Raley's says prolonged labor talks costing it millions, will bargain on its own

February 2, 2012 - The Sacramento Bee - By Dale Kasler

Raley's says the lack of progress on a new labor contract is costing the West Sacramento grocer millions - and contributed to the recent closure of two of its stores.

In an effort to jump start negotiations with the the United Food and Commercial workers, Raley's has separated itself from its fellow union grocers, Safeway Inc. and Save Mart Stores, and will now bargain on its own.

"There is more urgency on our end than on the other retailers to reach an agreement," Raley's spokesman John Segale said today.

The company is seeking about $18 million worth of annual savings, mostly through cutbacks in health expenses, according to a memo sent to employees late Wednesday by Chief Executive Michael Teel. The lack of a new contract since the old pact expired four months ago has cost Raley's about $6 million, he said.

Teel expressed frustration that the UFCW has refused to give ground even as Raley's has explained the corrosive effects of a surge in competition from low-cost, non-union employers.

"We told the union that we could avoid store closures and save jobs by quickly reaching an agreement," he wrote. "However, the information we shared seemed to fall on deaf ears and as a result, we had to announce the closure of two stores last month. I believe we could have found a way to keep those stores open if we had been able to reach an agreement in December."

The company is closing a Bel Air store in Elk Grove and a Raley's in Modesto, effective in March.

Officials with the UFCW couldn't be immediately reached for comment. Safeway and Save Mart had no immediate comment.

The union contracts with Raley's and the company's Nob Hill subsidiary have been extended to Feb. 29. The Bel Air contract runs out April 29.

The Safeway and Save Mart contracts expire Feb. 24.