Sonwil Distribution Corp. has lost a major customer contract with vacuum-cleaner manufacturer Dyson Corp., after 22 years of managing the British company's U.S. refurbishment and fulfillment business out of Buffalo.
Dyson is moving the operation to Mexico, where the labor costs are cheaper, despite months of efforts by Sonwil to retain the business.
As a result, according to a notice filed with the state Department of Labor, 180 permanent full-time employees and 57 temporary workers will lose their jobs between Aug. 31 and Sept. 30, at three different facilities run by Sonwil in Buffalo, Depew and Orchard Park.
However, company President and Chief Operating Officer Eric Enciso said officials expect to retain "most" of them in other positions at the company, although he could not yet give a precise figure.
"That’s an effort that’s ongoing right now," Enciso said. "We're all in a labor crisis. We understand how Covid-19 has impacted the labor market. So it's very important for us as a company to retain the highest percentage of employees."
A decade after building a massive warehouse at Buffalo Lakeside Commerce Park, Sonwil Distribution Center is preparing to start on its second.
Still, the loss is a blow to Sonwil, a fast-growing privately-owned company that has been based in Buffalo for 75 years. And it comes even as the company is seeking to expand locally with yet another warehouse in South Buffalo, at the Buffalo Lakeside Commerce Park.
Sonwil provides national third-party logistics services – including warehouse facilities, transportation, distribution, fulfillment and technology – for major companies across the country, such as General Mills, Georgia-Pacific Co. and Nestle-Purina, among others.
The company operates facilities nationwide, including in Buffalo, Depew and Orchard Park.
It has managed Dyson's reverse logistics manufacturing operation in Buffalo for more than two decades, but the British company was increasingly concerned about rising costs, and saw cheaper labor in Mexico as a solution.
"They were looking at ways to drive productivity and efficiency on their side," Enciso said. " It's an unfortunate event, and it was out of our hands."
Enciso said Sonwil "had conversations with them to retain the business" over the past several months, but "we were unsuccessful."
"We certainly took a hard look at our operation in areas where we could be more competitive to retain the business in Western New York," he said. "We put pencil to paper to put together a package, but it’s difficult to compete with overseas labor rates."
According to the WARN notice, the layoff will affect:
• 55 permanent and nine temporary workers at 315 Ship Canal Parkway in Buffalo.
• 46 permanent and 23 temporary employees at 2475 George Urban Blvd. in Depew.
• 79 permanent and 25 temporary employees at 100 Centre Drive in Orchard Park.
Enciso said the Orchard Park and Buffalo facilities handled production, while Depew took care of fulfillment.
He said the company intends to shift as many of the affected employees as possible to other Sonwil Distribution jobs outside of the Dyson contract, noting that the staff includes trained warehouse and office workers, supervisors and inspectors.
Privately owned Sonwil plans to construct a second major warehouse at the Buffalo Lakeside Commerce Park.
Meanwhile, Sonwil is proceeding with plans to construct a new 335,000-square-foot warehouse and distribution center at 283 Ship Canal Parkway, adjacent to the existing facility. The company is seeking sales, mortgage recording and property tax breaks from the Erie County Industrial Development Agency to support the $52.3 million project .
The ECIDA held a public hearing in April on the request, but the company, city and county are now asking for a non-standard payment-in-lieu-of-taxes arrangement over 15 years that would split the tax payments to support the Buffalo Brownfield Redevelopment Fund.
That fund is administered by the Buffalo Urban Development Corp., which owns and redeveloped the Buffalo Lakeside Commerce Park, and is used for infrastructure costs related to the land. Under the proposed agreement – which mirrors one from 2008 for 315 Ship Canal – half of Sonwil's tax payments would go to the brownfield fund, while the other half would go to the city and county.