A UNION OF INTERESTS

GREG GATTUSO

This week may be remembered as a milestone in labor relations for the food industry.

Six United Food and Commercial Workers Union locals in northern California -- representing about 25,000 workers -- are expected to approve a new four-year contract with some 200 Safeway and Lucky stores -- months before the current contract is scheduled to expire. The settlement would be news in itself, but it takes on an increased significance when contrasted with the last round of contract talks in the region two years ago -- which broke down and resulted in a nine-day strike by approximately 35,000 workers at 400 stores.

The northern California settlement, along with other early settlements, and one quick strike resolution sends a signal that labor and management are becoming more amicable in their dealings. However, unions have shown they are willing to use a number of tactics other than strikes to achieve their goals.

"I think 1995 would best be characterized as a 'lose-lose' situation," said Sean Harrigan, the UFCW's northern California regional director, of the previous settlement. "There was a nine-day strike that hurt the stores and resulted in a morale problem for the members."

The contract being voted on this week calls for substantial wage increases, signing bonuses, maintenance of health benefits, the creation of a committee of labor and management officials to meet regularly and discuss issues, and a "hands-off" policy by the chains when it comes to organizing stores. The pact is identical to one approved last month by Local 588 and Local 373 in Roseville and Vallejo, Calif., respectively.

While he stopped short of calling current labor-management relations "friendly," Harrigan did call them "cooperative."

"As a result, we have an improved awareness of each other," he said. "I'm hopeful that this will be a catalyst to developing a very progressive labor-relations atmosphere. I think we both, labor and management, decided we did not want a repeat of 1995. Both sides approached these early discussions in a more rational way."

Debra Lambert, a spokeswoman for Safeway, Pleasanton, Calif., said the chain has settled contracts early before, including one in Washington last year and another in Portland, Ore., this year.

"If we can come to an early agreement that is good for the union, good for Safeway and good for the employees, then we would certainly choose to take that route," she said. "But we look at each market differently. Each contract is a unique situation."

Lambert said the contract is "truly a 'win-win' for all parties" for two reasons.

"First, it recognizes the contributions that the employees have made to the success of Safeway, and second, we see this as a cooperative spirit that has begun to develop. It's ushering in a new spirit of cooperation." This year, Safeway will negotiate a new contract with some 3,400 employees at 76 Phoenix stores.

In another major contract talk, Cincinnati-based Kroger Co. will negotiate with some 10,500 employees at 96 stores in the Atlanta area, the UFCW said. And although the food-retailing industry is too localized to garner nationwide solidarity among its workers, industry observers say these are the salient points for negotiation: Supermarket chains that relied on labor concessions to get them through tough times will be expected by unions to share financial gains with their workers now that the companies have become more profitable. In today's tight labor markets, chains must be able to attract and keep qualified personnel with competitive health and welfare packages, wage increases and promises of job security. Workers' weapons include not only strikes, but lawsuits, which allow them to fight management and stay on the job at the same time.

The unions' power is limited, however, by the lack of a national contract. Chains have left markets -- American Stores and Safeway exited some parts of northern California; Kroger left San Antonio -- or threatened to leave as Safeway did in Alberta and British Columbia, where they felt the unions were too aggressive.

This year's early settlement in northern California is a positive step, said Greg Denier, a spokesman for the UFCW, which represents about 900,000 supermarket employees in the United States and Canada. Although there is no national pattern, companies and UFCW locals appear more willing to settle contracts earlier this year than in the past, he said.

"I hope we are moving down the path to positive and cooperative relationships, and resolving contracts that give a fair share to the workers without a labor dispute," Denier said.

The prime contract issue this year is health benefits, union officials said.

"Wages are always important, but members are becoming more interested in improving pensions and benefits for their later years," said Ed Clay, secretary-treasurer of Local 555 in Portland, Ore. "Pension problems are in the news now. Everyone's aware of the problems with social security and some pensions."

Earlier this year, Local 555, representing 5,000 retail clerks and meatcutters at 102 food stores, ratified new three-year agreements -- more than two months before the current contracts were to expire. Early negotiations contributed to more amicable meetings, said Clay.

"Three years ago, we had a strike. Everybody wanted to avoid that this time," Clay said. "They wanted to make that extra effort to make sure there was no strike."

That strike, by 7,000 workers at Fred Meyer Inc., Albertson's, Safeway and other companies, lasted 87 days and had devastating effects on the chains.

The union local representing 6,000 retail clerks at Schnuck Markets, St. Louis, ratified a new three-year contract this spring -- the first time in 27 years the rank and file agreed to accept the first negotiated proposal.

"An early settlement is a sign that both parties are being responsible," said Mark Husson, managing director of J.P. Morgan Securities, New York. However, every contract negotiation has the potential to turn ugly, he said.

"There are always tensions in those relationships," said Husson. "Whenever there's a piece of militancy in the labor markets -- no matter whether it's in food retailing or not -- there is always a heightened awareness of 'them or us.' "

Still, "The 1990s have been characterized by the most harmonious labor relations in food-retailing history," said Gary Giblen, managing director of Smith Barney, New York. Giblen said the favorable atmosphere is a result of several factors, including healthy growth in jobs and hours per job, competition from nonunion operators, outsourcing distribution to nonunion companies and the chains themselves, and "hanging tough" in negotiations.

The next best thing to an early settlement, observers agreed, is a fast resolution of a strike.

Shaw's Supermarkets, East Bridgewater, Mass., experienced its first labor strike in 137 years this summer when 6,500 union workers walked off the job at 28 Massachusetts stores, 11 Rhode Island stores and one Massachusetts warehouse. The strike lasted less than two days. Both labor and management told SN at the time they were relieved that the strike ended as quickly as it did.

"No one particularly enjoys strikes, apart from ridiculously militant leaders, who have some kind of power complex they need to satisfy," said Husson. "A strike is like the wife moving home to mother -- it's one of those things you try to avoid at all costs, but occasionally it happens. But it clears the air when it's resolved."

Analysts also say the economy, with its low inflation rate, has helped stabilize the labor situation by making cost-of-living increases somewhat of a nonissue.

And financial pressures felt by workers in other sectors tend to make them less sympathetic to union demands for benefits they do not enjoy -- such as fully paid health coverage.

At Shaw's this summer, talks stalled when the two sides could not reach an agreement on shared health-care costs. After a day-and-a-half of picketing, the UFCW Local 791 approved a contract that called for full-time employees to begin paying $6 a week for family insurance plans and $3 a week for individual plans, effective 2000, said a spokesman for the chain. However, wages have also become a much larger issue, because they have not risen as rapidly as company profits, Denier said.

"Workers are now working for a fair share of those profits that they have created for those companies," Denier said. "When [supermarket chains] needed help to keep the company afloat, workers made the sacrifice to keep the company afloat. And too often, companies, when they become profitable, simply turn around and ignore the contributions that workers have made."

That issue came up in Alberta this year, where Canada Safeway workers had forgone some $60 million Canadian in wages and benefits in 1993 to pull the division through financial straits. When the division recovered, and Safeway reported nearly $1 billion in earnings, union members wanted a piece of the prosperity, Denier said.

"At union companies, profit stems directly from the sacrifice of workers," Denier said. "Sacrifices of the past demand a fair share of the future. Corporate greed has driven a number of disputes and has been damaging to relationships in our industry. Alberta was emblematic of that. Despite record profits, the company was making record demands."

After that 75-day strike by 10,000 workers, which cost the company $200 million Canadian, the union claimed victory on wages and a guarantee of more hours for part-time employees.

In the Schnuck settlement, Local 655's new contract includes wage increases, maintenance of health and welfare benefits through the life of the agreement and a union stipulation that the company could take a two-month recess from paying into the health and welfare fund. Schnuck employees also qualified for an early signing bonus.

Rounding out the top concerns is job security, officials told SN.

In Westbury, N.Y., 112 King Kullen warehouse employees, represented by Teamsters Local 282, threatened a strike -- and then walked out -- to protest the closing of the warehouse and the company's plan to outsource distribution activities to Bozzuto's, a nonunion wholesaler based in Cheshire, Conn.

King Kullen said the move was designed to make the 46-store chain more competitive with Long Island's other operators -- including Edwards and Grand Union -- that have outsourced their wholesaling. But union officials say the motive was corporate greed, and the move betrays King Kullen's claims of being a Long Island company with deep roots in its marketplace.

"This goes beyond the issue of unions vs. nonunion, it goes to the issue of the greed of corporate America," said Larry Kudla, Local 282's recording secretary. "King Kullen is trying to attack American workers who have dedicated their lives to working for this corporation."

King Kullen and Bozzuto's said the laid-off warehouse workers would have an opportunity to interview for positions at Bozzuto's, but so far none have indicated a desire to do so, the local said.

The local had hoped to take advantage of the Teamsters self-proclaimed victory against Atlanta-based United Parcel Service, after their 15-day, nationwide strike this summer.

The strike had little effect on the distribution of food, said industry experts, because retailers and wholesalers have their own distribution systems. But while the standoff may have raised the profile of organized labor, industry watchers doubted that the outcome of that national strike would carry over to the fragmented food-retailing industry. A spokesman for the Teamsters national organization declined to comment for this story. Jonathan Ziegler, the San Francisco-based vice president of Salomon Bros., New York, said the settlement may result in a morale boost for food-industry unions.

"In various markets, with the tightness of labor, the unions could be perceived as more powerful," he said. "I'm not sure we're going to see any kind of nationwide movement in the food industry. "But [the UPS settlement] could revitalize the union issue," Ziegler said. "It shows they are negotiators, and it strengthened the hand of the unions.

But the UFCW was already fairly strong among the unions in this country, so the UPS settlement was relatively marginal in its advantage for [the UFCW]."

Smith Barney's Giblen, in a report titled "Union Environment Mostly Fine Post UPS," wrote the shipper's strike was "not analogous" to the supermarket sector, mostly because UPS drivers have more stringent skill and physical requirements.

However, Giblen said, "the hot-button issues" from the UPS strike -- inferior pay and benefit packages for part-time employees and a limited supply of jobs classified as full time, "could resonate for supermarketing."

The UFCW considers the number of hours given to part-timers to be one of its priorities in negotiations, Denier said. The union has been demanding part-time employees work enough hours per week to be eligible for health benefits.

Work hours were a focal point in the mid-1996 strike/lockout at Denver-area King Soopers and Safeway stores, which affected 14,000 employees and dragged on for six weeks. According to Denier, one of the victories of that settlement was a guarantee that part-timers would work at least 20 hours per week, the minimum needed to quality for health benefits.

However, strikes are not the only weapon labor unions wield against companies they say have wronged their members. Increasingly, they are looking to the courts to intervene.

The UFCW has filed several class-action lawsuits against Albertson's, Boise, Idaho, alleging that the chain illegally profited from off-the-clock work and unlawfully used managers' bonuses to reduce worker-compensation costs. The union also sent letters to Wall Street analysts pointing out that relations were not good -- and that it missed the leadership of the late Joe Albertson, company founder.

"I don't think we have a worse relationship with any company than we have with Albertson's," said Joe Peterson, a UFCW spokesman involved in the litigation. "It's incredibly strained.

"We are using lawsuits to pressure the company to change its practices and to obey the law," Peterson said.

"We are fulfilling our obligations to protect employees. Our objective is to stop them from cheating employees, both hourly employees and managers. When normal dialogue fails, we're forced to sue. It's not as if it's a new strategy. It's a last resort."

Both sides will meet this week in the Ninth Circuit Court of Appeals in Boise. There, a judge will decide whether all the suits against Albertson's will be consolidated, at least on a pretrial basis, Peterson said.

Denier defended the use of lawsuits, saying "We are a worker advocacy organization. We will make our case using any legal vehicle available to us, whether it's the bargaining table, filing lawsuits, community organizing or public demonstrations. We will use any legal means to lay standards that will result in better conditions."

Mike Read, a spokesman for Albertson's, said its dealing with the locals have been "largely positive." It is only with the international umbrella organization, based in Washington, that it has had trouble, he said.

"We continue to negotiate hundreds of contracts with our locals," Read said. "And we do it with less trouble than our competitors."

Harold C. Lloyd, a Virginia Beach, Va.-based consultant who advises supermarket operators on recruiting and retaining employees, said, "Unfortunately, management looks at employees as an essential component of the retailing business, but not an asset," he said.