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Published: Saturday, 1/3/2004

Decision on stores closing not final

BY JANE SCHMUCKER
BLADE BUSINESS WRITER

The apparent planned closing of the Toledo area s six Farmer Jack groceries seems to have been put on hold, at least temporarily.

A company spokesman and a union leader said late yesterday the chain had not reached a final decision regarding the fate of the stores.

“Most people walked out angry because they don t know,” Jeff Stephens, president and chief executive of United Food & Commercial Workers Local 911, said after addressing union members.

Farmer Jack employs 750 people locally, about half of whom work part time, Mr. Stephens said.

Company spokesman Maria Ward said a decision would not be made before Monday.

“We want to make sure we review each option ... and contemplate the results, she said.

Early yesterday, the options had seemed clearer, though perhaps bleaker, to union leaders.

Company officials had told Mr. Stephens they either would change the stores name and format, sell them to competitors, or shut them, he reported at the first of three meetings for union members.

But by afternoon, a company official told him to say a final decision had not been reached.

An employee at Farmer Jack s central-city store at Cherry and Bancroft streets who declined to give her name said she was turning to prayer.

“It s about all I ve got left right now,” she said, adding that her husband s job ended in July and they have four children.

Farmer Jack operates three former Churchill s stores that it bought in 2000 and three new stores.

Three stores are in Toledo, and one each is in Sylvania, Holland, and Perrysburg.

The chain commands 10.5 percent of the local grocery market, a distant third to Kroger and Meijer, according to the most recent figures from Trade Dimensions, an industry publication.

Local union leaders have tentatively scheduled a meeting Tuesday with the company to discuss its proposal to operate some of the stores under the name Food Basics, which is another chain owned by Farmer Jack s parent, Great Atlantic & Pacific Tea Co.

A&P, which owns more than 600 stores in the United States and Canada, has struggled financially, with losses in seven of its last 10 quarters.

More attention has focused on its Farmer Jack stores in Michigan, and the chain last month announced it would pull out of the Lansing market and obtained a 5 percent wage cut from its other 10,000 Michigan union workers to trim costs without added store closings.

If the Toledo-area stores would be converted to Food Basics, a chain which operates primarily in Ontario, Canada, they would have a discount focus, without deli counters or bakeries.

And employees likely would not be paid as much as Farmer Jack pays.

A new Food Basics contract in New Jersey calls for part-time workers to be paid $7.25 an hour and full-time workers to get about $9.50, Mr. Stephens said.

Most union Farmer Jack employees are paid between $6.50 and $18 an hour, although the highest-paid workers have skills such as meat cutting that Food Basics does not use.

Kroger Co. and Giant Eagle are competitors Mr. Stephens said were named as likely buyers for some local Farmer Jack locations.

Farmer Jack did not ask local employees to take pay cuts in an effort to keep stores open, which Mr. Stephens said appeared to be a bad sign. Some employees said they have been told not to reorder inventory.

“We asked if there was a way to keep Farmer Jack operating as Farmer Jack in Toledo and they said no,” he said of a late December meeting with company officials.

That meeting was called by the union because of rampant rumors that the stores would close.

Yesterday, Mr. Stephens speculated that Farmer Jack might be hedging because it was close to selling the stores or because a company official saw hope of keeping the stores open.

Farmer Jack long has been thought to be the weakest local supermarket by analysts such as Ryan Mathews, a Detroit-based grocery industry consultant with FirstMatter of Westport, Conn.

“I think they ve managed to mismanage almost everything,” he said of A&P. “They never seem to get it that they re just a half step out of touch with the consumer. And that s an expensive way to operate.”

Mr. Mathews said he doubted a no-frills Food Basics concept would work.

“It s probably got all the service graciousness of an Aldi and all the inventory breadth of a 7-Eleven,” he said.

However, Mr. Stephens said he hoped Food Basics could compete against Aldi, but was concerned that the Farmer Jack stores are too big to convert.

Super special prices that Toledo area shoppers have grown used to might be less common for a while if A&P pulls out of the local market, Mr. Mathews said.



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