U.S. Foodservice to Leave Columbia

Monday, February 2, 2009

U.S. Foodservice will shut down its office and former headquarters in Columbia by the end of July, affecting about 150 jobs.

The food distributor said it will consolidate the office with its new headquarters in Rosemont, Ill., and a processing center in Phoenix. Some Columbia employees will be given an option to relocate, the company said. Those who do not will receive severance and retention packages.

"The changes respond to the pressures customers and suppliers are experiencing from unprecedented economic conditions," according to a company statement. "That means running the business with faster response times for customers and with less expense."

U.S. Foodservice had been one of Maryland's largest public companies and among a handful with headquarters in Howard County. The company was bought in 2000 for $3.6 billion by Royal Ahold, parent of grocery chain Giant Food.

But the deal turned sour in 2003 when Ahold disclosed that it had inflated earnings by $800 million at U.S. Foodservice. Ahold later was forced to pay $1.1 billion to resolve shareholder lawsuits.

The scandal forced Ahold to slash costs and jobs. About 150 of the 600 employees then working at U.S. Foodservice's headquarters were let go in 2005, and the office has been shrinking ever since. Two years ago, Ahold sold the company for $7.1 billion to New York private-equity firms Clayton, Dubilier & Rice and Kohlberg Kravis Roberts, which moved the headquarters to Illinois.

Still, Dick Story, chief executive of the Howard County Economic Development Authority, said U.S. Foodservice remained a significant presence in the area because it employed high-ranking executives and donated to several nonprofit groups.

"We are sorry to see them go," he said. "They've been an important part of Howard County."

Pam Klahr, president of the Howard County Chamber of Commerce, said the county is helping employees who remain in the area find jobs.

"At a time like this, we all need to help each other," she said.

U.S. Foodservice also employs about 560 at its distribution center in Severn, Md., and the company said they will not be affected by the closure of the Columbia office.

-- Ylan Q. Mui


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