SUPERMARKETS, LABOR SQUARE OFF IN SOUTHERN CALIFORNIA

Elliot Zwiebach

LOS ANGELES -- The rhetoric in Southern California is beginning to heat up -- not only among gubernatorial candidates but also between the union and employers as the Oct. 5 expiration of their current contract draws closer.

The contract between seven locals of United Food and Commercial Workers Union and the area's three major employers covers 80,000 retail clerks and meatcutters at more than 850 stores. Albertsons, Kroger-owned Ralphs and Safeway-owned Vons are negotiating as a single bargaining unit with UFCW Local 770, the largest of the seven locals, and separately with the six other locals.

According to Rick Icaza, president of Local 770, "We told the employers we want their 'best and final' offer by Oct. 5 so we can vote within a few days on whether to ratify or authorize a strike. The proposals that are on the table right now seem like the recipe for a strike."

On the other side of the table, negotiators for the three major chains are also talking tough, repeating over and over in their published list of proposals that the changes they are seeking are "designed to address the employers' competitive disadvantage ... with respect to union and nonunion companies operating without such restrictions."

Those references are generally considered to mean Wal-Mart, which will begin opening supercenters in Southern California early next year, with plans for 40 supercenters in the state over the next four years.

Icaza told SN the union hopes to neutralize Wal-Mart as an issue by getting local ordinances passed that would force companies with supercenters to pay prevailing wage and benefit rates. "Where ordinances around the country have gone after supercenters on the basis of land use, an ordinance that will be voted on in Los Angeles in the next few weeks deals with the economics of the situation, and if it passes here, it could be voted on by other cities in Southern California," he explained.

What the ordinance will attempt to do, he said, is "require nonunion operators like Wal-Mart to pay prevailing wages and medical care costs for employees and their dependents so they can't underprice the market. If that ordinance passes, then logically that knocks off a major problem for the industry."

Negotiating sessions are scheduled for four days this week, then resuming Sunday and continuing daily through the contract expiration. The last two Southern California agreements, in 1996 and 1999, were settled prior to their expiration dates; the five contracts before those were settled within one to seven days of their expiration.

The last work stoppage in Southern California occurred prior to the merger of the clerks and meatcutters, with the last clerks' strike in 1978 and the last meatcutters' strike in 1985.

Any possible labor upheaval will exclude Stater Bros. Markets, Gelson's Markets and smaller chains and independents in the area, all of whom have signed interim agreements under which they will accept whatever terms are ultimately negotiated by the major chains. The contract for the area's other major employer, Food 4 Less, a Kroger subsidiary, is not up for renewal until February.

Each of the three major employers has made comments about the negotiations in different forums.

Speaking with financial analysts in a conference call last week, David B. Dillon, chief executive officer of Cincinnati-based Kroger, said he was confident the negotiations would have positive results.

"In the negotiations, we will stress changes that impact new hires but don't affect the existing employees quite as much. But it's too early to say [how they will come out]."

Steve Burd, chairman, president and chief executive officer of Safeway, Pleasanton, Calif., told an investment conference earlier this month that Safeway's objectives in Southern California and in other negotiations are to reduce operating and administrative costs as a percentage of sales by maintaining existing wage rates and offering lump-sum increases rather than raises or seeking buyouts of longtime employees; containing health care costs so they escalate at a slower rate; creating a new tiered wage structure that slows the rate at which employees accelerate upward from entry-level wages; and improving work rules.

Safeway is on record as a tough negotiator, as exemplified by its hard-line stance in Chicago, where its unwillingness to accede to union demands prompted it to seek a buyer for the Dominick's chain there. In Canada, UFCW Local 1518 in British Columbia rejected Safeway's final offer and launched a strike against the chain last week.

Dave Simonson, president of the Southern California division of Boise, Idaho-based Albertsons, said on the chain's Web site that union members in Southern California are "some of the highest compensated associates in the company" as a result of "very generous increases in wages and benefits" in prior contracts.

"But for the past two years, outside forces have changed the way we must approach all of our costs, including labor contracts," Simonson said. "Our high labor and other operating costs threaten our ability to remain competitive and to grow," he said.

A spokesman for the six locals that are negotiating as a group could not be reached for comment.

Icaza, of Local 770, told SN, "We're not asking for any major improvements in the previous agreement. We want to maintain health and welfare contributions and pension contributions, and if we can't get that, then that's a strike issue."

He also said any effort by employers to ask employees to pay medical premiums for medical care "is also a strike issue."

Although the employers have issued a list of proposals, those proposals have not been specific on wages or health and pension costs. In a letter to members that was duplicated on three union Web sites, the UFCW said it expects those proposals will attempt "to decimate your health and welfare benefits ... [and] we know [the employers'] desire is to impose significant co-pays and reductions in our pension formula."

In a separately worded letter to members of Local 1428, based in Claremont, Calif., Connie M. Leyva, president, said the employers put takeaway proposals on the table "claiming a need to be more competitive, which we know means they want to increase their profit margins. Clearly, this is just the first salvo in what promises to be a long and challenging negotiation."