January 15, 2010

'Touchdown' Schumer?

A local company, Penn Traffic, is in the process of disappearing from the landscape. The parent company of P&C, Quality, and BiLo grocery stores is going through its third and final bankruptcy in ten years, and a court decision is expected within the next few days or so on how the company will be disbanded.

As with most cases like this, there are a number of competing interests: creditors, who rightfully want to get as much of their money back as possible; management, who (we hope) are trying to do the best they can under the circumstances; employees, in this case union employees, who want to hold on to their jobs and benefits; customers, who may not want to lose their local grocery stores; and suitors – those who would buy some or all of the company’s troubled assets.

In this case, one New York grocery chain, Schenectady-based PriceChopper, put in a bid for 22 of the 79 stores, signed a contract with Penn Traffic, and put down 10% a while back. (Dislcaimer: My Sweet Baboo and I get about 95% of our groceries at PriceChopper). They didn’t want the whole kit and kaboodle, but were interested in expanding into certain areas and wanted only certain stores. They were honest about the fact that they’d close the stores for renovation and rebranding, and they made no promises regarding retention of Penn Traffic’s employees.

Naturally, the United Food and Commercial Workers (UFCW) union was not happy about the lack of commitment to keep the employees, and even less happy that PriceChopper is a non-union shop. And so, enter the last competing interest: politicians, primarily Chuck Schumer. New York’s senior senator got engaged in the process, and worked to ensure additional time was allowed for bidding, opposed a flat-out liquidation bid, and to some extent actually contributed to the process.


He also rallied with the union employees, pitted one New York company against another, and in the end the bid that he favored – that of Buffalo-based Tops Markets – was the highest bid; it’s the bid likely to be accepted by the bankruptcy court towards the end of the month.

In the process, Schumer made some really fun comments, in true over-the-top style:

  • “We are not across the goal line yet, but it looks like the components are all coming together to save thousands of jobs and dozens of grocery stores in Jamestown and across Upstate New York,” he said in one statement.
  • In another Senator Schumer said, "It's pretty much over. Tops is going to be the only bidder and that is great news. As I said we started out on our own ten yard line and now we're about to go over the opponent's goal line and score a touchdown."

Tops, like PriceChopper, admitted they would be closing "…a certain number of stores, a small — right now it’s a small handful…” but that the company expects to keep "the majority, if not all," of Penn Traffic's workers. This was great news for the union, and for Schumer, who if nothing else knows and understands the political power of organized labor.

The latest news, however, is that if the Tops deal closes, the local P&C warehouses will also close. The grocery distribution business run out of the warehouses is owned by C&S, a New Hampshire company, but the employees are Penn Traffic employees. C&S will be consolidating everything into their Pennsylvania warehouse, which is much closer to Tops headquarters, within 60 days of the closing.

I suspect that may be news to the UFCW and the hundreds of employees at the warehouse. Perhaps it’s even news to Senator Schumer… so, I wonder, in the end, how many points his ‘touchdown’ is really worth?

2 comments:

  1. The warehouse employees are not members of the UFCW, and no, it is not a suprise to the warehouse workers. However, we are very thankful for the work Senator Schumer has put in on our behalf.

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  2. Square, thanks for clarifying the situation with the warehouse workers. Most reports seemed to indicate that job losses were expected at the store level but had not mentioned the warehous, so I'm glad this is not a surprise. Best of luck to all the Penn Traffic folks.

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