was taken over last year by Eimskip Holdings of Iceland.

"It's going to affect up to 600 employees from our Erin Mills facility and this is going to take place in the fall of `08," said Loblaw spokesperson Danielle Rouleau. "We're working with the union right now on arrangements."

No specifics were released on the contract, and Rouleau said it was too early to say what will happen to the workers at Erin Mills, an older warehouse just west of Toronto to be phased out.

The move is part of Loblaw's prolonged "transformation" of its supply chain, which included shutting six warehouses in Ontario and Quebec, with relocations to large new distribution centres. Loblaw has also moved its general-merchandise centre from Calgary to Brampton, transferring 125 people, hiring 65 more and shifting non-grocery distribution to a third-party complex in Pickering.

Rouleau said Loblaw will benefit from Atlas's expertise in scheduling distribution and transportation, which "can be very unpredictable."

"The battle for grocery share in ... all of Canada is going to be won in merchandising, not in operating warehouses," said Veritas Investment Research's Peter Holden. "So I think this is a good move for Loblaw, to have outsourced that to someone whose expertise it is."

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