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Ohio Suppliers Picking Up The Pieces

CLEVELAND (Dec. 7, 2009)—Foodservice has been a sector of the fresh produce industry hit hard by the economic recession.

If Cleveland isn’t the heart of blue-collar steel country, it’s close, so it stands to reason the foodservice industry here, and in Columbus and Cincinnati, is hurting.

But that’s not always the case, according to wholesale distributors in the area.

“Companies are probably ranging from 10% to 25% off, and 25% is real tough,” said Tom Sirna, president of Sirna & Sons Produce in suburban Ravenna. “Cleveland is a blue-collar town, and we’ve lost a lot of blue-collar jobs.”

Monster.com’s market intelligence report showed good news for the city’s employment rate at the end of the summer. Cleveland’s unemployment rate dipped below the national average, to about 9% in August after peaking at just over 10% from April-June. But, as Sirna pointed out, the steel industry that once bolstered the community has long been gone, and the automobile industry, which has been a backbone for the city more recently, has been hurting.

However, that hasn’t resulted in a downturn in business at Sirna, which does 80% of its business in the foodservice sector.

“For us, we’re running a little ahead of last year, which is pretty unheard of,” Sirna said. “Business was available in our area, which is what it came down to.”

In other words, some foodservice companies didn’t make it and were forced to close. The biggest example of that was the demise of A. LoPresti & Sons, a foodservice wholesaler on the Northern Ohio Food Terminal that had done business in the Cleveland area for 100 years. According to Lenexa, Kan.-based Red Book Credit Services, a division of Vance Publishing, which owns The Packer, between Jan. 5 and Oct. 13 this year, 11 foodservice businesses in the area either filed Chapter 7 bankruptcy and/or were barred from operating in the industry by the Perishable Agricultural Commodities Act.

That lost business had to go somewhere, and that somewhere in many cases was to Sirna & Sons.

“Our foodservice has seemed to go up a little,” said Jim Smith, vice president of Cavalier-Gulling-Wilson, a distributor at the Northern Ohio Food Terminal. “But it seems to be a little more selective.”

It helps, Cavalier vice president Pat Kelley said, to have long-standing relationships with foodservice groups that will persevere when times are tight.

“We have some guys we’ve been dealing with for 30 years,” Kelley said.

Foodservice is an essential part of business for Coosemans Cleveland, which deals primarily in specialty produce items. People are watching their budgets, said Coosemans Cleveland general manager Joe Boda, but he continues to move significant volumes.

The foodservice news isn’t as positive in Columbus, Ohio.

“We’re down, but it fluctuates day to day,” said Mark Wolfel, general manager of Arena Produce Co. Inc. “We’re not down a ton. We’re trying to pick up clients to fill in for the ones sliding down. They’re buying less, so you have to get more people.”

Jim Sanfillipo, co-owner of Sanfillipo Produce, a primarily foodservice company on the Columbus terminal, said his profits are way up, mainly because the company has tightened its belt and hustled to pick up new business.

Some in the area, however, simply don’t want to deal with foodservice business.

“We have a few restaurants we’ve had for years,” said Frank Cautela, president of Macaluso Fruit Co., and owner of the Columbus terminal. “But we don’t go out and solicit. They don’t pay as fast as others. But, if approached, we’ll sell to anybody.”

The sector has taken big hits in Cincinnati, but some see a bright side.

“Foodservice has been hit hard,” Ed Sabin, president and chief operating officer for Gentile Bros. Co., Cincinnati, said. “But I see what (Federal Reserve chairman Ben) Bernanke sees. People are gradually starting to recover.”

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