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Costco sails on while Walmart's Super plans stall

Do union politics, pay perks make a difference in Lodi?

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Posted: Saturday, January 30, 2010 12:00 am

In Lodi, the community has virtually rolled out the red carpet in anticipation of the Costco that could soon be built in the Reynolds Ranch center.

Meanwhile, attempts to construct a Super Walmart on Lower Sacramento Road and Kettleman Lane have been met with bitter resistance for the better part of a decade.

What is the difference?

Some say a Supercenter is opposed because it would create sprawl and traffic congestion, and fail to generate much new sales tax revenue.

But is it possible that union politics are a major reason Lodi hasn't embraced a Supercenter from the Bentonville, Ark. retailer?

"Absolutely," said City Council member and former mayor Larry Hansen. "Unions upset with Walmart have convinced people about what a bad company Walmart is. Costco is low-key and behind scenes, and (has) nowhere near the controversy."

He said Costco is able to escape scrutiny from grocery unions because they do not see the membership-only bulk-buy retailer as the enemy a Super Walmart is.

"People aren't going to buy a week's groceries at Costco," Hansen said. "It's not as threatening."

Another council member echoes Hansen's feelings about union politics shaping public perception.

"Super Walmart is a seller of grocery goods, and it's targeted by grocer unions who don't want it in the community," Bob Johnson said.

The two companies do have a distinctive workforces — and reputations.

Walmart, founded by Sam Walton in 1962, is the country's largest private employer, with roughly 1.4 million workers. Employees' average hourly wage varies from $8.25 to $12, depending on the position. The company has a contentious relationship with unions and has been widely criticized for having high employee turnover.

Costco, a membership-only bulk-buy retailer, began as Price Club in 1976 and has more than 400 stores nationwide. Less than 15 percent of its total workforce is unionized.

"We typically don't have union operations, but that doesn't mean we don't have a good relationship with the union," said Jim Sinegal, CEO of Costco, in a telephone interview.

He said he couldn't talk about employee compensation for the Reynolds Ranch store because the deal isn't completed. However, he said that if the deal is finalized, he doesn't expect the 200 to 250 employees in Lodi's store to be unionized.


Employees: 1.4 million (United States, 72,116 in California)

Union employees: 0

Average wage for full-time employee: $12.05

Sales: $401 billion in sales for fiscal year ending Jan. 31, 2009

Number of stores: 4,200 (Supercenters, discount stores and Sam's Club Warehouses)

Source: www.walmart facts.com


Total employees in U.S.: 83,600

Union employees: Union employees are grandfathered in from 1993 merger with Price Club

Average wage for full-time employees: $22 per hour

Annual revenues: $48 billion

Headquarters: Issaquah, Wash.

Source: Costco

Yet Costco does have some union employees. It has a substantial number of full-time jobs as a percentage of its overall workforce, and better compensation packages.

Sinegal said the union employees at Costco are grandfathered in from the 1993 merger with Price Club.

As far as the community's perception of both Costco and Walmart, Sinegal said his store sells high-quality merchandise and provides well-paying jobs.

"We operate on a basis that what works for us may not work for Walmart," Sinegal said. "We have a different business plan that calls for a different strategy."

Perception meets reality

Jeff Abadir, regional vice president for Costco, said that roughly 60 percent of the store's workers are full-time and the average wage is $22 an hour. Tiffany Moffatt, a spokesperson for Walmart, said most of the company's 1.4 million workers are full-time employees.

A grocery union representative said they campaign against Walmart and have a better relationship with Costco because employees are treated much better at the bulk-buy store.

"Costco does not put downward pressure on wages and benefits," said Jill Cashen, spokesperson for the United Food and Commercial Workers union. "They have a positive influence on the retail standard, as opposed to Walmart, which drives standards down with sub-standard wages and benefits."

Even though Costco has an image for treating its employees well, one economics professor feels that Walmart is despised simply because it is a big target as the nation's largest private employer.

"The attacks on Walmart seem unfair," said David Macpherson, Stevens Professor of Economics at Trinity University in San Antonio. "They are automatically assuming they are driving people out of business and hurting families."

Macpherson, who teaches at a private university, said his employer must adapt to a changing marketplace and offer services their competitors don't, a situation he said is exactly how Walmart competes in a free market.

"It's how the market works. If we charge too much or aren't efficient, people won't come to our school," he said. "Competition is a good thing."

He added that while he wouldn't want to work at Walmart, many do, and those who don't want to are free to find jobs elsewhere.

With the country's workforce at 140 million, Macpherson said there are 139 million other places where people who don't want to work for Walmart can look for jobs.

Why don't Walmart employees just form a union?

However, that doesn't change how some feel about Walmart employees not being able to organize. Even if workers at Walmart wanted to organize, the odds are stacked against them, according to one local expert.

Phil Tucker, project director for California Healthy Communities Network, said that Walmart is able to effectively fight unions because the process for creating a union takes a year or two, and the retailer has such a high turnover rate that organizing one is nearly impossible.

"You have to have at least 30 percent of employees sign cards. And once you go through the National Labor Relations board, you need the approval of contract negotiations," he said. "It's an archaic process that complicates it."

He also said that Walmart is able to fight unions because it isn't afraid to lay people off when they organize. He cited an example in 2000 when Walmart shut down its unionized Tyler, Texas, meat-cutting plant and all its meat-cutting departments in the country before switching to pre-packaged meats.

"It sends a powerful message to people," he said.

Even though the company has been battered around the nation and in the community for its methods, a spokesman for Walmart said they aren't losing sleep over it.

"We're not concerned about perception," said Aaron Rios, a Walmart public relations officer. "We're worried about serving customers."

Rios said the down economy has turned people into more frugal shoppers, and the retailer is focusing on getting consumers the best deals more than anything else.

Moffatt, also a spokesperson for Walmart, said associates don't unionize because the retailer has an open-door policy that enables employees of all levels to air any grievances directly to their superiors.

"We also promote based on merit instead of seniority," said Moffatt.

'It is what it is'

One City Council member understands opposition to a Lodi Walmart Supercenter, but her objection is separate of the union angle.

Council member JoAnne Mounce said that while she is a regular Walmart shopper and has nothing against the company, she understands why people would prefer a Costco as a neighbor rather than a Super Walmart.

"People wouldn't feel so adamantly about Walmart if they hadn't built their own reputation," Mounce said. "No one did that for them."

Mounce said she would prefer the area of the Alpine Meats factory on Lower Sacramento Road for a Supercenter, because it could clean up a blighted area. She said she is for the Costco in Reynolds Ranch because it is visible from the freeway, and can capitalize on regional traffic and obtain more customers.

However, one professor understands that this is a situation where perception and reality are the same thing.

Scott Testa, a marketing professor at St. Joseph's University in Philadelphia, said the public's beliefs about the two companies are shaped by how they treat both employees and customers.

"Costco has an image portrayed as not anti-union because it pays its workers better and their health benefits are better," he said.

He said he isn't attacking Walmart or hyping Costco, but merely stating the public perception.

"It is what it is," he said.

Contact reporter Jordan Guinn at jordang@lodinews.com.

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  • posted at 10:56 am on Sat, Feb 6, 2010.


    Lodian wrote on Jan 30, 2010 2:21 PM:" "People wouldn't feel so adamantly about Walmart if they hadn't built their own reputation," Mounce said. "No one did that for them."I agree. "Ditto!

  • posted at 3:21 am on Sat, Feb 6, 2010.


    gator-never say never

  • posted at 12:41 pm on Thu, Feb 4, 2010.


    Lodi has Crap for shopping choices, I have not spent so much as a dollar within the city limits for years..

  • posted at 5:15 am on Tue, Feb 2, 2010.


    Looking forward to a new Costco!

  • posted at 1:53 pm on Mon, Feb 1, 2010.


    I plan to do my weekly shopping at Costco to snub the anti-competition fake Lodi First campaign led by SaveMart and Food4Less patsies against WalMart. The lack of action against Costco proves the motivation against WalMart was fomented by folks easily led by their masters. I guess none of this matters now since we'll be fighting for stale scraps at half-empty state-run stores within the decade.

  • posted at 12:50 pm on Mon, Feb 1, 2010.


    gray cloud; Detroit is a disaster no doubt.. Ford has announced they will hire 1500 new workers @ 14.00 an hour not the 28.00 the rest of the workers make. The days of big wages have come and gone and never to return…

  • posted at 2:04 am on Mon, Feb 1, 2010.


    Whoa Nellie. lol. No, I am not the original T&C. I am a 62 year old woman living on the pooreastside "trying to do the best I can with the tools I got." I, too, am reading less and less of LNS blogs. Most of them are blah, blah, blah. Everything seems to center around projects that are squeezing us to death with taxes.

  • posted at 6:25 pm on Sun, Jan 31, 2010.


    I for one will never pay an admission fee for the privilege of shopping.

  • posted at 4:25 pm on Sun, Jan 31, 2010.


    I am very happy for a Costco coming in..I'm sure other businesses ie..small eateries/restaraunts will follow in the shopping center which will be nice. I hope a super walmart NEVER comes into town. I don't understand why Lodi people would want a super walmart? Has anyone ever been to the Stockton super walmart? Have fun not getting carjacked, ran over, mugged or asked to buy stolen items in the parking lot. The savings are not worth the type of people that a super walmart will bring into town.

  • posted at 4:24 pm on Sun, Jan 31, 2010.


    If new development fees are based on the city's actual cost of administration and installation of infrastructure, these costs should be recovered by charging the developer. The developer adds these fees (plus interest I'm sure)and passes them along to the new property owner. No?From my seat in the bleachers, it is a bad idea to "bribe" developers by absorbing these costs which were paid for with tax payer dollars.Come on city council---do your job. Recover the tax dollars you spend on infrastructure for new developments, just as you will recover the cost of our future water meter installations.

  • posted at 11:53 am on Sun, Jan 31, 2010.


    Costco will bring in needed new revenues and good paying jobs while Walmart will merely move into a much larger building, concentrating on grocery sales, which are non-taxable so the revenue change will be very little, if any. Walmart transfers its funds every evening to its corporate headquarters in Arkansas, not using any local financial institutions at all. When the superWalmart moves across the road and razes that old store the entire shopping mall is doomed. Our city council is willing to let them doze that store down rather than make Walmart and Browman stick to the original contract stating they would have that old building 100% leased to a long term viable tenant. What else would you expect from the same three council members (Hansen, Johnson, Katzakian) who overruled their own planning commission to even let this project go forward. It makes their wealthy boy annointed planning commission look like a bunch of crooks pandering to the influential. IMO they looked like ordinary appointees that turned this project down because the proper paperwork wasn't in order, which it wasn't. Yet Hansen, Johnson $ Katzakian voted to deem their own planning commission plain old liars.

  • posted at 9:43 am on Sun, Jan 31, 2010.


    pressureon wrote "Walmart makes Walmart look bad"Well said. I'll remember that and quote you in the future. :-)

  • posted at 9:34 am on Sun, Jan 31, 2010.


    Observer, I hope so too. Costco would be a welcome addition to our area. I don't think the final contract has been inked yet, but I hope the developer and city of Lodi will be honest concerning perks and freebies that will be given to Costco to locate a property here. Since the land for RR was annexed into the city of Lodi, is Mr. Gillespie going to get his infrastructure cost free? Water, electric, sewer, etc? That's one big bundle of money out of the general fund if that's the case. Why would the city council approve postponing any fees? Returning caampaign donation favors, maybe? I think Larry Hansen should have a talk with attorney Mooney before shooting his mouth off about the unions making Walmart look undesirable. Walmart makes Walmart look bad.

  • posted at 8:39 am on Sun, Jan 31, 2010.


    Thank goodness we have Reynolds Ranch....that's where Costco is going to locate.

  • posted at 7:50 am on Sun, Jan 31, 2010.


    There already is the BC/BS office complex built and occupied at Reynolds Ranch, isn't there? The traffic mess needs to be taken care of either by Gillespie or BC/BS, doesn't it? Or are our Measure K funds going to be spent on this private venture? Has DGP paid their fees? Or replaced the acreage they were required to when they signed the contract? There'd better not be a penny spent giving these local and pet developers any bailout. Let them borrow against their own assets if they need to get cash. Wasn't CC Meyers in Sacramento foreclosed on? Then why should these greedy developers given any slack? Of course, with the three votes, Hansen-Johnson-Katzakian, I'm sure these wealthy developers of the RR and Walmart projects will get their way. Lodi needs the revenues rright now with another round of budget cuts coming in June-July. I say pay up to these developers or foreclose on them like they've done to homeowners.

  • posted at 7:47 am on Sun, Jan 31, 2010.


    wudbridgGal wrote on Jan 30, 2010 5:44 PM:" C-O-S-T-C-O! Whats that spell? COSTCO!! YAAAAAAYYY COSTCO!!!! Sorry Wal-mart, you reap what you sow. "Yes, indeed!

  • posted at 7:45 am on Sun, Jan 31, 2010.


    Jerome Kinderman wrote "I wonder though how many local folks are still out of work while construction on the Wal-Mart expansion hasn't moved forward. Clearly those jobs would have helped many who are now simply waiting for the economic tide to turn. Pity."People can look forward to working for the new Costco. Now that's exciting!

  • posted at 5:49 am on Sun, Jan 31, 2010.


    Why wouldn't Walmart just let their employees have an election to let their employees choose whether they want a union or not? And what has Mr. Browman decided to do with the old building? That whole project was approved on a contingency that the current Walmart building should be completely leased before building across the street. What happened to that deal? Hansen and Johnson can't even deny or change that.

  • posted at 5:18 am on Sun, Jan 31, 2010.


    Lets see,you like the union, Wamart does not. I dont care either way. Why dont we let people who want to, shop at WalMart. Let the people who want to, work there too. You want union ? go to another store. Dont like their employment pay and bennies? Start your own store, unionize it up to your eyeballs and see what happens. One of the most unionized towns in America [was] Detroit. Now, it is a wasteland complements of the United Auto Workers. The purpose of a union is to demand more pay and bennies until the company is destroyed.

  • posted at 5:06 am on Sun, Jan 31, 2010.


    Sorry larry n bob going to have to throw the BS card at your analyses of why walmart has not come to town. Only in lodi, the unions are to blame for all the evils of the world.

  • posted at 1:02 am on Sun, Jan 31, 2010.


    I could give a damn if Walmart opens a Superstore or not but the suggestions than the government should decide on a stores ability to expand, move or paint the interior purple is beyond me. Would they be moving to an area that is properly zoned.....YES. Whether they are union or not should not be a factor. How much they pay their employees should not be a factor. Sales tax stay locally. Let the free market determine if they will be successful or not. That's the American way.

  • posted at 11:52 pm on Sat, Jan 30, 2010.


    Council members Hansen and Johnson have shown they don't have an issue with the business tactics of Wal Mart. Using the tired excuse that it's the unions bullying the public with their anti- walmart tactics. I don't belong to the grocery clerks union, but I know a bad deal when I see one. Wal Mart doesn't create a good local economy. The money goes back to Arkansas while they pay their workers hardly anything. Costco on the other hand provides better wages and benefits and has more full-time employees.I enjoy shopping at Costco as it provides a wide variety of products at a fair price. And that's at all their locations not just the unionized ones. Wal Mart can never say the same. These two council members are wrong in implying that it is the grocery clerks union creating this anti-Walmart mentality. The truth is, Walmart has created this themselves.

  • posted at 1:27 pm on Sat, Jan 30, 2010.


    I believe Walmart brings most of their own sub-contractors to their projects and they have a general contractor that oversees all of their projects. Very few local sub-contractors will be utilized, if any.

  • posted at 11:44 am on Sat, Jan 30, 2010.


    C-O-S-T-C-O! Whats that spell? COSTCO!! YAAAAAAYYY COSTCO!!!! Sorry Wal-mart, you reap what you sow.

  • posted at 9:00 am on Sat, Jan 30, 2010.


    I doubt that Wal-Mart has permanently stalled with their plans for a Supercenter; I haven't heard that they've decided to quit altogether. But with the economy in such a state of flux, perhaps they're simply biding their time. Also, they need to jump through the final legal hurdles that have been erected by those so opposed to their expansion; Costco has been very fortunate in this regard.I wonder though how many local folks are still out of work while construction on the Wal-Mart expansion hasn't moved forward. Clearly those jobs would have helped many who are now simply waiting for the economic tide to turn. Pity.

  • posted at 8:21 am on Sat, Jan 30, 2010.


    "People wouldn't feel so adamantly about Walmart if they hadn't built their own reputation," Mounce said. "No one did that for them."I agree.

  • posted at 8:19 am on Sat, Jan 30, 2010.


    ..."...perception and reality are the same thing."Exactly!

  • posted at 7:24 am on Sat, Jan 30, 2010.


    Great memory, whoa nellie, you are so darn smart. I shopped at Walmart when they first came to town and sold lots of products that were USA manufactured. Now those American made items are few and far between along with my patronage. As far as their groceries and produce are concerned, I'll pass. I won't buy their pre-packaged meats, since Walmart ran their union butchers off years ago and now only have pre-packaged meats from who knows where. Their canned goods, both generic and name brands can be purchased at the 99cent, canned food stores, dollar stores Big Lots, etc. for over half the pprice of your low cost leader, Walmart. They are only claiming to be the lowest because these other type of venues aren't even mentioned or taken into consideration in these so called polls.

  • posted at 6:09 am on Sat, Jan 30, 2010.


    pooreastside- i understand your misconception about Costco's membership fees. I pay the $100 per year "Executive" fee & get 2% back on my purchases. I just got my rebate check for over $120, meaning I spent over $6K at costco. Easy to do with three teenagers; food, clothing, homestuff, etc.Pressure- the reason the Trio allowed the changes was that 1) home building stopped, 2) LUSD told them enrollment was dropping, 3) it made total common sense.I have been reading less & less of the LNS blogs, but I'm beggining to suspect you might be the original T&C. Hmmmm?

  • posted at 5:08 am on Sat, Jan 30, 2010.


    $12.05 per hour VS. $22.00 per hour, enough said.

  • posted at 3:45 am on Sat, Jan 30, 2010.


    With the state of the economy worse in California right now, why would the city of Lodi let a large local developer, like Mr. Gillespie get away with not paying his fees like all others have to? Has DGP even purchased the replacement acreage for the agricultural land he raped? This Reynolds Ranch has been a lemon from day one. I am happy to see that BC/BS was able to stay and keep their employment base in Lodi, but very unhappy with the way it was done. Why did Hansen, Johnson and Katzakian vote to approve this project and then just weeks later let RR do away with the school and park and increase the commercial square footage? They approved the project that was completely different from the original and then allowed DGP to drastically change the number and densities of the residential areas. After all these breaks to get RR approved, why should Mr. Gillespie get more preferential treatment from Hansen, Johnson and Katzakian when they once again vote together to curry to DGP. DGP will get another favor and the citizens of Lodi will pay again. Lodi needs the funds and DGP needs to pay up.

  • posted at 3:31 am on Sat, Jan 30, 2010.


    WOWerzz, Walmart just closed several Sam's Clubs and 1200 jobs, many here in California. And Hansen's lame excuse about the unions has nothing to do with why Walmart doesn't have a second store here. Walmarts are being organized in Canada and the movement is growing. People only want a decent wage and benefits and without the unions organizing and handbilling Walmart would still be paying the federal minimum wage and not their now lousy wage package that doesn't even let an individual support a family on with even a 40 hour week.

  • posted at 2:34 am on Sat, Jan 30, 2010.


    Costco- Green Light.......walmart supercenter- bad idea from the start....Ive been saying this from the beginning and even have written to Bentonville....that they should drop the idea of the supercenter and bring in a SAMS CLUB....why doesnt LNS poll...and see if LODIAN's want one here instead of the Super"buy almost everything under one roof" Center..

  • posted at 2:12 am on Sat, Jan 30, 2010.


    WalMart has done more for their employees and community than Costco ever though of. Where are you getting these public opinion ideas from, a Philadelphia professor? I would never pay a store a dime in order to shop in their store. Costco sucks.

  • posted at 2:12 am on Sat, Jan 30, 2010.


    The grocery unions haven't affected my decision at all, they're just a scapegoat. Don't blame the unions. I don't have a problem with the store, I have a problem with the shoppers. Costco patrons don't regularly shop in their pajamas and leave dirty diapers in the parking lot. Walmart patrons, on the other hand...



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