FreshDirect is an online grocer that delivers to residences and offices in the New York City metropolitan area. It also offers next-day delivery to much of New York City and parts of Nassau and Westchester Counties, New York; Fairfield County, Connecticut; Hoboken, Newark, and Jersey City; and Philadelphia, Pennsylvania. The company was founded by former CEO of Fairway "Like No Other Market" Joe Fedele and Jason Ackerman, a former investment banker who specialized in the grocery industry. FreshDirect custom-prepares groceries and meals for its customers, a manufacturing practice called Just In Time that reduces waste and improves quality and freshness.
Introduced to the New York market in 2002, its business grew popular for its convenience, fresh food and comparatively lower prices than many Manhattan supermarkets although less competitive elsewhere. The service is popular for its distribution of organic food and locally grown items, as well as items that consumers see in supermarkets daily. It also delivers numerous kosher foods and is recognized by the Marine Stewardship Council as a certified sustainable seafood vendor.
FreshDirect uses SAP AG software to process thousands of orders placed on its website every night. Orders are dispatched to the kitchen, bakery, deli as well as fresh storage rooms, produce ripening rooms and production areas within the company's refrigerated facility. All order components are custom-cut, packaged, weighed and priced. In the case of dry goods or frozen foods, items are picked from storage before being placed inside bins that travel along conveyors to the sorting area. There, products in a customer's order are scanned and gathered in corrugated fiberboard boxes. The boxes are labeled, recorded and loaded into refrigerated delivery trucks.
The company is based in a 300,000-square-foot (28,000 m2) building in Long Island City and is one of the largest employers in the area. Though the website and plant processes were in development for several years before its public launch, the company made its first deliveries to Roosevelt Island on July 11, 2002. FreshDirect has since expanded service to New York, Kings, Queens, Bronx, Nassau, Suffolk and Westchester counties in New York, as well as Northern New Jersey. The company now has almost 2,000 employees.
In 2011, UK retailer Morrisons bought a 10% stake in the company in order to learn about online shopping in order to launch its long awaited online shopping service in the UK. In March 2014 Morrisons sold their 10% stake in the company, stating they no longer needed the company.
Employees at FreshDirect have made several attempts to unionize. In 2004 and 2005, Teamster Locals ran two unsuccessful campaigns to organize FreshDirect's 500 delivery workers. Following these failed campaigns, Local 348S of the United Food and Commercial Workers ran a successful organizing drive in 2006 and subsequently negotiated a contract for FreshDirect's drivers. Although Anthony Fazio Jr., the UFCW local's secretary treasurer, said his union waged a tough fight to win recognition, some plant workers reported that company officials had openly encouraged workers to sign up with 348S. Local 348S has been accused by other unions of providing "sweetheart contracts" to businesses.
The contract negotiated for the drivers includes no minimum starting wage but has a maximum that caps the highest wages the company must pay at $12 to $18. Raises total $2.55 over the life of the 5-year contract.
In the summer of 2007, Local 805 of the International Brotherhood of Teamsters began signing up workers at FreshDirect's warehouse in Long Island City. UFCW Local 348-S subsequently announced their intention to organize the warehouse workers. 348-S later filed for an election, which was held on December 22 and 23, 2007. Approximately 530 out of the warehouse's 900 employees voted in the election. Of those that participated, 426 workers voted against joining any union, 73 workers voted to join the Teamsters, and 31 workers voted to join UFCW 348-S.
The election, however was mired with controversy. Days before the election, FreshDirect released a memo to its employees asking them to verify their eligibility to work in the U.S., saying it was responding to an audit by federal immigration authorities. As a result, 100 to 300 employees were dismissed, suspended or quit just days before the vote was scheduled.
Union activists and some New York City elected officials have accused FreshDirect and the I.C.E. of intentionally creating an atmosphere of fear and intimidation. FreshDirect has publicly denied this accusation; a company spokesperson noted that some immigrant employees opposed unionization, and suggested that union had called immigration authorities to drive off workers they had failed to win over.
Proposed move to the South Bronx
In 2012, the company planned to move its main distribution hub from Long Island City to the Harlem River Yards in the Bronx. Community organizations charged the city and FreshDirect with failing to conduct a sufficient environmental review and transparent community outreach. A lawsuit and boycott campaign were initiated to stop the relocation.
The company planned to invest $112 million of its own capital with roughly $130 million in tax breaks and grants from the borough, city and state, claiming the project would create up to 1,000 permanent jobs, with targeted hiring for Bronx residents. It had recently expanded its delivery service to the borough and launched a pilot program that allows some Bronx customers to pay with food stamps. Yet, critics of the proposed move have argued that FreshDirect's claim of future job creation was simply a promise, not backed by any legally binding agreement to create jobs. In an audit, then-comptroller John Liu supported the group's claim by establishing that EDC subsidizes "empty job promises."
Following Hurricane Sandy, the company placed approximately 60 of their damaged trucks on the proposed lot, inciting outrage among Bronx locals who claim FreshDirect "feel[s] that our waterfront is a junkyard." The next month, in November 2012, owner of the Gristede's supermarket chain John Catsimatidis, teamed up with the New York Association of Grocery Stores, the National Supermarket Association and the Bodega Association to join the opposition, claiming the company was getting unfair benefits from the city.
Locally elected representatives, among them councilmembers María del Carmen Arroyo and Melissa Mark-Viverito, New York State Senator José M. Serrano, US Congressman José E. Serrano, Comptroller Liu and then-NYC Public Advocate Bill de Blasio, all publicly came against the proposed move, expressing concerns about the use of public monies to subsidize a multi-million dollar private enterprise and the potentially negative environmental impacts of the move on the Mott Haven area in the South Bronx. Mr. Liu, then-Democratic candidate for NYC Mayor told the press that FreshDirect was holding the city 'hostage' with the proposed move.
Both during his primary campaign for NYC mayor, and after winning the candidacy of the Democratic party, then-NYC Public Advocate Bill de Blasio, repeatedly criticized Fresh Direct's proposed relocation to the South Bronx. Now that he is mayor, however, it is unclear whether he has any power to stop the company. Opponents, which now also include the Natural Resources Defense Council and Latino Pastoral Action Center, in early December 2013 appealed the Bronx Supreme Court decision to allow the company the large sums of subsidies and grants, and nine protestors were arrested in Harlem River Yard on March 22, 2014 in a demonstration against the city's deal with the company.
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