SOUTHERN CALIFORNIA JOB MARKET: WORKING INTO THE NEXT CENTURY : GETTING HIRED, GETTING FIRED : THE GEMCO 9,000 : When the Takeover Fight Ended, So Did a Lot of Jobs

For about 9,000 Gemco workers in Southern California, the bad news could scarcely have come at a worse time.

Faced with a hostile takeover threat, the owner of the money-losing discount department store announced in October, 1986, that it would close the chain. By Christmastime, most workers were out of a job.

“Coming into the holidays, it really put a financial and emotional stress on people,” recalled Greg Bond, a five-year Gemco veteran.

To this day, many former Gemco employees are bitter about how Lucky Stores handled the closing of its 25-year-old chain. Some older workers, in particular, have yet to find jobs or receive severance pay. Gemco retirees went to court and only recently won a settlement that will provide medical benefits for the next five to six years--far short of the lifetime coverage they had expected when they retired.

The unraveling of Gemco, a once-thriving California business, provides lessons for all workers. For one thing, it signifies the restructuring of U.S. business that is resulting from takeover mania. And it brought home a powerful message--that even seemingly secure jobs can face quick extinction.

“Gemco in its heyday through the 1970s was this gang buster kind of company,” said Edward F. Comeau, an analyst with Wood Gundy Corp. in New York. “It pioneered a mini-hypermarket concept. It was, I understand, a very nice place to shop, where customers and employees had rapport. The downside was that it stayed very much behind the times.”

One major problem was that the chain was a unionized competitor in a non-union industry. Gemco also failed to devise sophisticated computer systems to keep track of merchandise and to aid in scheduling workers.

To some extent, “the employees cut their own throats,” analyst Comeau said. “But that’s not laying everything on the unions. The problems were left unaddressed (by Lucky management) for a long period.”

For a time, healthy sales increases masked the chain’s woes, but it nonetheless experienced nine years of declining profits. By early 1986, it was starting to lose money at the startling rate of $1 million a week, even as Lucky was belatedly pumping millions of dollars into upgrading stores.

Then came takeover artist Asher B. Edelman, who in September, 1986, offered to buy Lucky, a diversified food retailer based in Dublin, Calif.

“The company had to scramble,” recalled Richard Cox, who at the time was Gemco’s director of labor relations and now holds a similar post with Lucky’s Southern California division in Buena Park. “That meant making some very difficult decisions.”

One of the most dramatic was to the hemorrhaging Gemco operation, in the process eliminating about 9,000 jobs in the Southland. The company provided some training and was able to place some workers at the Thrifty drug store chain and Boys Markets.

About 700 former Southern California Gemco workers have ended up at Lucky food stores, and several others have found positions with the Target discount chain, which bought the Gemco stores, remodeled them and opened them as Targets in the second half of 1987.

But most employees were on their own as they tried to pick up the pieces and start over.

Neither Lucky nor the United Food and Commercial Workers, which represented many of the Gemco employees, know how many workers found jobs. “There were so many that it’s hard to keep track of everybody,” said Ron Bruckner, executive assistant to the president of the union’s Local 770 in Los Angeles. “It affected a lot of lives.”

Reached by telephone recently at his Manhattan office, Edelman reiterated statements he made at the time of the closing. “It was mishandled,” he said. “And I did feel bad for the workers.”

That, of course, is easy for him to say. Then and now, Wall Street analysts applaud Lucky’s decision to close Gemco and focus on its core food business. The company is thriving and producing record operating earnings. (Ironically, its performance has attracted another suitor, American Stores, owner of Alpha Beta, and the company’s future is again uncertain.)

Jonathan H. Ziegler, an analyst at Sutro & Co. in New York, argues that the timing of the Gemco layoffs was actually pretty good. “There’s a real shortage in retail and fast-food workers,” he said. “Those people can be soaked up. . . . But it surely disrupted their lives.”

To be sure, many former Gemco workers are still adapting to the changes. Here are conversations with four employees who found that there was life after Gemco, despite some struggles.

Greg Bond

Despite being barely over 20, Greg Bond was handling all the ordering and selling of fine jewelry merchandise for the Gemco chain when the closing was announced.

Although rumors had circulated for weeks beforehand, “it was definitely a shock when it finally did come down, when we knew we were going to be out the door,” he recalled. “I had a girlfriend with four kids. I felt a certain sense of pressure.”

Bond, now 23, was one of the lucky ones. With five years of experience at Gemco, he was immediately able to find a new job with a catalogue company and for a time worked at both places.

After the closing, he soon became disillusioned with his new employer and moved on to a San Francisco-based wholesale jeweler called Jefco. For the last 10 months, he has been assistant manager of the company’s leased jewelry department at the Costco store in Canoga Park.

In a strange way, Bond said, he might actually have benefited from the turmoil during the last weeks of Gemco.

“For me, good things came of it because I started to wake up to the way things really operated in the business world,” he said. “You really have to keep options open about where you’re going and what you’re doing.

“But in a lot of ways I think a lot of people were hurt by it. . . . It was a middle-income company where a lot of middle-income people worked. They had families and homes. They were really reliant on what seemed to be a decent wage structure.”

Ada Mae Luff

Ada Mae Luff started working at Gemco after her husband suffered a heart attack in 1976. “I sort of put my son through college,” she said. “I had never worked before.”

For 11 years, she handled service calls and complaints for all 80 Gemco stores. News of her layoff hit in January, 1987, while she was home on disability, recovering from surgery.

Disability payments and 26 weeks of unemployment pay helped her manage for a time. Then she started sending out scores of resumes and got a rude awakening.

“It’s hard to get a job when you’re 60,” she said. “Of course, you’ve got to start at the bottom.”

Last November, through a temporary agency, she landed a full-time position as a file clerk at FHP International, a health maintenance organization, in Hawaiian Gardens, near her Cypress home. She makes almost $3 an hour less than she did at Gemco. “I work nine hours a day to make my salary a little bit higher,” she said.

Luff is still in touch with many former Gemco employees. In fact, she boasted, “I recently found a job for another co-worker.”

Tim Garry

When Tim Garry went looking for a job in the grocery business in 1982, he settled on Gemco because he figured Lucky Stores was a well-run company with a bright future. He started stocking shelves and soon worked up to assistant manager.

“I went with Lucky thinking it would be long term,” he said, “but obviously it wasn’t.”

When Asher B. Edelman launched his bid for Lucky, speculation about Gemco was rampant. One rumor even surfaced that Bank of America would buy the chain and continue to operate it, Garry recalled.

But that wasn’t to be. “After the announcement of liquidation . . . within a week almost all of the food departments were empty,” said Garry, 31, who lives in Long Beach. He was laid off and collected unemployment for a week before being hired by Ralphs Grocery of Compton. Once again, he began as a stocker and worked up to assistant manager. Today he is deli manager at the Ralphs store in Downey.

The change has hit Garry in the pocketbook. Because of overtime pay, “I was making a lot more money at Gemco, probably $10,000 (a year) more,” he said.

Garry acknowledges that the closing was tough. “I took it hard,” he said. “It was the process of having to start all over. . . . I’m doing pretty well, but I had to start at the bottom and work my way back up.”

Others left the business. Of Garry’s former Gemco associates, one is now driving a truck for United Parcel Service and another cleans windows.

Some experience gleaned from the closing did serve him well, he said. “I learned a lot about takeovers and how they work.” He had a chance to watch the process again recently when Ralphs was taken over by Campeau Corp. as part of that Canadian company’s purchase of Federated Department Stores.

Annie Caraway

At 50, Annie Caraway is finding it tough to start over in the job market, even after 16 years of experience working in Gemco’s general office.

“A lot of people really don’t want to hire you,” said the Lynwood resident.

After Gemco closed, Caraway jumped at Lucky Stores’ offer to take a computer class but has yet to land a permanent job despite her new skills.

When aerospace companies, including Douglas Aircraft, Rockwell International and Northrop, turned her away, she went to work for a temporary service. So far, the longest she has held a position was six months, at Long Beach Memorial Hospital.

Luckily, her husband, Willie, an airline mechanic at Northrop, has medical and pension benefits. But “it’s still not enough,” Caraway said. “These days, you really need two incomes and benefits.”

She still feels bitter about the closing. “None of us understood the situation,” she said. “I think something more should have been done to try to place us.”