More bombshells fell at the Mercury News today.

First, just before 11 a. m. the Mercury News announced that the California Newspaper Partnership will be opening a “shared services center to provide business support functions to the papers in Northern California.”

Further, according to the email from George Riggs, “The shared services center will be located in San Ramon. Functions to be located there include: Finance, IT, HR, Marketing, online and parts of advertising. CNP anticipates that the transition from the local properties to the shared services center will occur in March 2007.”

Then, at today’s bargaining session with the Guild, the company set a deadline—November 30, 2006—for Mercury News employees to accept a tough contract proposal.

The company proposal outlines dire consequences the Guild work force will likely face if the deadline is not met. But accepting the contract has its own consequences, which are also pretty unpleasant.

The complicated details are below in the emails from George Riggs and Luther Jackson at The Guild.

This is one of the times when my concern for friends and former co-workers is in serious conflict with the part of me that likes to believe he is a “hard head” (hearted?) retired businessman. The conflict I feel is this: If the newspapers now owned by MediaNews in California are going to thrive they must take advantage of the savings that can be realized by combining job functions. This is a simple business proposition. Work that is now being done in two or three places by two or three people can be done less expensively if it is consolidated into one location. The company’s estimates of some of the savings are in the Guild email below.

I doubt that any one feels good about this. I know I don’t, although I am not going to be personally affected. But friends I worked with for two decades are going to face some tough choices. Do they take jobs at the new shared services center or do they find new work outside of the newspaper industry?

The George Riggs email announcement was followed by a series of meeting with people from affected departments. I’ve had reports about a couple of the meetings. A few more details were revealed, but my instinct is that there is a lot more not known than known right now.

The details are very important to the people involved and I will pass them along as they become available.

But there are some things that can be reasonably assumed at this point.

–Wages will be lower for Mercury News employees who are selected for these jobs.
–Their benefits will not be as good as those which have been offered to Mercury News employees.
–People who have been working at the Mercury News will be looking at a commute that is 35/40 minutes longer than they have been dealing with.
–Lots of people—maybe dozens—will be starting new careers in new industries.
–The very difficult situation people at the Mercury News have had to deal with for the last year is going to continues for a long while.

I’ll post new details as I get them.

—–Original Message—–
From: Riggs, George
Sent: Wednesday, November 01, 2006 10:41 AM
To: ALL
Subject: A message from the Publisher
November 1, 2006

Dear Colleagues:

As you know, the Mercury News is part of the California Newspapers Partnership - a company made up of 33 daily and 56 non-daily newspapers jointly owned by MediaNews, Stephens Media and Gannett. Our sister papers in Contra Costa and the ANG group are part of the partnership as well.

Following last Friday’s meeting of the CNP board, today we are announcing a way for CNP to take advantage of potential synergies among its various Northern California properties. CNP is forming a shared services center to provide business support functions to the papers in Northern California.

The shared services center will be located in San Ramon. Functions to be located there include: Finance, IT, HR, Marketing, online and parts of advertising. CNP anticipates that the transition from the local properties to the shared services center will occur in March 2007.

CNP will be encouraging interested employees from the local properties affected, including the Mercury News, Contra Costa and ANG, to apply for positions there. As we get closer to the launch date of this new venture, CNP will keep us posted on application procedures, employee benefits and timing.

Given the business challenges facing the Mercury News and the newspaper industry generally, we believe that the Mercury News needs to be part of this new venture in order to take advantage of potential business synergies and gain needed efficiencies.

As more information about this venture becomes available we will be sharing it with you.

Sincerely,

George Riggs

From: Luther Jackson [mailto:Luther@SJGuild.org]
Sent: Wed 11/1/2006 5:46 PM
To: Mercury News Guild Members; retired Guild Members
Subject: Bargaining Bulletin: News on layoffs, consolidation

Nov. 1, 2006

For the first time, the company today proposed direct links between layoffs and contract concessions. At the same time, the company introduced the entirely new subject of outsourcing jobs to the CNP San Ramon “shared services center,” which was announced simultaneously by George Riggs to the staff.

The company said that if the Guild accepted all contract concessions by Nov. 30 on health insurance premiums, elimination of the pension plan, loss of accrued vacation, a six-month pay freeze (beginning July 1, 2006), and elimination of most contract language that now reserves Guild work for Guild members, it would reduce the number of previously announced layoffs from 69 Guild members to 42. The company said it could make no assurances that the 27 jobs that would be saved — or any others — would be protected from future layoff.

If all concessions were made, the company would still layoff 10 employees in advertising, three in finance, one IT/PBX, 23 in editorial, two in circulation, two in creative services, and one in production. Layoffs would be announced Dec. 5, effective Dec. 19.

The company said if the Guild agreed to the proposed concessions, the company would achieve annual saving of $828,000 on health care, $360,000 on retirement, $270,000 by freezing wages for six months, and $4.8 million through adoption of ”management rights.” Those management rights would eliminate the rights of Guild members to do to the work they currently do (also known as jurisdiction). The company said it was not ready to explain how elimination of jurisdiction protections would yield $4.8 million in annual savings. The vacation accrual change would amount to a $2.1 million one-time savings for the company.

On the “shared services center,” the company said it intended to eliminate 116 Guild positions in March, broken down as nine from advertising majors; 19 from national; 14 from marketing; two from targeted delivery; 25 from recruitment; two from advertising co-op; 15 from the advertising call center and 30 from finance.

It is important to note that under the jurisdiction language of the current contract, the company cannot outsource this work to non-Guild members.

The company acknowledged that it needed to address these jurisdiction issues through collective bargaining. The company said that if the Guild agreed to its contract proposals, 71 of the 116 jobs would not be eliminated and would remain in San Jose under Guild jurisdiction. In any case, the company said 15 call center and 30 finance jobs would be eliminated and those functions would be shifted to San Ramon.

In total — combining those jobs planned for elimination through the layoffs announced Oct. 20 and the outsourcing announced Tuesday — the company said it planned to eliminate 185 San Jose Newspaper Guild jobs. Of those, if all company contract proposals were accepted, 98 would be preserved in San Jose, though for no fixed period of time.

The next bargaining session is scheduled for Nov 9. Also, on Nov. 9, the Guild will hold membership meetings at 12:30 p.m. and 6:30 p.m. at a location to be announced.

Representing the company were Marshall Anstandig, Andy Huntington and Kathleen Slattery. Representing the Guild were Suzanne Arnaud, Mary Anne Ostrom, Becky Bartindale, Luther Jackson, Barry Witt, Nick Warner and Dennis Uyeno.