The company, which currently delivers groceries for Morrisons as well as for Ocado’s online store, is consulting with picking and packing staff about potential redundancies having been unable to find suitable temporary warehouse space in Andover, Hampshire.
Workers have been retained on full pay since February when a major blaze razed the firm’s £45m robot-driven distribution centre.
Ocado said: “In light of the fact that the rebuild of Andover fulfilment centre will take at least two years to complete, it is with immense regret that we have commenced a formal consultation process.
“We would like to thank all of our colleagues for their hard work and we will provide them with all the support we can during this process. We are committed to rebuilding and restoring our operations in Andover, and sincerely hope that we are able to welcome any affected colleagues back to Ocado in the future.”
As part of its plans to maintain service for shoppers, Ocado has signed a deal with its client Morrisons, which allows the delivery firm to take back 30% of the space for two years at its new centre in Erith, south-east London, which handles 10,000 orders a week for the supermarket.
Ocado also increased capacity at its two other warehouses in Hatfield in Hertfordshire and Dordon, Warwickshire. Morrisons is also increasing the number of online orders picked from its stores using Ocado technology.
It is understood that about 450 Andover workers will retain their jobs including most delivery drivers in the area after the company opened a temporary facility for vans to pick up ready-packed orders. However, few picking and packing staff are expected to transfer to Ocado’s other operations because they are too far way.
The fire has put a dampener on Ocado’s plans for expansion as it prepares for a new relationship with Marks & Spencer, which replace an existing grocery supply deal with Waitrose, in September next year.
The Andover warehouse provided about 10% of Ocado’s delivery capacity and was still ramping up operations.
Daniel Adams, national officer of the Usdaw union, which represents workers at the Andover site, said: “Clearly the staff are devastated by this development, particularly as they have spent the last three months helping to keep the business going after a fire gutted the Andover site.
“Full and meaningful consultations are ongoing with the company, with a view to minimising redundancies and mitigating their impact.”