Raley's pushed its union workforce to the brink of a first-ever strike Tuesday, gambling it can exert enough pressure to force the cost savings the company says it needs.
Following months of negotiations, the struggling West Sacramento grocer suspended talks and declared it will submit its "last, best and final contract offer" to the United Food and Commercial Workers.
The offer would leave thousands of UFCW members across Northern California with two unpleasant choices: Accept the offer, with cutbacks in health care and other compensation. Or reject it, and risk the first walkout in Raley's 77-year history.
The UFCW, following a late-night negotiating session in the East Bay, issued a statement accusing Raley's of playing a "reckless game of chicken." Saying Raley's hasn't proved its case for savings, the union said it would schedule membership meetings to authorize a strike.
The brinkmanship reflects the huge challenges facing long-established, unionized supermarket chains like Raley's and their workers as non-union grocers such as Wal-Mart devour market share. Safeway and Save Mart are demanding savings, too, but haven't pushed the union as aggressively as Raley's.
"Raley's is saying, 'We cannot continue to operate in this marketplace with the disadvantage in relation to the nonunion operators,' " said industry consultant Bob Reynolds. "Raley's is not in general in a good position. Their position of leadership has faded in the last five to seven years."
A strike would hurt management and labor alike. Even if Raley's keeps its stores open with fill-in workers or managers, many customers would likely go elsewhere rather than cross picket lines.
By the same token, UFCW members might be reluctant to walk out in a weak economy. Employees at the top of the pay scale make around $21 an hour plus benefits, although workers say most employees make considerably less than that.
Raley's downplayed the possibility of a strike. Chief Executive Michael Teel, in a memo to workers, predicted employees would vote in favor of the final offer. He said Raley's is merely asking them to accept concessions similar to those swallowed by its nonunion and white-collar workers.
"We do not expect the employees to vote for a strike," he wrote.
The final offer covers workers at the chain's three store brands: Raley's, Bel Air and Nob Hill Foods.
Labor experts said Raley's is taking a gamble.
"They're definitely pushing it very close," said Ken Jacobs, a professor at the University of California, Berkeley. "It seems like it would be a very foolish move by Raley's to push it to a strike."
For now, workers will get paid under terms of the old contract, and no changes are imminent. Raley's hasn't put the finishing touches on its "best and final" offer. Nor has it decided when to submit it to a vote of the workers.
If workers reject it, Raley's could simply impose the terms of that proposal, said Catherine Fisk, a labor law expert at UC Irvine. She said the union could respond by filing a complaint with the National Labor Relations Board. Or it could strike.
The area's last grocery strike was in 1995 and didn't include Raley's. The last big U.S. supermarket strike was in Southern California in 2003, a multi-company affair that lasted months.
Jacobs said a strike might be preventable.
"These things tend to heat up, often before a settlement is reached," he said. "They also tend to heat up before things break apart."
The UFCW has acknowledged the need for lower costs but has said the companies are pushing too far.
Until now, Raley's, Safeway and Save Mart were content to extend the contracts every few weeks. Safeway is still doing so, but Raley's and Save Mart let their contracts expire late Monday. The expirations on Save Mart's pacts are effective May 9.
Save Mart hasn't yet talked about a "best and final offer." The Modesto company said there would be no walkout "unless the union, and only the union, calls a strike."
Meanwhile, Raley's clearly is pushing the hardest among the three companies.
Sales at Raley's fell 8 percent between 2008 and 2010, according to Stores magazine. The grocery chain announced the shutdown of four stores this year. It says it is still profitable, but Teel also has said concessions are necessary "to preserve the future viability of our company."
The privately held company employs about 13,000 people in Northern California and Nevada.
Raley's wants givebacks on health care. It also wants to curtail so-called "premium" pay for Sundays, holidays and night shifts.
If a walkout occurred, Raley's spokesman John Segale said, "we do have plans to provide staffing" to keep stores open.
He wouldn't elaborate, but Reynolds said Raley's would likely use management employees and hire replacement workers.
It wouldn't be easy, he said. It's not clear if Raley's employees from other unions including drivers and pharmacists would cross the picket lines. And some of the companies that deliver goods to the stores are unionized.
"If there are pickets, we are confident our suppliers would continue deliveries," Segale said.
Even so, Reynolds said customers might prefer alternatives to Raley's.
"One of the most dangerous things you ever want to do is send your customers to somebody else's stores," he said. "The strike's over and they don't come back."