The warehouse, not the supermarket, was the principal scene of labor-management strife this past year, with two angry disputes between food distributors and members of the International Brotherhood of Teamsters punctuating an otherwise quiet year.
The two confrontations were as different in their causes and resolutions as the size and scope of the two companies involved, Associated Wholesale Grocers, Kansas City, Kan., which serves 850 stores in a 10-state region of the Midwest and had revenues of an estimated $3.4 billion in 1999, and Safeway, Pleasanton, Calif., a national retailer that operates more than 1,600 stores and had 1999 revenues of nearly $30 billion.
The focus of the AWG-Teamsters dispute was an effort by the distributor to outsource the operations at distribution facilities in Kansas City, Kan., and Springfield, Mo., each one to a different third-party, a move the company said would improve efficiency, save money and facilitate expansion.
In February, AWG told the Teamsters about the planned outsourcing, also informing the union it would have to negotiate separate contracts with each third party. On April 2, the day after the Teamsters' three-year contract expired, AWG laid off 1,200 unionized truckers and warehouse workers.
Teamsters responded by picketing stores supplied by AWG and filing an appeal with the National Labor Relations Board, which, in May, ruled the company had bargained in bad faith and urged it to reopen negotiations. The company modified its outsourcing plan, settling on a single third-party operator, and the Teamsters returned to work in early June with an eight-year contract.
Then, in August, Doug Carolan, AWG president and chief executive officer, abruptly left the company, a departure that was widely seen as the result of the AWG board's displeasure with his handling of the labor dispute. Commented an editorial in the Springfield, Mo., News-Leader, "If any business professors are looking for a textbook example of how not to handle labor negotiations, this is it... Carolan underestimated the Teamsters [and] overestimated his company's ability to run the warehouse with temporary workers."
Gary Phillips, AWG's chief financial officer, was named interim president to succeed Carolan. In September, the company made Phillips' promotion permanent.
In contrast, the Safeway warehouse dispute resulted in what most observers saw as a management victory, with workers ultimately approving a contract that offered them less than management had put on the table before a bitter, six-week strike.
This was a classic wage-and-work rules confrontation between the Teamsters and Summit Logistics, Tracy, Calif., which owns and operates a 1.8 million-square-foot distribution center in Tracy exclusively for Safeway.
According to Summit, the major obstacle to a settlement was the union's demand for a 22% wage hike, compared with a 4% increase management was offering.
According to the union, work rules were at least as important an issue as wages. The Teamsters said truck drivers at the facility were paid on a per delivery, rather than per hour, basis. "They're on the road 13, 14, 15 hours at a time," a union spokesman told SN. "They're forced to push themselves beyond what is reasonable." The warehouse workers, the spokesman added, were up against impossibly high production standards.
The Teamsters' contract with Summit expired in September, but the workers did not go out on strike until the middle of the next month. In the meantime, Summit prepared for what it saw as an inevitable work stoppage by bringing in replacement workers -- 1,400 warehouse workers and 250 drivers -- from outside the local area and lodging them at regional hotels. Safeway also prepared for disruption going to self-delivery on milk, bread and other fresh products.
The beginning of the strike was marred by union violence, with bricks, rocks and other projectiles tossed through the windows of vans bringing replacement workers to the facility, according to Summit. However, by the end of the strike's first week, Summit said it was nearly back to handling its normal number of daily shipments. Safeway told SN, "For the most part, the vast majority of items are in stock. Shortages are sporadic." Analysts said while Safeway's quarterly sales might be affected by the strike, investors would see it as a one-time setback for an otherwise highly successful company.
After the initial violence, peace reigned at the Tracy warehouse, with the Teamsters directing much of their energy to picketing Safeway supermarkets in northern California in hopes of inspiring a consumer boycott of the company. In late November, however, rocks were once again being thrown by picketers at the warehouse entrance, and Summit went to court and received a restraining order limiting the number of pickets at the facility.
Nearly as soon as calm was restored, labor and management sat down for a marathon day-long bargaining session, the first face-to-face meeting of the two sides since the strike began. Out of that came the contract the Teamsters approved on Dec. 1. It gave them lower wages and pension benefits than Summit's final pre-strike offer, but union leaders said it at least created a mechanism for re-examining work rules.