Ferndale Foods is consulting with staff at its Erith factory in Kent to discuss a swathe of redundancies after failing to secure additional business to replace a £40m ready meals contract with Asda that it lost over the summer.
Despite attempts to win new business for the site, finance director Graham Melia said that the factory was currently producing less than half of the usual volumes of meals for Asda as the contract gradually transferred to Northern Foods.
He said: “The consultation period ends at the beginning of December and it’s not looking good. We’re talking about 500-600 redundancies. We have picked up small bits of work here and there but not a £40m contract.”
His comments came as the first hearings of the All Party Parliamentary Small Shops Group inquiry into the power of the supermarkets commenced and the Office of Fair Trading (OFT) was urged to reconsider its recent decision not to recommend a full inquiry into the grocery market.
The inquiry was set up to assess the existing local retailing market, predict how it will develop to 2015 and make recommendations to the Secretary of State for Trade and Industry and the Office of Fair Trading as to whether the market warrants further investigation.
The Association of Convenience Stores, the Forum for Private Business, the Federation of Wholesale Distributors, Tesco and the British Retail Consortium have all given evidence.
The new boss of the OFT will also meet MPs holding the inquiry this week, fuelling expectations that the watchdog is preparing to take a tougher stance with the supermarkets.