KROGER FACES HURDLES AS IT CONSOLIDATES FRED MEYER

DAVID GHITELMAN / ELLIOT ZWIEBACH

CINCINNATI -- Kroger Co. here is facing challenges around the country as it moves forward in its efforts to consolidate its operations with that of Fred Meyer Inc., Portland, Ore., the 900-store chain Kroger acquired in May.

The challenges run the gamut from transferring more than 100 executive positions -- most but not all from Fred Meyer headquarters in Portland -- to Kroger headquarters here, to dealing with protests by an International Brotherhood of Teamsters local in Arizona over warehouse closings and the potential for lost union jobs.

Kroger is also dealing with several labor disputes not directly related to the Fred Meyer consolidation. In California, a Teamsters local has been protesting the impending opening of a distribution center it says Kroger plans to operate with non-union workers. In the Midwest, the company last week narrowly averted separate strikes by two union locals representing more than 13,000 supermarket workers in four states.

Kroger said last week it will transfer here approximately 130 executive positions, most in such support services as accounting, finance, human resources, legal and procurement. The company said it intends to cut about $225 million of operating costs within Fred Meyer.

However, a company spokesman said the Fred Meyer headquarters in Portland will remain the headquarters for Kroger's Western region. He added the company is preparing to complete a five-story addition to its Portland office building.

Kroger also said it will spend nearly $7 million to renovate its headquarters building in downtown Cincinnati as well as another building it owns across the street. The construction work is scheduled to begin by year's end, and the transfer of the executive positions will take place over the next three years.

In Arizona, Kroger has consolidated operations of two unionized Phoenix-area distribution centers into a larger facility in Tolleson, and sold that facility to a third-party operator, prompting picket lines by Teamsters Local 104, as previously reported. That situation was further exacerbated when Kroger announced it will close a Phoenix dairy, lay off approximately 90 employees and move milk processing into a separate building near the main Tolleson distribution center, beginning in mid-November.

In California, Kroger's decision to operate a new Stockton distribution center as a non-union facility has prompted Teamsters Local 439 to threaten strike action when the warehouse is operational.

To demonstrate its seriousness, the northern California local staged a one-day protest earlier this month at a dry grocery warehouse in southern California operated by Ralphs, Compton, Calif., a chain Kroger acquired in the Fred Meyer purchase.

Pat Miraglio, secretary-treasurer for Teamsters Local 439 in Stockton, Calif., told SN Ralphs has indicated it will not recognize the union at the 600,000-square-foot warehouse it will open there, "so we plan to picket for recognition."

According to Miraglio, the facility was supposed to become operational Oct. 4, and the union had planned to begin picketing Oct. 6. However, when the warehouse opening was delayed, the union decided to postpone its actions and opted instead to extend picket lines to a Ralphs warehouse in Glendale, Calif., for a one-day protest "to show Ralphs how serious we are," he said.

Miraglio said the protest was effective, with only 10 of 250 outbound loads getting out and more than 100 inbound loads refused "because no one was there to receive them."

The Teamsters also gave Ralphs the required 72-hour notice that it would picket a perishables facility in Riverside, Calif., also in southern California, but decided not to follow through, Miraglio added.

He said Ralphs has turned the transportation portion of the Stockton operations over to a third party -- the Stockton division of Ryder Logistics, Miami -- and the union has already gotten cards from nearly two-thirds of those drivers indicating their interest in organizing, more than the 30% needed to petition for a union vote.

Miraglio said he expects Ryder to refer the matter to the National Labor Relations Board, which he said will ultimately authorize an election that he believes the union will win.

Ryder representatives could not be reached for comment.

Miraglio said the Teamsters local plans to try to organize the warehouse employees once they are hired. "Until then we'll have to bide our time," he said.

In the Midwest, Kroger reached separate last-minute agreements early last week with two union locals.

Members of United Food & Commercial Workers Local 347, Charleston, W. Va., which represents approximately 4,700 Kroger employees in West Virginia, Ohio and Kentucky, and Local 1099 here, which represents about 8,500 Kroger employees in Ohio, Kentucky and Indiana, had voted last week to go on strike Oct. 9 at midnight when their contracts expired.

The West Virginia local did set up pickets from midnight until 2 a.m. Oct. 10, when a tentative agreement was reached.

The Cincinnati local, however, did not call its workers off the job even though negotiations extended past the midnight deadline. Talks continued all day Oct. 10 and into the early morning hours of Oct. 11 until a tentative agreement was reached.

Although company and union officials declined to comment on the pay provisions of the new contracts, a newspaper Cincinnati paper said Kroger did agree to union demands for better health benefits.