Workers' efforts to maintain health benefits despite management attempts to control healthcare costs will be the focus of much of the debate between labor unions and their supermarket employers this year.
Local unions with contracts expiring this year are also seeking to find their place among companies that may have been changed by consolidation since the last time a contract was reached.
Both sides, however, say they are optimistic about peaceful settlements in a year in which major United Food and Commercial Workers Union contracts will expire in Washington-Baltimore, Phoenix, Houston, Toronto and New York, among other cities.
Cincinnati-based Kroger Co., which will be involved in negotiations with three of the largest seven UFCW contracts that expire this year, and Safeway, Pleasanton, Calif., facing two of the top seven, will be the busiest companies renegotiating contracts this year, according to the UFCW, Washington. A&P, Montvale, N.J., faces expiring contracts with more than 10,000 workers in New York, New Jersey and Maryland; and Loblaw Cos., Toronto, will renegotiate with more than 14,000 unionized employees across Ontario.
Numerous local unions will be fighting to maintain or increase their health benefits, said Jill Cashen, spokeswoman for UFCW. The union fears that the growing presence of nonunionized superstore competitors such as Wal-Mart may be encouraging store management to cut benefits to stay in line, she added.
"We've see big employers today such as Kroger trying to cut back on their health benefits, and they're trying to use Wal-Mart as a reason," said Cashen. "Maintaining and improving our health care benefits is one of our big priorities this year. We intend to hold Wal-Mart accountable as well."
The UFCW recently gained its first U.S. Wal-Mart representation at a store in Jacksonville, Texas. However, only 11 of Wal-Mart's more than 815,000 U.S. associates are represented by the union.
Safeway Senior Vice President of Finance Melissa Plaisance told SN that the chain seeks "a level playing field" among labor competitors in the food retailing industry, including nonunion shops such as Wal-Mart. "Our principle objective is to maintain parity in the marketplace," Plaisance said. But rather than cutting back on the benefits Safeway offers its union employees, "We wish Wal-Mart would step up to the level of benefits we are providing."
Plaisance declined to comment specifically on ongoing negotiations between Safeway and its unions.
Medical benefits will be at the forefront of negotiations between Kroger and UFCW Local 455, which represents some 12,000 workers in the Houston area, said Ed Chambers, executive assistant for the UFCW's Region 5.
"Kroger is trying to incorporate co-payments nationally, and we're not interested in that at all," said Chambers. However, Chambers said he is confident the union and Kroger will be able to agree to a contract by the time its current one expires April 1. "We're going to come in level-headed and not ask for anything we know they wouldn't be able to provide, and they're not going to ask for anything they know we won't accept. We've had a good working relationship with Kroger in Houston for years and we expect that will continue."
Kroger officials declined to comment specifically for this story, but Chief Executive Officer Joseph A. Pichler, speaking a recent investor conference, said the company does not anticipate many problems with its unions this year, particularly after a busy 1999 in which the company successfully settled six of the largest 10 UFCW expirations. "But no contract is assured until it's ratified," he cautioned.
Pichler also said the company has learned to stand firm in negotiations, because "every concession has a ripple effect."
Analysts say that supermarkets and their unions are experiencing a time of "great harmony." While around 5,400 workers of UFCW Local 1657 staged a one-week strike of Bruno's, Birmingham, Ala., last year, work stoppages were threatened -- but avoided -- by UFCW unions in Denver and Chicago.
Bruno's employees walked out over concerns their seniority and benefits might be affected in the event the retailer, then restructuring under Chapter 11 bankruptcy protection, would be sold to another operator, said Cashen.
In Denver, more than 14,000 Safeway and King Soopers employees, represented by UFCW Local 7R, prepared to strike before their contracts expired last summer. The previous round of negotiations, in 1996, resulted in a strike-lockout that lasted seven weeks, with the union striking King Soopers and subsequently being locked out by Safeway.
"I think a litmus test was Safeway in Denver last year," said Gary Giblen, a New York-based managing director for Banc of America Securities, San Francisco. "There was a lot of sound and fury, but it was sound and fury signifying nothing. Labor kicked up a ruckus, and there were some threats, but no strike."
UFCW Local 7, which represents around 19,000 King Soopers, City Market and Safeway employees in Colorado and Wyoming, is still wrangling with management over a health insurance retirement plan, reports said.
Analyst Ed Comeau of Donaldson, Lufkin & Jenrette, New York, said union threats in Denver are typical of an "old school" approach to negotiating that is rare today.
"When the negotiations are handled on the local level by the local authorities, some know what they're doing and some don't," Comeau said. "In Denver, for example, there seems to be a feeling that they need to have a strike every few years so that they know they're there. That's an old-school approach and I don't think that's out there very much anymore. On the national level, I think unions are much more in tune with the issues the retail chains face."
Plaisance said, "I think there's a better understanding between unions and management on what it takes to compete."
In Ohio, Kroger settled peacefully with some 8,500 Cincinnati-area employees last year, and UFCW Region 4 Director Michael Leonard is looking for the same kind of cooperation for upcoming negotiations between the chain and UFCW Local 1059, comprising 10,000 workers in Columbus and Toledo, whose contracts expire in September.
"I think the deal we worked out in Cincinnati was a good model," said Leonard, who is also an international vice president for the UFCW, based in its Florence, Ky., regional office. "We talked about a strike vote but in the end the members ratified it two to one. In this day and age, with so many pieces to negotiate, if you come away with a two-to-one or three-to-one vote that's a real victory. It's impossible to satisfy everyone."
The five-year deal included wage increases, small increases in pensions and the addition of some full-time jobs. The latter "was huge for us," said Leonard.
Retail chains are more likely to stand up to unions on issues such as seniority and workplace rules, said Comeau, noting that supermarket employees already tend to receive pay and benefits as good as or better than other jobs in retail.
"The store will fight givebacks in the workplace. 'If a bagger works on Saturday you have to pay the meat-cutter double-time.' That kind of thing," Comeau said. "But basic wages and benefits are good for the food retailing industry."
Still, some union representatives told SN they are looking for wage increases from companies they perceive to be bigger and more profitable than the ones they negotiated their current contracts with. Buddy Mays, president of UFCW Local 27, Baltimore, said higher entry-level wages and health and retirement benefits are on the agenda for the 9,990 workers of Giant, Safeway and Super Fresh stores whose contracts expire March 25. Local 27 is negotiating jointly with Local 400, Landover, Md., which represents more than 23,000 Safeway and Giant employees in the Washington, D.C. area, whose contracts also expire March 25.
Both companies have been affected by the wave of mergers in the supermarket industry recently. Giant became part of the Ahold group in 1998 and Safeway has been gaining clout by acquiring regional chains.
"These companies have been making a lot of money over the past several years," said Mays, "and we feel its our turn to share some of the profit that these companies have been making hand-over-fist."
Concerns about consolidation encouraged Locals 27 and 400 to attempt an early settlement with the chains in October, but the sides were too far apart on wages and benefits, Mays added. The union has set a ratification date of March 21. If an agreement is not reached by then, the union will likely negotiate under federal mediation until the contract expires.
Officials from Safeway and Giant declined to comment on the ongoing negotiations.
Around 14,000 members of UFCW Local 1000A, Etobikoke, Ontario, will also be looking for wage increases in negotiations with Loblaw's, Toronto, said Kevin Corporon, president of Local 1000A. "We've gotten through a four-year agreement with wage freezes; the company needed help then," said Corporon. "But they've been busy with expansion since then. Our members now have high expectations of wage increases."
Local 1000A's contract, which covers Loblaw's stores throughout Ontario, expires June 28.
UFCW Local 464A, Little Falls, N.J., representing around 9,000 A&P workers in New York and New Jersey, wants to do away with its bonus plan in favor of wage increases, said Local 464A President John Nicollai. The union is also looking to improve pensions and wants prescription cards, he added. Its contract expires July 15.
"The supermarket industry works on pennies, and we understand that," Nicollai said. "They have to be careful when they negotiate. And we don't want to negotiate a contract so good it puts half our people out of work."
A robust economy resulting in low unemployment may work in favor of the union, he added. "It's a healthy industry and we're glad to see that A&P is growing nicely in our area. The tight labor market is helpful for us because it makes it more difficult to replace the force."