KANSAS CITY, Kan. -- The settlement that brought members of the International Brotherhood of Teamsters back to work last week at Associated Wholesale Grocers here for the first time in two months could produce savings of up to $40 million for AWG, the company told SN.
The labor agreement, struck as AWG faced a potential federal mandate to return workers to their jobs, calls for Teamsters Local 955 here and Local 245 in Springfield, Mo., to resume warehousing and trucking duties under an eight-year contract with Elite Logistics, a division of Tibbett & Britten Group North America, Toronto.
That deal came after AWG agreed to allow Elite to manage all warehousing and trucking operations at its facilities here and in Springfield.
AWG concurrently agreed to a seven-year extension with Teamsters at its Oklahoma City, Okla., facility, ending a sympathy strike there.
The agreements allow all of the parties to get at least some of what they wanted when the grocery cooperative declared an impasse in contract negotiations, laid off 1,200 union workers and hired third-party providers in April. The move set off an explosive dispute that included protests and handbilling at AWG's member stores, some charges of violence, and political and legal manueverings on both sides.
The National Labor Relations Board, which found merit in the union's unfair labor practice charges against AWG, threatened in late May to take action against AWG if a settlement was not reached.
"We looked at the prospect of a long legal battle with the NLRB, and decided that if we could get a deal that provided the cost savings we needed, we should take that opportunity," Doug Carolan, AWG president and chief executive officer, told SN. "But first, Elite had to prove to us they could negotiate a deal with the Teamsters and also bring us a package that would provide us with the cost savings we were after."
AWG's agreement with Elite, which runs for five years, will provide Associated with savings of between $30 million and $40 million, Carolan said. That is lower than the $43 million in AWG projected under its previous plan, which involved no union labor and four outsourced service providers: Elite Logistics in Springfield, CS Integrated here and independent trucking companies in both cities. However, the deal is "in the ballpark," Carolan said.
Elite was able to negotiate a deal with the Locals that included fewer restrictive workplace rules, Mike Sprague, president of Tibbett & Britten, told SN.
"Typically, when we negotiate a contract with a union, our approach is to make sure that wages and benefits are fair but with less emphasis on what management can or can't do," Sprague said. "We strongly believe we're a service business and we're there to give the best possible service to AWG."
Another difference in the new union contract is mileage-based pay for truckers, as opposed to the hourly pay under the 1997 contract with AWG. The union had been unwilling to grant that to AWG, Carolan said.
"I think there were a lot of tensions that had been building up between the locals and AWG," said Sprague. Elite had invited Teamsters to negotiate ever since taking over in April, but said the union refused until its truckers were also included in the talks.
The parties met in marathon negotiations between May 26 and May 28 and reached an agreement in principle May 30, officials said. The deal was voted on and approved by both union locals June 3 and workers began returning to their jobs the following day, Sprague said.
As part of the settlement, AWG provided back wages totaling $3.7 million for union members, who were out of work for nine weeks, Carolan said. In addition, AWG canceled its service agreements with CS Integrated and the independent trucking companies. Terms of those settlements were confidential, Carolan said. In the meantime, teamsters agreed to drop the charges against AWG that were filed with the NLRB.
"We commend both parties for their untiring willingness to tackle this enormous task and are very pleased that the employees are getting back to work promptly," said F. Rozier Sharp, director of the NLRB's Overland Park, Kan., regional office, which heard the case.
Elite laid off more than 400 permanent replacement workers in Springfield. Those employees were given a severance package and are being offered assistance finding jobs with other Tibbett & Britten divisions, Sprague said.
Elite will likely lay off some workers in Springfield because 21 Dillons stores dropped out of the cooperative during the labor dispute, he added. Dillons, a division of Kroger Co., Cincinnati, said the decision was not related to the labor dispute.
The Teamsters said their efforts -- including boycotts, protests and coalition building among community groups -- was a key to their success. The lockout drew the attention of James P. Hoffa, Teamsters president, who at a March rally in Springfield promised AWG "the fight of its life." Police investigated a number of incidents, including a wrecked truck, a beating of a replacement worker, and a trespassing charge against a top union official, during the dispute.
Carolan said AWG and its 850 member stores endured considerable pain but maintained that generating cost savings and greater efficiency were critical to the cooperative's survival.
"We're competing today with larger, more sophisticated retailers," he said. "When you're going up against companies like Wal-Mart, Albertson's and Kroger, it's essential for independent retailers to be as efficient as possible."