Stater Bros., Union Ink New Contract

JON SPRINGER

COLTON, Calif. — Labor unions last week voted to accept a new contract with Stater Bros. Markets here — a deal the retailer said would avoid the “economic and emotional disaster” of another contract dispute and that labor lauded as leverage in negotiations with other Southern California food retailers.

Contracts between major grocery chains and the United Food and Commercial Workers in Southern California expire March 5. Those pacts were reached after a bitter, 141-day strike-lockout in 2003 and 2004.

Stater Bros. in 2003 agreed to accept whatever terms were ultimately negotiated by Kroger, Albertsons and Safeway, only to see those talks deteriorate into a strike. Stater was not picketed, and in fact experienced extraordinary sales gains during the dispute, but, according to Jack Brown, chairman and chief executive officer, the retailer suffered as well. Negotiating a new deal well ahead of the others negates the chance of a similar business disruption, Brown said.

“The strike was the most divisive and devastating event to hit the industry in all of my 55 years in the industry. More than 10,000 people, some of the most experienced in the industry, went and found other jobs, saying, ‘I don't want to go through that again,’” Brown told SN in an interview last week. “Our industry was hurt, and we had to retrain the bodies to fill those spots.

“There's a better way to negotiate than under the threat of a strike. So that's what we did.”

The agreement — approved by six UFCW locals last week — provides “improvements in almost every area as compared to the last contract,” a spokesman for UFCW Local 323, Buena Park, Calif., told SN last week. Chief among the improvements is the elimination of the “two-tier” structure that provided new hires with lower pay and fewer benefits than workers whose tenures predated the last agreement, union officials said.

“This is huge for the new hires, who no longer have a glass ceiling above them, and huge for the other workers who no longer have targets on their backs,” Greg Conger, Local 323 president, told SN in an interview last week.

Stater Bros. also agreed to increase its contribution to health and benefit plans, Conger said, although that provision is dependent upon Ralphs, Vons and Albertsons agreeing to the same terms.

Unions have begun to negotiate separately with Ralphs, owned by Kroger, Cincinnati; Vons, a division of Pleasanton, Calif.-based Safeway; and Albertsons, now owned by Supervalu, Minneapolis, Conger said.

“We believe that if a small regional chain can make enormous positive changes to the contract, there should be no question the three national chains can afford to do the same thing, especially after posting their largest profits,” Conger said.

Stater was the only company to respond to the UFCW's invitation to early negotiations, according to Brown.

“Each CEO has to decide what his responsibilities are to his constituencies — the consumers, employees and lenders,” he said. “This [negotiating early] was the right thing for our company. I hope the others can do it without hurting financially or emotionally.”

Burt P. Flickinger III, a managing director for Strategic Resource Group, New York, told SN last week that he expected contentious negotiations between the national chains and unions in Southern California, and that a strike against one or more chains was “a 50-50 possibility.”