Strikers picket Raley's in valley

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, including six in the greater Modesto area, was open.

"We just want a square deal," said Mark Hancock, a meat cutter at the Tully Road store, who joined in the picketing.

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 77 years, Raley's says it has become an unprofitable chain trying to hold off a wave of low-cost, mostly nonunion competitors such as Wal-Mart.

On the other side, the equally proud United Food and Commercial Workers 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, based in Modesto. But the union decided that 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.

The company said it was merely asking for the same concessions it secured from employees at its 30 nonunion stores. Raley's also owns Bel Air and Food Source.

Some workers crossed picket lines

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, opened 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.

Eight to 12 people held picket signs at each store in Modesto and Turlock, asking potential customers to shop elsewhere.

"We're on strike," Margarita Chavez told customers approaching the Tully Road store. "Please don't shop here — there's a Save Mart down the street."

Chavez, an assistant bakery manager, said she's worked at supermarkets for 27 years, Lucky's and then Raley's. At the Lucky's strike in 1995, she recalled, "Hardly anybody crossed back then."

Retiree Pat Shaffer said he would be on the line most of the day to protect his medical benefits, which continue until he signs up for Medicare and even then cover a portion. If he loses his benefits, he said, he's sure pension cuts would be next.

Hancock, 56, has 32 years in the union, so he has passed the "golden 85" formula of age plus experience to retire with benefits. He said new people were welcome to sign on for no benefits, "but you've got people who've worked 30 years who are counting on this."

With the busy Thanksgiving season looming, experts said the strike will injure the company and union.

"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 the University of California at Berkeley.

And when the strike ends, shoppers who tried other stores might not come back to Raley's, especially in a crowded field such as 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."

Losing millions of dollars a year

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.

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.

"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.

Raley's submitted its "last and final" contract offer three weeks ago. The basic wage rate stays the same, but there will be a two-year pay freeze and the elimination of bonus pay for working Sundays. Holiday bonus pay is scaled back.

Modesto Bee staff writer Nan Austin can be reached at naustin@modbee.com or (209) 578-2339, and on Twitter @NanAustin.