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JOSÉ LUIS VILLEGAS / jvillegas@sacbee.com

Raley's employee Rendell Ng pickets Sunday morning outside the store on West Capitol Avenue in West Sacramento. Raley's workers struck the company for the first time in its 77-year history after more than a year of talks, culminating with three days of marathon negotiations.

Raley's workers walk off job in Northern California contract battle

Published: Monday, Nov. 5, 2012 - 12:00 am | Page 1A
Last Modified: Monday, Nov. 5, 2012 - 11:32 am

After decades of labor harmony, Raley's and its unionized workers went to war Sunday over the very future of the supermarket industry.

About 5,000 employees walked off the job at Raley's and its Nob Hill Foods subsidiary after three days of marathon negotiations ended in failure. Picket lines went up at 6 a.m., but Raley's said every one of its 130 stores was open.

The strike is about wages and benefits, but in the larger sense it's a struggle about what's ailing the traditional grocery industry.

After dominating much of Northern California's grocery business for the past 77 years, Raley's says it has become an unprofitable chain trying to hold off a wave of low-cost, mostly nonunion competitors like Wal-Mart.

"We must reduce our operating costs to become more competitive against nonunion retailers," the West Sacramento grocer said in a statement announcing the walkout.

On the other side, the equally proud United Food and Commercial Workers union is hoping to preserve what's left of a blue-collar, middle-class occupation that's been gradually eroded over the past decade by those same competitive pressures.

The UFCW agreed to concessions in September with another struggling grocer, Save Mart Supermarkets. But the union decided Raley's demands were too steep. A proposal to make changes in the workers' health plan – and eliminate coverage for Medicare-eligible retirees – became a huge sticking point.

"I've got bills to pay, but I'm going to be retired someday," said Terese Frinzell, walking the picket line at the Raley's on West Capitol Avenue in West Sacramento.

A few feet away, picket captain Lori Thurn said the union was willing to help Raley's – offering to give up bonus pay on Sundays, for instance.

"We gave away a lot," she said. "We want Raley's to be successful. We don't live in a bubble."

The company, however, said it was merely asking for the same concessions it already secured from employees at its nonunion stores.

On Sunday, Raley's staffed its stores with managers and those union workers who, after weeks of company lobbying, crossed the picket lines. It wasn't clear how many workers did cross.

Store hours were curtailed at some locations, but bakery and deli departments, and other sections of the stores, were opening up as the day went on. Employees went out of their way to greet customers and offer to help them.

Pharmacies stayed open, as their employees honored a no-strike clause in their contract.

"We're continuing to provide a level of service and maintain product on the shelves," said Raley's spokesman John Segale. While the Teamsters union wouldn't cross the picket lines, he said store managers would be able to retrieve goods from trucks parked near the stores.

Segale said Raley's won't know until today how much business it did Sunday.

Some shoppers defect

With the busy Thanksgiving season looming, experts said the strike will injure the company and union alike. No matter how well stocked the stores are, many shoppers will likely go elsewhere, put off by the sight of picket lines staffed by workers they know.

"One of the reasons grocery strikes tend to be effective is because the (shoppers) know the workers from the checkout line," said Ken Jacobs, a labor expert at UC Berkeley.

And when the strike ends, shoppers who tried other stores might not come back to Raley's, especially in a crowded field like Northern California, said industry consultant Bob Reynolds.

"Consumers are going to be inconvenienced – they're not going to be starved," he said. "Raley's is going to be hit very hard."

The crowd at Safeway in midtown Sacramento on Sunday included customers who typically shop Raley's.

"I don't cross picket lines," said Thad Selmants of Sacramento, who made a beeline for Safeway after seeing the strikers in front of Raley's on Freeport Boulevard in South Land Park.

But some shoppers were remaining loyal to Raley's.

"I'm torn. At the end of the day, you can basically understand both sides," said Brian Matsuura as he left the Freeport Boulevard Raley's with a bagful of groceries.

The day was fraught with emotion. In the strike's first minutes, a manager of the store on Freeport fought back tears as he hugged several of the picketing workers.

"Nobody wins, everybody loses in this deal," said Rendell Ng, walking the picket line at the Raley's on West Capitol Avenue in West Sacramento. "We love Raley's, we love working for Raley's, but you've got to do what's right."

Security guards posted

Raley's posted private security guards around its stores. At least a half dozen guards patrolled the parking lot at Fair Oaks Boulevard in Carmichael – a store that is frequented by Joyce Raley Teel, the mother of Raley's Chief Executive Michael Teel, employees said.

The union said it's armed with a $60 million strike fund, the fattest ever. UFCW Local 5 in San Jose said workers would get at least $200 a week in strike pay. Information on how much Sacramento workers would receive wasn't immediately available.

The UFCW is holding some options in reserve. Raley's 20 Bel Air stores haven't been struck. Those 2,000 employees haven't yet taken strike-authorization votes, and it appears they won't walk off the job anytime soon.

"This is phase one. We would prefer not to have to impact every brand of Raley's in order to find resolution," said Jacques Loveall, president of UFCW Local 8 in Roseville, in a statement to The Bee. "We prefer to engage in constructive dialogue rather than deepening the wounds."

Still, a sign in a Bel Air window in Carmichael said replacements were being hired.

Segale said replacements could be brought in to fill gaps throughout the chain, but no one's been hired "at this point."

The union members who crossed the picket line Sunday included Shelby Moyer, who works at Raley's on Fair Oaks Boulevard in Carmichael.

Moyer said a picket called her "a scab" as she headed inside the store for her shift.

"It's a bummer, but I have a job," said Moyer, who's worked at Raley's for eight months.

The strike doesn't affect Raley's discount warehouse stores, under the Food Source brand, because workers there are covered by a different contract.

Raley's said it's never had a strike before. The walkout is the first in Northern California's grocery industry since a nine-day work stoppage in 1995. It's the first in the state since the epic Southern California strike of 2003, which consumed nine months and cost employers billions.

In Southern California, the companies got concessions to combat the looming threat from Wal-Mart, which had just opened its first California superstore, in La Quinta.

"This is (in) one sense a rewrite" of that strike, said Nelson Lichtenstein, a labor historian at UC Santa Barbara.

Eroding market share

The trend has moved north. The UFCW agreed to concessions in Northern California in 2004, but the rise of the nonunion stores continues. In the past decade, the union chains have lost 10 percentage points of market share in greater Sacramento to Wal-Mart, Target and others, according to Scarborough Research.

That's put enormous pressure on all union chains to try to cut their labor costs. Veteran Raley's workers make $21 an hour plus benefits. Although most workers earn less than that, it's still about twice as much as what many earn at Wal-Mart.

Now the UFCW is fighting to hold the line on pay and benefits.

"The retail grocery was the place where people without a college education could make a decent living," said Jacobs, from UC Berkeley. "It has been eroding. The demand that Raley's is making in health care is another step in that direction."

Despite more than $3 billion in annual sales, CEO Teel told employees the company is losing millions of dollars a year.

Segale said Teel, the grandson of company founder Tom Raley, spent Sunday visiting stores, where he met with shoppers, strikers and employees who were working.

Several strikers bemoaned what they said is a change in the paternalistic culture fostered by Teel's grandfather.

"Historically they've treated us well," said Thurn, walking the picket line in West Sacramento. "We have to have the Teel family do what they've always done."

Loveall, the local president, has placed much of the blame on Raley's lead negotiator Bob Tiernan, an outside consultant whom he calls a carpetbagger.

More than a year of fruitless negotiations came to a head when Raley's submitted its "last and final" contract offer three weeks ago. The union refused to put it to a vote of the members, saying it was a worse offer than the proposal that workers rejected when they voted in the spring to authorize the walkout.

In response, Raley's said it would unilaterally implement the changes to the wage package at midnight Saturday, while deferring any changes to health care. The two sides met for three days in a last-ditch effort to make peace, but the union wouldn't go along with any deal that didn't resolve the health care issue.

Negotiators talked past the midnight Saturday night deadline but gave up shortly after 2 a.m. Sunday.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Dale Kasler

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