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National Retailers

MEC to close Ontario distribution center, enact more layoffs

These cost-saving moves come just months after the Canadian retail chain was sold to a U.S. private equity firm.

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More layoffs are looming at the Canadian outdoor retail chain Mountain Equipment Co-op, which plans to close its distribution center in Brampton, Ontario, next month, the company confirmed to Outside Business Journal on Monday.

The Brampton Guardian first reported last week that MEC, which was sold last year to the U.S.-based private equity firm Kingswood Capital Management, will close the Brampton facility “by the end of May, eliminating dozens of jobs.” 

According to a press release issued by the United Steelworkers union (USW), “about 60 unionized employees and an unspecified number of other jobs at MEC’s Brampton distribution centre have been put on the chopping block by U.S.-based Kingswood Capital Management.”

MEC confirmed the news in an email. Company spokesperson Penny Evangelakos wrote, “The decision was made to change our eastern distribution operations because the facility was not adequate for our current and future needs. As part of our greater distribution solutions, a new Ontario distribution partner allows us to respond and adapt to the ever-changing demands of retail. We are now in a better position to meet customer and member expectations by improving the shipping experience. Our new order-to-pick timeline will be same-day versus the current, which ranges from one to five days at the Eastern Distribution Centre.”

MEC will now outsource distribution and ecommerce to non-union workers, the union said. 

“When Kingswood’s acquisition of MEC was announced, the co-operative’s employees and its five million members across Canada were told the new American owner would save jobs, was committed to ‘honoring the MEC ethos’ and had ‘tremendous respect for those values’ that were built over 50 years,” Marty Warren, USW director for Ontario and Atlantic Canada, said in a press release. “MEC workers and their families in Brampton believe the new owner should make good on those commitments. MEC should invest in its Brampton employees and in its distribution and e-commerce operations in the community.”

Warren added in the release that “Kingswood disclosed its intention to close the Brampton facility as the union and its members were preparing for pending negotiations on a new collective agreement.” He said the existing collective agreement expires on June 30. Meanwhile, he noted, the country is still reeling from the economic ravages of Covid-19.

“The timing and the callousness of dropping this bombshell on loyal employees—that they are about to lose their jobs in the middle of a pandemic—is very disconcerting, to say the least,” Warren said. “We’re calling on the new MEC owners to do the right thing by negotiating a new agreement with their workers and investing in the community.”

MEC pledges support to terminated workers

The move comes about six months after sweeping changes took place in MEC’s ownership structure and business model. 

Last September, MEC announced that its board of directors had voted unanimously to sell to Kingswood Capital Management, a private equity firm based in Los Angeles. Though MEC members formed a grassroots effort  to save the chain, a British Columbia supreme court justice greenlighted the sale to Kingswood, whose portfolio also includes online auto retailer AutoAnything and furniture and home décor chain World Market.

A month after the announcement was made, MEC sent layoff notices to dozens of employees, informing them of immediate termination without severance pay. According to MEC’s board of directors at the time, 15 percent of current active staff members were slated to lose their jobs following the sale, while one store out of 22 was set to be shuttered.

After this latest announcement and staff reduction, MEC said it is working to support the workers affected by the layoffs. “While the majority of our distribution workforce will be retained for the transition period, terminating roles is never taken lightly and we are committed to supporting those impacted,” the company said.

Evangelakos said MEC is taking the following actions to assist those affected by the decision:

  • Offering all impacted staff career transition resources, leveraging our online learning platform to enhance skills in areas of job search, resume writing, and interview skills.
  • Sharing a relevant list of local support, including employment resource centers, temporary placement agencies, and local employment services.
  • Providing all impacted staff with reference letters and will also provide hours of paid time off from work to attend interviews.
  • Securing a FESAP counselor, who will come to the EDC in the next few days and connect with staff who have questions and want a better understanding of the support available to them.