Thursday, September 8, 2005

Brandy Baker / The Detroit News Michele Campos, a part-time worker, talks about the contract vote today after voting to accept the offer. "My main concern is full-time employees with families who need their jobs," she says.

Farmer Jack workers OK cuts in pay

Members reverse earlier vote and approve deal designed to attract a union-friendly buyer.

By Tenisha Mercer / The Detroit News

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Farmer Jack union workers overwhelmingly approved a new labor agreement Wednesday that calls for wage cuts and other concessions to help make the Detroit-based grocery chain attractive to a potential buyer.

The yes-vote comes after members of United Food and Commercial Workers Local 876 in Madison Heights initially rejected the contract last week, ending talks between a possible buyer, the union and Farmer Jack's parent company, The Great Atlantic & Pacific Tea Co. (A&P) in New Jersey. Days after the contract was defeated, A&P said Farmer Jack stores in White Lake Township, Clio, Flint Township and Macomb Township would close in 30 days.

It is not clear if the ratification paves the way for negotiations to resume with potential buyers. UFCW Local 876 President Victoria Collins said in a statement Wednesday that she is "optimistic" that A&P will be able to secure a buyer who will maintain the existing workforce and union contract.

"We know this was a tough choice for members," Collins said. "By ratifying this contract, members are giving a new employer the opportunity to grow Farmer Jack and provide them with future job security. With this ratification, Farmer Jack members now have a good chance of continuing to work with benefits that provide for their families. The local will support the members' decision as we continue to do all we can to preserve as many jobs as possible."

The union said it does not have knowledge of a signed purchase agreement for Farmer Jack, but analysts said ratification of the contract could speed up a possible sale. Spartan Stores Inc., a nonunion firm in Grand Rapids, is thought by analysts to be a possible suitor.

"If there are suitors circling, it might give them a quicker impetus," said Ed Nakfoor, a retail analyst in Birmingham. "There is a big hole when it comes to national grocery chains in Metro Detroit. It's a good opportunity for someone to come into a marketplace that's starved for good grocery stores."

At least one potential buyer was close to making an offer, but the deal collapsed last Monday when one-third of the union's 6,000 members narrowly turned down the contract. The ratified agreement requires a new owner to operate at least 56 of the 71 stores. It also would void the new contract if a sale is not finalized in 180 days.

The new agreement will become effective only if a buyer signs a purchasing agreement, the union said. In May, A&P said it wanted to sell its operations in Michigan and Ohio to concentrate on operations in the northeast. A&P has been unable to sell the Farmer Jack stores to a single buyer.

Faced with the grim decision of taking a $200 a month pay cut or possibly losing the job she's had for 31 years, Farmer Jack worker Carolyn Zahnow on Wednesday reluctantly voted to approve the new labor contract, which called for 10 percent wage cuts and other concessions.

"It's a lose-lose situation," said Zahnow, after voting for the amended five-year contract that union leaders said was necessary to save thousands of jobs.

"I hate losing money. But if it doesn't pass, we could all lose our jobs if a buyer isn't found. It might be the better of two evils ... but I feel safer knowing that at least for another five years, I'll have a job."

Farmer Jack employee Michele Campos is optimistic that a buyer can be found now that employees have voted to approve concessions.

Campos is a part-time employee who voted to approve the new contract even though she will lose $1.30 an hour and $2 an hour on Sundays under the new bargaining language.

"My main concern is full-time employees with families who need their jobs," she said. "It's scary. This has been hanging over workers' heads for a long time."

Some workers lashed out at the union outside the UFCW hall near 13 Mile in Madison Heights on Wednesday, claiming the union did not do enough to protect workers' interests. Employees fear 15-30 stores could close.

Under the new contract, workers will get small pay raises beginning in September 2006. Health care insurance, pension benefits and seniority were not affected.

The UFCW called for a new vote late last week after employees complained they were confused about the voting process and the new contract language. The union expanded voting polls from three locations to six, and dispatched union employees at stores to explain contract details.

The UFCW had urged members to approve the contract, hoping to save between 5,000 and 6,000 jobs under a new owner. But communicating new contract terms with the possibility of a sale looming is difficult, said labor expert Patricia Nemeth of Nemeth Burwell P.C. in Detroit.

Retail analyst James McTevia doubts a new owner will maintain the union work force for long.

"These stores will only be attractive without a union base," said McTevia, chairman of turnaround firm James V. McTevia & Associates in Eastpointe. "The cost of operating these stores with union wages is just too high."

Farmer Jack, the state's largest grocery store chain, has struggled against blistering competition from Wal-Mart Stores Inc., the country's largest grocer, and local rivals such as Grand Rapids-based Meijer Inc.

The 75-year old chain has closed stores, trimmed its workforce and tweaked its identity in recent years in attempts to bolster profits and boost market share.

"I don't think the UFCW would be making these concessions if economically Farmer Jack was in a better situation," Nemeth said. "Overall, you see more companies asking for concessions."

You can reach Tenisha Mercer at (313) 222-2401 or tmercer@detnews.com.