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Troubled with uncertainty, United Grocers certainly seems to be leavingMedford

United Grocers is proceeding with plans to close its Medford warehouse,eliminating or displacing more than 200 Rogue Valley jobs.

The move has been set back a year from last October. Although operationscontinue at the sprawling Medford warehouse, sweeping changes have occurredthrough the company:

Associated Grocers of Seattle is negotiating a possible merger with Portland-basedUnited Grocers.

Complications in consolidating facilities in California to replace Medfordand in linking computer systems have cost the company $2.4 million in thefirst quarter and delayed the move.

Alan Jones, president and chief executive of United Grocers, announcedhis retirement amid rumors that the grocer directors of the cooperativeasked him to leave.

It was his decision, said Gaylon Baese, a director of UnitedGrocers and spokesman for the company. A management team is responsiblefor day-to-day operations while a chief executive is sought, probably athree- to six-month process.

Rumors abound about the company and its moving pains.

The company's diminishing profits are verifiable because the companyissues bonds and must file quarterly reports with the Securities and ExchangeCommission. Net income has dropped from $2.7 million in 1992 to $152,312in 1996.

Patronage dividends to member grocers were cut for the six months endedMarch 30, to $5.2 million from $7.8 million a year earlier.

And because of a failure to meet financial performance standards, thecompany fell into default on notes held by several lenders.

The company said profits were hurt by declining sales volume, highersoftware amortization expense, higher net interest expense and reservesfor warehouse consolidation.

The company has spent roughly $7 million to $8 million to create a compatiblecomputer software system.

Meanwhile, the fortunes of the Medford warehouse workers have been sinking.

The majority of workers were given the option to follow the work to Californiaor Portland.

But the company announced that operating losses wiped out funds destinedfor a severance package for workers leaving the company. And the SouthernOregon Teamsters Union members in Local 962 who choose to move to Portlandlearned they will lose their seniority to Portland Teamsters.

A group of Medford workers is trying to get the company to reconsiderthe closure of the facility.

It's paid for and it's always made money for United Grocers,said Tom Holmes, a warehouseman for 22 years.

I think the board of directors has no clue what's going on,said United Grocers employee Steve Ray. If it ain't broke, don't fixit.

The Medford warehouse, at 2195 Sage Road, includes 250,000 square feetof storage ­ more than twice the size of Medford's Target store.

United Grocers has put the warehouse and 20 acres of land on the marketwith an asking price of $5.6 million.

If it closes, we're looking at an economic impact in the RogueValley of $25 million to $30 million, said Jerry Stuart, businessrepresentative for Local 962.

In a letter to United Grocers members, the Teamsters say the loss goesbeyond a $15 million payroll in the community.

United Grocers has donated several pallets of meat each week to CERVSand St. Vincent de Paul and up to a dozen pallets of produce to Gleanersand other charities.

Workers say they've heard Southern Oregon grocers are upset about thedeparture of the company, in part because they stand to lose a handy sourceof inventory.

I hate to see them leave, said Sherm Ohlsrud, owner of Sherm'sThunderbird, Food 4 Less and other stores. It won't be as convenient,but we'd still be served, I'm sure.

No comment, was the response from C&K Grocers, the Brookings-basedcompany operating Ray's Food Place stores.

The closure will affect other Rogue Valley businesses serving the UnitedGrocers facility.

It will have an impact, but I'd just as soon not say how much,said Dave Westerberg of Medford Ice Service.

The Jackson County Board of Commissioners wrote to the United Grocersboard of directors offering to help keep the Medford facility open.

The board and management decided to close the Medford warehouse to staycompetitive, said Baese, the United Grocers spokesman.

Like any other company, you have to do what's best for the membersto be competitive, he said. Once you make the decision, youcan't go back.

He said the company plans to turn around its financial condition soon.

We have to make money to survive, Baese said.

For years, United Grocers had considered expanding the Medford warehouseto serve a larger area in Northern California. It has also considered expandingits market by moving the warehouse farther south, avoiding winter bottleneckson the Siskiyou Summit.

The closure of the Medford facility was triggered by United Grocers'acquisition of Market Wholesale in 1995. That company had warehouses atSanta Rosa, Tracy and Modesto, Calif.

The Santa Rosa warehouse was closed and plans were made to expand theTracy facility and close the one in Modesto. The company's warehouse inMilwaukie, near Portland, was expanded to handle inventory formerly storedin Medford.

Workers and union officials say plans to expand the Tracy facility werederailed because the company doesn't have adequate parking and can't buyit from adjoining landowners.

Workers say the Siskiyou pass isn't as bad as the company has been saying.

They lose more time daily on trucks from Portland than we everlose going over the Siskiyous, said Ray. Now they say they'regoing to truck daily from Portland to Lakeview and they're not going tohave problems?

Some workers speculate the Medford warehouse stands a better chance ofsurvival if the merger with Associated Grocers goes through.

Associated and United Grocers are both among the nation's 10 largestretailer-owned cooperatives. United Grocers is slightly larger, with annualsales of some $1.3 billion and more than 2,000 employees. The company has1,600 workers in the Portland area and up to 350 in Medford. It also hasa trucking subsidiary, Western Passage Truck Line, and sells Grocers' Insurancein 31 states.

Workers at the Medford warehouse had asked Associated Grocers to considerstepping in to keep the operation going, according to Kevin Norman, a warehousemanfor 19 years.

The companies began exploring the merger a month ago, anticipating a90-day evaluation process before a decision will be reached.

Pending the merger, United Grocers materials indicate a produce departmentmay remain open in Medford if the company can find space and if the laborcontract can be modified.

Associated Grocers is much the same as United Grocers, hesaid. They're both cooperatives and even carry the same Western Familybrands.

He said he doesn't know if the workers' initiative led to the mergerdiscussions.

We don't want to just roll over and play dead, he said.