Supermarket union locals are heading to the bargaining table this year determined to get higher wages, better health benefits and improved pension plans for their membership.
The leaders of several of the largest United Food and Commercial Workers Union locals whose contracts will be renegotiated before the end of 2001 told SN they are prepared for some of the toughest negotiations of their careers.
"It's our turn," said Harvey Whille, president, Local 1262, Clifton, N.J., whose contract, scheduled to expire April 14, is the largest scheduled to be negotiated this year. "I see very difficult and labored negotiations ahead of us. We're going to have to be prepared to take the stance that's necessary to achieve our goals. It's going to be very difficult."
Ron Lind, communications director for UFCW Local 428, San Jose, Calif., told SN, "Money is the issue this time, especially in the San Francisco Bay area. Our members have seen the economy pass them by, and they want to catch up." The northern California grocery master agreement, which expires Sept. 1, is the second largest UFCW contract coming up for negotiation this year.
Steve Lomax, president, UFCW Local 1996, Atlanta, said, "At this point, I would like to remain positive." His local's contract covering some 15,000 Atlanta-area employees of Kroger Co., Cincinnati, doesn't expire until November. Still, he said he is resolved that this year the union will not retreat. "We're not going to give anything up," he declared.
However, industry observers caution that supermarket companies are unlikely to cave easily to union demands.
(None of the leading supermarket companies with union contracts set to expire later this year were willing to be interviewed for this story. Some declined while others could not be reached for comment.)
Chuck Cerankosky, equity analyst, McDonald Investments, Cleveland, pointed to the competition supermarkets face from such non-unionized alternative channels as supercenters and warehouse clubs.
"The balance sheets of many supermarket operators have improved over the last 10 years," he said. "But you have to be careful when you evaluate a corporation's balance sheet and project that onto a local level. A strong balance sheet has nothing to do with competing against non-union Wal-Mart."
He also cautioned that a weakening economy could create heightened competition for supermarket jobs, and take pressure off companies to offer higher wages.
"The tight labor market could change with a weakening economy," he told SN. "If people are eating more at home, restaurant workers may come looking for supermarket jobs."
Cerankosky credited the unions with becoming more cooperative with management. "Over the last 20 years, the UFCW and the chains have worked together pretty well to provide a more competitive contract against the supercenters," he said.
However, he added that supermarkets still feel themselves threatened by their low-price, non-union competitors. "No matter what the UFCW has done, I see the supercenters have continued to spread. And the union has yet to formulate an organizing strategy that works at Wal-Mart."
Jonathan Ziegler, San Francisco-based managing director at Deutsche Banc Alex. Brown, New York, told SN he discounts much of this union rhetoric.
"The union will probably get some increases, but it's hard to say this industry is flourishing. This is an industry that always has to look over its shoulder.
Several union representatives told SN they did see the economy weakening, but added that their members were largely undeterred from their goals.
Lomax told SN he was worried about the economy turning sour. "I am concerned about an economic slowdown," he said, "but I don't think our members have felt it. Still, I see Kroger cut [workers'] hours as they try to streamline their operation."
Lind also observed that his membership might be expecting too much this year. "If you talk to them, we have a strong advantage over the employers," he said. "But we caution our members not to be overoptimistic. It's always tough to get money out of employers."
He added that recession, or even a decline in growth, did not seem to be an immediate threat for supermarkets.
"It takes a long time for a slowdown to trickle down to retail, especially retail food," noted Lind.
Ziegler observed that on this issue the union leader was probably right. "Retail food is considered a defensive industry," he said. "People cut back on other things before they cut back on eating."
Still, Ziegler said the unions would do best "to strike a deal without a prolonged walkout." He said all of his thoughts about what various UFCW locals could expect was shaped by the outcome of last year's bitter strike at a northern California distribution.
The workers involved were members not of the UFCW but the Teamsters, while management was not a supermarket company but Summit Logistics, Tracy, Calif., the third-party owner and operator of a distribution center that exclusively served Safeway, Pleasanton, Calif.
After a month-and-a-half-long strike that was marred by worker violence both at its start and conclusion, the Teamsters approved a contract that offered them lower wages and pension benefits than Summit's last pre-strike offer.
The lesson of that strike, according to Ziegler, is that "it would be great if the union would be happy with a modest increase."
Another observer, Gary Giblen, director of research and senior vice president, C L King Associates, New York, took a harsher view of union prospects.
Like Ziegler, he cited the Tracy warehouse strike as the basis for his opinion. "That produced so pathetic a result the union didn't even declare it a victory," he said.
Union leaders, however, took away a very different lesson from the strike. "Some may look at that and say that Safeway was trying to send a message," said Lind, who will be negotiating with Safeway, along with other leading northern California chains and independents, this fall. "Or they may say the Teamsters were unprepared.
"We have a strong advantage. We can take our message directly to the customers, as we did so successfully in 1995."
Another factor that may limit the ability of unions to get all their demands is consolidation in the supermarket industry. A lot of familiar management faces will not be returning to the bargaining table, leaving union representatives to start from square one in forging new relationships with their corporate counterparts.
In New York/New Jersey, Local 1262 will not be bargaining with the all-but-defunct Grand Union Co., Wayne, N.J. In its place will be Stop & Shop, Quincy, Mass., an Ahold operating company.
In northern California, Albertson's, Boise, Idaho, while not an entirely new face, has become decidedly more prominent. "Albertson's had been a minor player until it sucked up American Stores," said Lind. "Our national [leadership] has experience dealing with them. We're just trying our best to build a good relationship."
In the Seattle area, Bob Morand noted that he was taking a similar approach with Kroger, which had acquired Fred Meyer and QVC since the last time the regional master contract was negotiated. "The UFCW negotiates with Krogers around the country. We'll use the same tactics here to extract money for employees," said Morand, a UFCW international vice president as well as the Bellevue, Wash.-based director of UFCW Region 7, which comprises seven Puget Sound area locals.
In the New York/New Jersey metropolitan area, Local 1262 has several major concerns, along with the usual demands for better wages and benefits, according to Whille. The union is looking to bolster its pension plan so members can retire at an earlier age. The union is also looking to increase the premium paid to people who work on Sunday.
In northern California, the diversity of localities represented by the single contract poses a challenge to the union, according to Lind. "The cost of living is quite different in, on one hand, San Francisco and San Jose, and, on the other hand, Sacramento and Fresno," said Lind. "I don't think anyone's suggesting different wage rates, but we're going to have to get creative." Creative possibilities, he added, might include some sort of extra housing or locality pay.
"I represent a local in Silicon Valley, where a one-bedroom apartment rents for $2,000 a month," he said.
In Washington state, union members have yet another focus, according to Morand. "The key issue is the cost of benefits," he said. "That's the No. 1 issue on the table every place we negotiate."
One of the factors fueling the confidence of union members is the tight labor market. "The supermarkets are having trouble hiring anyone," commented Lind about the situation in northern California. "We could increase our membership by 600 or 700 if employers could fill all their positions."
Another factor pushing unions to step up their demands is the perception that many companies have successfully rebounded from their recent financial difficulties.
"I think the membership has recognized that this industry has been through some hard times and has supported the union with respect to companies that were in financial difficulty," observed Whille about such New York/New Jersey companies as Pathmark, Carteret, N.J., which emerged from Chapter 11 bankruptcy protection in 2000 and quickly grew strong enough to be able to acquire six stores earlier this year from bankrupt Grand Union.
Doug O'Halloran, president of Local 401, Calgary, Alberta, whose contract with Safeway, Pleasanton, Calif., expires Friday, recalled how his membership had come to the aid of the embattled Safeway in 1993.
"We gave back $48 million to save Safeway in Canada," he said, "with a promise that when they became financially stable, they would reward workers. In 1997, management offered them a raise of 25 cents an hour, while [Steve] Burd [Safeway president and chief executive officer] went from getting an annual salary of $300,000 to $70 million in stock options.
"We have no problem with the company making money. We want the company to make lots and lots of money. We just have a problem with the people at the top making too big a share."
Less specific than the topics the union representatives are planning to negotiate with management is a pervasive sense that more than pay has declined at supermarkets in recent years.
New Jersey's Whille said, "One of the supermarket industry's problems is that it has not been trying to attract career people into the industry. They've compromised themselves by not addressing that.
"So many things need to be addressed. We talk about how important school teachers are, how important police officers are. What about supermarket workers? We're dealing with the public, and we're dealing with food."
Lind observed that even if the union can negotiate a $5 an hour wage hike, that will not be enough to restore supermarket workers to the relative level of prosperity they enjoyed a generation ago.
"Twenty years ago, a job at a supermarket was a good middle-class job," he said. "It was the type of job people really sought out. But now, the middle class has passed it by in certain areas."