SHOULDER TO SHOULDER

GREG GATTUSO

WASHINGTON -- Strong economic conditions and tight labor markets are emboldening the labor unions representing food industry workers in 1998.

Unions are expected to push for a greater share in employers' financial success as a payback for concessions made in the early 1990s.

Despite the union stance, labor negotiations aren't expected to be more contentious this year. Instead, a good economy and a fear of protracted labor disputes are likely to bring management and labor together.

Mark Husson, a retail analyst and managing director of JP Morgan, New York, said the current labor shortage gives the unions a position of power in upcoming negotiations.

"The companies aren't articulating concern, because it's not in their interest to do so," he said. "Companies like to say they've got all their bases covered and that they're being fair and reasonable and great partners in employment.

"But as far as we're concerned, throughout the whole country there are potential problems coming up just because of the tightness of the labor market."

Several large supermarket retailers declined to comment on the state of labor relations or on upcoming negotiations.

Greg Denier, a spokesman for the United Food and Commercial Workers union here, which represents about 900,000 supermarket employees in the United States and Canada, said unionized companies are operating more profitably than non-unionized companies.

"Union employees are now looking to share in the profits they've created," Denier said. "So bargaining will have increasing emphasis on wages.

"In any year, you will always have tough bargaining on both sides," he said. "In good economic times, it is easier to negotiate contract settlements than it is in hard economic times. And these are good economic times for the country generally -- and they are good economic times for most union employers."

This year, the UFCW expects to negotiate more than 150 contracts covering some 200,000 employees at 4,700 locations in the United States and Canada.

Among the largest UFCW locals with contracts up for renewal in 1998 are Local 881, which covers 21,750 Jewel Food Stores employees at 170 Chicago-area stores; Local 367, which covers 14,750 workers at 263 Tacoma, Wash.-area stores; and Local 1500, which covers some 13,000 employees at 166 New York City stores under various banners.

However, the union said it expects bargaining to be less contentious than in the recent past, due to the renewed financial health of the supermarket industry.

"While you will certainly see both sides hanging tough at the table, there is a pot of money there that can be negotiated over," Denier said, "as opposed to bad economic times, when you're often faced with the situation where you're negotiating just to keep the company in business."

The International Brotherhood of Teamsters here, which represents about 100,000 drivers and warehouse workers in the retail/wholesale food business, will negotiate about 150 major contracts this year.

Major issues for the Teamsters include job security -- an especially hot topic amid the current trend of chains seeking to cut costs by outsourcing various aspects of the distribution process to non-union third parties.

However, Teamsters officials are optimistic about the upcoming contract talks because of the serious shortage of qualified job candidates.

"There is both a driver shortage and a labor shortage in general in distribution," said Tom Leedham, the international vice president and warehouse division director for the Teamsters. "It is hard to find good people and, as a result, our members are really worth a premium.

"I think it's difficult to get good people in these highly physical jobs in warehouses. And it's very difficult to get competent, qualified drivers. Our people are commanding a premium at this point, because of their knowledge and experience, and the work ethic that exists among our members."

According to SN's most recent analysis of the 20 largest public chains, sales for the second half of 1996 increased 8.3% over the corresponding period of 1995. Operating profits increased an average 13.2% in the second half of 1996 compared with the second half of 1995.

The economic recovery, along with a fear on both sides of work stoppages, has also motivated a trend toward expedited, and in many cases early, negotiations.

Last November, the Teamsters ratified a new contract with Giant Food, Landover, Md., a day after the previous contract expired, ending the possibility of a repeat of a five-week trucker strike in late 1996/early 1997 that crippled the chain's distribution system.

The UFCW is still touting its 1997 settlement of contracts in northern California covering about 30,000 workers at some 200 Lucky and Safeway stores a year ahead of the deadline. Those negotiations, which eliminated the possibility of a reprise of a 1995 strike in the region, included higher wages while maintaining or improving health and welfare benefits.

Steve Burd, president of Safeway, Pleasanton, Calif., told a recent industry conference that the early settlements last year would make 1998 "a pretty easy year for us."

Commenting on the company's labor relations, he added, "we have a good relationship with the people we bargain with."

Denier noted that the union has made significant progress in eliminating some of the concessions that workers made in the last decade in order to keep their companies in business, such as the two-tier wage system.

"We're seeing the contracts strengthened, wages improved and benefits secured," he said. "It has been overall a very positive bargaining environment.

"Unionized retail food firms are extremely profitable and in a firm financial position generally. Workers over the past decade have sacrificed and struggled to make their employers profitable and financially secure. Workers are now looking to reap some reward for their efforts over the past decade.

"People are not going to sacrifice health benefits and pension benefits. These must be made secure. But there is now an emphasis on wage increases consistent with the profitability and financial security of the unionized company."

While the tight labor markets in most parts of the country have boosted entry-level wages to as high as $7, $8 or $9 per hour, the union is also looking to reward long-term employees -- "experienced employees who have spent their whole lives in the food industry."

In addition to maintaining levels of full-time work, Denier said the union is looking to win enough hours for part-time employees to make a suitable income and qualify for health benefits -- usually 15 or 20 hours a week or more.

"We certainly try to negotiate -- and have successfully negotiated in many parts of the country -- minimum hours so that employees can qualify for health benefits," he said.

Husson, the retail analyst, said the healthy economy and the lingering memory of last year's United Parcel Service strike resolution have made both sides of the table eager to maintain business as usual.

"I think it's fair to say that everybody's getting along," Husson said. "A lot of people's nerves got jangled when the UPS strike happened.20The old union reps who had been lying dormant for 10 years got back on their soapboxes for a few brief moments and started chanting."

However, when the strike was settled, "they all seemed to simmer down again, and everyone got on with earning a lot of money and having a nice job, and getting on with each other, which is what we're all supposed to be doing in the first place."

The Teamsters' Leedham said the UPS strike demonstrated public support for unions, which carries over to the food industry, even though supermarket chains lack the international recognition of a company like UPS.

"The UPS victory was much more than a traditional strike," Leedham said. "It involved a real mobilization of our membership. It involved working very closely with the public, through the media."

He said the union received similar public support when Teamsters Local 282 picketed King Kullen stores on Long Island last fall to protest that chain's decision to shutter its grocery warehouse and outsource its grocery distribution to a non-union operator, Bozzuto's, Cheshire, Conn.

"Many of the issues are the same," Leedham said. "Issues like job security, and trying to keep good jobs in the community. If you take King Kullen, we got a lot of support from the public. The company totally misjudged both the union and the workers and the community.

"I was at a number of those stores, and they were like a ghost town during that strike," Leedham said. "That whole strike could have been avoided, had the company tried to work with their long-term employees at finding a solution instead of making an announcement and expecting [longtime] employees to just go away."

Leedham said there is great incentive for both sides of the table to negotiate before making any major changes or announcements -- to find alternatives to work stoppages that destroy workers' lives and negatively affect supermarket sales and images.

"Both parties have to have a responsibility to look at all the alternatives and do it together," he said. "One party cannot make decisions in a vacuum. I think King Kullen paid a tremendous price for it and it was really unnecessary.

"In this industry, companies work very hard and spend millions of dollars to develop market share and to develop buying habits among the consumers," Leedham said. "And those can change very quickly, and there's no assurance that those consumers will ever come back.

"I think companies make unilateral decisions at great risk. What we're suggesting, especially in the King Kullen situation, is that those situations can be avoided if the concerns of their employees -- our members -- are taken into consideration and we can find a solution that makes sense to both parties."

King Kullen said the diffi-cult decision to close its warehouse would make the chain more competitive and ultimately preserve more than 4,000 other King Kullen jobs, 90% of which are union positions.

Consolidation -- an issue that has been literally swallowing the supermarket industry -- has had mixed effects on the union, said the UFCW's Denier.

Mergers can be positive for union workers if they strengthen a union operator. But they can be "devastating" if they strengthen non-union operators or bring non-union operators into an historically unionized market, he said.

"The threat, from the union perspective, in consolidation is that you bring in, or strengthen, the non-union presence, and that has very serious consequences on the downward pressure on wages and benefits. Non-union employers simply don't provide the benefit levels that union employers do."

He said merger-driven growth by non-union operators can have serious effects outside the chain as well.

For the Teamsters, consolidation does not necessarily mean layoffs as much as a shifting of the work to different locations, Leedham said.

"Clearly, there are efficiencies gained that potentially could result in layoffs. But with increased volumes and building new stores, especially in the chains, we're optimistic about it."