Farmer Jack Employees Looking for a Way Out

Discussion
Oct 28, 2005
George Anderson

By George Anderson


This isn’t a story about extramarital infidelity, but Elmore James’ words seem appropriate for workers at Farmer Jack’s stores. “Ain’t but one way out baby. Lord I just can’t go out the door.”


Next Tuesday, employees of the chain will vote on whether to accept a new labor agreement with A&P that would mean a 10 percent cut in wages, less overtime and fewer personal days.


Should members of the United Food and Commercial Workers (UFCW) Local 876 choose not to accept the offer, they will be faced with a number of undesirable options, including the chain going out of business or being sold to a non-union competitor.


UFCW Local 876 President Victoria Collins was blunt in her assessment. “Farmer Jack members are facing the biggest crisis of our working lives. This is a one shot deal to try to save the stores and the jobs.”


Even with a deal, it seems likely that A&P will close 15 unprofitable Farmer Jack stores.


The question remaining for many is whether any union concession will save Farmer Jack.


David Livingston, Principal, DJL Research and RetailWire BrainTrust panelist, offered this glass is completely empty assessment: “A&P has never fixed anything in my lifetime.”


Another retail analyst, Kenneth Dalto, had a similar evaluation. “Farmer Jack is in a never-never world where everything they do right now is not going to be good enough for A&P. To keep it would mean a major infusion of capital, restructuring of stores and distribution networks that I don’t think A&P is prepared to make.” 


Moderator’s Comment: What will it take to fix Farmer Jack?


The character in Elmore James’ song had the option of going out the door or climbing out on a ledge where he might fall off. Neither option was good there
and the same is true for Farmer Jack’s employees.

George Anderson – Moderator

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3 Comments on "Farmer Jack Employees Looking for a Way Out"


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Gene Hoffman
Guest
Gene Hoffman
15 years 4 months ago

Two questions come to mind: yours, “What will it take to fix Farmer Jack?” and mine, “Can Farmer Jack really be fixed?”

To answer your question, George, I’d say “prayers and an unusual miracle.” To mine, I’d say, “No, the die appears to have been cast.” In today’s dynamic retail football game, should one expect to win with an aging crippled halfback?

Mark Lilien
Guest
15 years 4 months ago

Farmer Jack workers could hire an investment bank to value the company and tell them their chances of success if they bought it from A&P and operated it themselves, using sweat equity in exchange for some of their current compensation. Or they can ask their union to help find them other jobs. Or they can get the nonunion competition organized. None of these solutions would be easy. The easy solution: cut the wages and benefits. But that won’t solve the problem.

David Livingston
Guest
15 years 4 months ago
I believe A&P has hired investment bankers and they failed to sell the deal. Right now, I don’t think A&P could give Farmer Jack away. There are about a dozen or so stores that would be desirable for Kroger or a well run upscale independent. These might fetch a few dollars, perhaps $50 million. The remaining stores are strapped with low sales, cap-ex starved, and well above-market rents. These will be hard to sell since Kroger, Meijer, and Wal-Mart have been making sport out of Farmer Jack for the past several years. Perhaps if A&P would agree to subsidize the rents, sign over the fixtures and equipment, some of the bargain hunters might be interested. I was hoping to see Marc’s deep discount drug/grocery from the Cleveland area pick up some stores. As for fixing Farmer Jack, A&P has been announcing these “reinventions” just about every six months for as long as I can remember. I feel bad for the workforce because, regardless of what they vote for, it will not change the end result.
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