Economic Treason:

Case Study of C&S Wholesale Grocers

and the Destruction of New Jersey Jobs

A report to the Commission of Inquiry into the Impact of Predatory

Business Practices on New Jersey Employment and Economy
 Economic Treason:
Case Study of C&S Wholesale Grocers
and the Destruction of New Jersey Jobs

A Report to the Commission of Inquiry into the Impact of Predatory

Business Practices on New Jersey Employment and Economy

This independent commission was formed to evaluate the economic and social
impact of C&S Wholesale Grocers’ decision to close its Woodbridge Logistics
facilities and Grocery Haulers, Inc, and relocate its New Jersey-bound grocery
distribution out of state.

We commissioned the enclosed report by the Center for Labor & Community
Research, a Chicago-based non-profit with expertise in economic analysis and research.

Commission of Inquiry Members:

Assemblyman Craig J. Coughlin (D)

State of New Jersey, 19th Legislative District

Reverend Monsignor John J. Gilchrist

Pastor Emeritus of Holy Cross Church, Harrison, NJ

Professor Norman Glickman

University Professor, Center for Urban Policy Research, Edward J. Bloustein
School of Public Planning & Public Policy, Rutgers University

Mayor John E. McCormac

Woodbridge Township, NJ

Professor William Rodgers, III

Professor of Public Policy and Chief Economist, Heldrich Center for Workforce
Development, Edward J. Bloustein School of Public Planning & Public Policy,
Rutgers University

Carl Spataro
Director of Economic and Business Development, County of Middlesex

Senator Joseph F. Vitale (D)

State of New Jersey, 19th Legislative District

Economic Analysis and Report by:

3411 W. Diversey Ave., Suite 10 • Chicago, Illinois 60647

 Commission of Inquiry into the Impact
of Predatory Business Practices on
New Jersey Employment and Economy
C&S Wholesale Grocers, the country’s largest grocery
distributor and exclusive grocery supplier to A&P
supermarkets, announced on December 3, 2010,
that it plans to close its Woodbridge, N.J. operations
by February 5, 2011 and put more than 1,300 New
Jersey workers on the unemployment line.
In response to the announcement, this Commission
of Inquiry was formed to provide an independent
assessment of the economic impact of the closure
and out-of-state relocation of C&S Wholesale Gro-
cers’ Woodbridge operations on New Jersey’s econ-
omy. An economic impact analysis of the C&S
closure on the local community was completed by
the Center for Labor and Community Research
(CLCR). Founded in 1982, CLCR has nearly 30 years
of experience in economic research. CLCR utilized
IMPLAN economic modeling software to calculate
the impact of the C&S closure. The IMPLAN soft-
ware is based on U.S. government data and is con-
sidered one of the most accurate tools for
local-level economic modeling.
The report provides clear evidence that the C&S
closure would have a severe impact on multiple
sectors of the local economy and negatively im-
pact area businesses and employment.
C&S plans to move A&P distribution hundreds of
miles away to out-of-state warehouses and supply
New Jersey shoppers from these locations, all while
devastating the New Jersey economy. The closure
of the C&S facility will extract millions of dollars
from the local economy as warehouse workers and
truck drivers at C&S and trucking firm Grocery
Haulers, Inc. lose their jobs. Yet the impact of these
layoffs will extend well beyond these 1,300 workers;
it will deal a serious blow to the economies of Essex,
Union and Middlesex counties.
The economic impact analysis shows that the C&S
facility closure will, in 2011 alone, cause:
• 2,114 job losses, including 818 additional job
losses in other sectors in the local economy;
• $129.9 million in lost sales for local businesses;
• $48.9 million in lost profits for local businesses;
and
Executive Summary
• A tax loss of $11.7 million for the state of
New Jersey.
New Jersey and Essex, Union and Middlesex coun-
ties cannot afford the C&S closure. The three coun-
ties have already shed 56,395 jobs in the last three
years. The closure will also have a long-term impact
on local businesses and public finances. Local com-
munities will bear the burden of additional job
losses; reduced business revenues; loss of govern-
ment revenue; and increased government expendi-
tures on unemployment benefits.
The potential impact on the New Jersey housing
market is also troubling. As the impact analysis
shows, the C&S closure will hit real estate estab-
lishments hard, causing a $12.7 million loss in rev-
enue in the tri-county area. New Jersey’s housing
market is already one of the 10 most distressed in
the nation; C&S’ closure could further depress the
regional housing market, harming the financial
prospects of thousands of homeowners.
C&S’ decision to rapidly and drastically change the
distribution model for its largest customer, A&P,
was announced days before A&P filed for bank-
ruptcy protection. Moving distribution out of state
undermines the reliability of the A&P supply chain,
thus also hampering A&P’s restructuring.
C&S’ decision also represents a worrisome trend,
as it threatens New Jersey’s historic position as
a leader in the warehousing and distribution
industries, due to its strategic location and
transportation infrastructure. New Jersey’s
Council of Economic Advisors has identified
transportation and logistics as one of the key
sectors of the state’s economy.
In light of these findings and considerations, we rec-
ommend a 90-day moratorium on the closure of
C&S’ Woodbridge facilities, so that C&S may consult
with A&P, the state of New Jersey, local govern-
ments and employee representatives to explore fea-
sible alternatives to the facility closure, and to
ensure the long-term viability of the distribution
model; local economic development; and safe and
reliable access to food for New Jersey residents.
The Economic Impact of Closing C&S
Woodbridge Logistics Facilities and
Grocery Haulers, Inc.
The Center for Labor and Community Research has examined the
economic impact of closing the C&S Woodbridge Logistics facilities and
Grocery Haulers Inc. C&S Wholesale Grocers, the leading New York area
grocery distributor, announced these closings that will impact
Middlesex, Union and Essex counties in New Jersey.
To determine the impact of the Woodbridge facilities’ closure,
including all the below projections and estimates, CLCR used the
IMPLAN 2009 Middlesex, Union and Essex counties input-output model
software developed by the U.S. Forest Service and maintained by the
Minnesota IMPLAN Group.
All economic development has a “multiplier” effect. This is because
business activity, such as a warehousing, requires purchases from
numerous other industries, which in turn buy goods and services from
still other businesses (see Figure 1). Also, the workers and small business
owners who receive income by working for and serving that business
activity go out and buy goods and services.

“Multiplier Effect” Labor Demand Cycle

Manufacturer
Figure 1

Retailer Supplier

Distributor Warehouse

So any major event, such as a closing, has a much greater impact on

the immediate geographic area beyond just the stakeholders within the
business. The closure of the Woodbridge facilities would have a
profound impact on the lives of all the residents living in Middlesex,
Union and Essex counties in addition to the people who work there.
The following data were provided to CLCR by the company and by
the Teamsters Union, which represents workers at C&S and GHI:
The closure would directly affect 967 workers at Woodbridge and
329 truck drivers at GHI, excluding management at both sites. The
annual average earnings for the warehouse workers is $43,900, and
for the truck drivers, $60,191, excluding pension contribution from the
company. Both numbers were lower than the industry average in the
three-county area, probably because there were a large number of new
hires at the entry pay rate in both facilities in recent years.
Based on the above information, CLCR has developed the following
estimates on the economic impact of closing the Woodbridge facilities
on the economy of Middlesex, Union and Essex counties:
 $170.1 million Business Sales Loss
C&S does not provide actual sales figure for both facilities. However,
direct business CLCR is able to estimate the direct business loss of $170.1 million based
on the warehouse industry average for sales per worker in 2009 in the
loss in the three-county area. This estimate is very conservative because union
three-county workers usually are more productive than nonunion workers, and a large
facility like Woodbridge Logistics tends to have a relatively high level of
area mechanization, which results in higher productivity.
In addition to this direct loss in output, the closure would also create
a decline in sales for the suppliers and the service providers to both
sites. For example, equipment suppliers would sell less equipment,
local office suppliers would sell less paper products and independent
contractors would lose maintenance contracts. As a result, those
working for these suppliers and service providers could feel the pinch
of shrinking business at their companies. As a consequence, these
$129.9 million workers would themselves begin to consume less.
CLCR estimates this trickling down, chilling effect could amount to an
in lost sales additional induced and indirect loss of $129.9 million in sales to local
businesses (see Figure 2).
for local
businesses Output Impact of Closure of Woodbridge
Logistics and Grocery Haulers (in Millions)

65.6
Figure 2

Induced

Total
170.1 Direct
$300
64.3
Indirect

Job Loss
In addition to the direct loss of 1,296 jobs at the Woodbridge facilities,
CLCR projects there would be additional loss of 818 jobs (see Figure 3)
because of the trickling down impact of the closure, resulting in a total
2, 114 total loss of 2,114 jobs.
The largest number of job losses would be distributed in the
jobs lost following industries: real estate establishments, 83 jobs; employment
services, 57 jobs; other warehouse companies, 56 jobs; and food
services and drink places, 40 jobs.

Job Impact of Closure of Woodbridge

Logistics and Grocery Haulers

426
Figure 3

Induced

Total
1,296
2,114 Direct
392

Indirect
 Income Loss for the Self-Employed
As all other industries, the warehouse industry supports a large number
of independent contractors, such as construction workers, accountants,
electricians, etc. Closure of Woodbridge facilities would create a loss of
business to these self-employed people. CLCR projects the loss to these
people would amount to $10.2 million, mainly affecting the following areas:

• Maintenance and repair construction, non-residential and residential;

• Real estate establishments;
• Cable and other subscription programming;
• Food service and drink places; and
• Security and commodity investment companies.

$48.9 million Corporate Profit Loss

The closure definitely pulls down the entire business world. Because of the
profit loss for closure, other businesses would suffer shrinking profits. CLCR estimates
the owners of the companies located in Middlesex, Union and Essex
local counties will see a decline of profits by more than $48.9 million, mainly
businesses in the real estate, rental, telecommunication, and food and drink services.

Tax Revenue Loss for Federal and

State Government
$34.6 million The closure of Woodbridge facilities would also create a loss of tax
in lost income revenues for both federal and state government. The federal government
tax loss could amount to $22.9 million, including $10.3 million of Social
for federal Security tax, $9.2 million of income tax, $1.9 million of corporation income
tax and $1.1 million on indirect business taxes and fees.
and state For the state of New Jersey the tax loss could be $11.7 million, including
$3 million on household income tax, $6.8 million on indirect business taxes
governments and fees and $1.7 million of corporation income tax.
All these numbers do not include the possible increase of expenditures
for both federal and state government. Because of the job losses more
people would seek financial aid from government. Given the current job
market situation, they might depend on unemployment checks for a
considerable period of time. Families may have to use other safety net
programs such as Temporary Assistance for Needy Families (TANF) or
State Children’s Health Insurance Program (SCHIP).

Conclusion
C&S’s decision to close the Woodbridge facilities would have a far larger
economic impact than just on the bottom line of the company. Mitigation
of the burden of plant closure to the local communities and government
should be taken into consideration in the closing decision-making process.