US Foods Inc. said Wednesday it plans to close its distribution center in Anne Arundel County, a decision that could affect about 350 workers and eliminate the last vestige of what once was a major company in the Baltimore region.

The food distributor, which employs about 25,000 people nationwide, said it began informing employees and customers of "the tentative decision" to close the Severn facility this week. Those services would be moved to other locations, including a center in Manassas, Va.


The shutting of the warehouse would be the latest example of job losses from a once mighty Maryland firm, as businesses relocate, consolidate and cut costs. In another recent example, Diageo announced last month that it would close the bottling line at the former Seagram plant in Relay, eliminating about 100 jobs and ending liquor operations that stretch to the end of Prohibition.

Spokeswoman Michelle Calcagni said US Foods' business shrank in the Washington region over the past few years, leaving the firm with excess capacity.

"This tentative decision was made after a thorough review of our distribution network serving the Washington, D.C., metropolitan area revealed that we can provide the same high level of service to our customers in a much more cost-effective manner," she said.

US Foods, a subsidiary of Illinois-based USF Holding Corp., was previously known as U.S. Foodservice. Headquartered in Columbia, it was one of the Baltimore region's largest companies.

That firm, a division of the Dutch grocer Ahold, was rocked by an accounting scandal that surfaced in 2003. Five years later, after a turnaround, Ahold sold the company for $7.1 billion to private equity firms Clayton, Dubilier & Rice and Kohlberg Kravis Roberts & Co.

At the time, U.S. Foodservice employed more than 27,000, including about 500 in Columbia, but its workforce shrank as the headquarters was relocated to Illinois.

Richard Clinch, a Baltimore-based research economist for the Battelle Memorial Institute, said the possible closure speaks to Maryland's rising land and labor costs, as well as the difficulty of retaining ancillary locations once a headquarters closes.

"It points to the difficulty of Maryland keeping good, middle-skill jobs," he said.

If US Foods goes through with the closure, it would become at least the seventh significant employer to announce plans to shut Maryland locations this year — a list that includes Unilever in Baltimore; Safran Labinal Power Systems in Salisbury; and Diageo, according to a log of layoff notices and plant closures maintained by the state. Nine more companies have announced layoffs.

In Diageo's case, the company decided to consolidate bottling at a larger plant in Illinois despite having spent $50 million to upgrade the line at the Relay plant in 2012.

"You're seeing these middle-skills jobs sort of going away, and I don't think that's a trend that's going to slow down," said Daraius Irani, chief economist at Towson University's Regional Economic Studies Institute. "I think it's just going to accelerate, especially as firms try cost-cutting, consolidation, those sorts of things."

Republican Gov. Larry Hogan was elected last fall after promising to restore and retain jobs in Maryland.

"He's been governor for what, six months now, and we've had some really great wins and I think it's just going to continue," said Karen Glenn Hood, a spokeswoman for the Maryland Department of Business and Economic Development.

Saying that the state's labor market is improving, she cited the planned doubling of the workforce at mattress manufacturer Tempur Sealy in Hagerstown, the addition of 240 jobs at the solar installation firm Astrum Solar in Annapolis Junction and the retention of McCormick & Co. and its 900 headquarters jobs in Baltimore County.


Glenn Hood said the agency had not known of US Foods' plans. Officials have since reached out to the company, but incentives have not been discussed, she said.

"If we can do anything, we'll try," she said. "There is only so much we can do when it is a business decision."

Job losses already were clouding the horizon for US Foods workers.

In 2013, Sysco, a larger food distributor, announced plans to buy US Foods in a $3.5 billion deal. Sysco, which would assume US Foods' debt of $4.7 billion, said it expected about $600 million in annual cost savings within three to four years. Sysco employs about 1,000 people in distribution centers in Jessup and Pocomoke City.

Maryland, nine other states, the District of Columbia and the Federal Trade Commission have opposed the merger, saying it could raise prices by substantially reducing competition in this region and elsewhere.

Calcagni said the potential closure of the Severn facility is unrelated to the proposed merger.

US Foods also cited a loss of business in May as it announced plans to close one of its Florida facilities, with layoffs of more than 200 workers expected in early August.

The firm had not filed a formal notice with the state about closure of the Severn plant, which employs about 350 people. Calcagni said it is too early to provide a timeline or say how many workers would be affected by a closure.

The company said it is meeting with union officials and other stakeholders about its nearly 350,000-square-foot base on Telegraph Road.

About 118 members of Teamsters Local 355 work at the facility, said David White, secretary-treasurer for the union. White said representatives received a phone call from the company about the possible closure but are waiting to learn more. He declined to comment further.

Kirkland Murray, president and CEO of Anne Arundel Workforce Development Corp., said his staff is planning to meet with US Foods to learn more about who might be laid off in hopes of connecting them to new positions.

Hiring has picked up since the recession, with demand for tech workers and commercial drivers, he said, though he did not have a sense of how easy it would be to place anyone affected by the US Foods closing.

"Until we have a better understanding of what the workforce looks like, that's hard to tell," he said.