Human Factor Often Ignored : Mergers Create Big Firms, Nightmares for Employees

Bill, Jim, Carlos and Dave, four market warehouse workers in their 30s and 40s, were sitting in a restaurant lounge in Fullerton after work, sipping beers and talking about the worst thing in the world.

The future.

For more than a year, they have been living under the shadow of a huge merger--the proposal to consolidate their supermarket chain, Alpha Beta, with Lucky Stores. Their lives, once seemingly stable, are full of uncertainty. Nobody’s told them that they’ll lose their jobs or take a wage cut. But nobody’s made them any promises either.

When chief executive officers talk about mergers and acquisitions, they talk about constructing a bigger, yet leaner, more competitive corporation. The human factors, so intangible, are often ignored, launching waves of nervousness and cynicism among workers.

“The merger is judged simply by the bottom line, not the social consequences,” said Harley Shaiken, a UC San Diego professor who specializes in work and technology. “One of the widely touted benefits of mergers is that you can produce more with fewer people. . . . There is no legal, moral or economic pressure to consider what happens to those who are affected.”

When Bill, Jim, Carlos and Dave talk about mergers, they talk about lying awake at night. They talk about personal relationships souring under the strain of the same old questions asked a hundred times. They talk about putting off vacations. They talk about feeling lost in the shuffle. They talk about never knowing who to believe.

They talk about washing machines.

One of Bill’s supervisors advised him not to buy one.

“He told me not to go out and buy anything even as expensive as a washer,” said Bill, an expansive, 42-year-old Vietnam veteran who vacillates between anger and astonishment that life has been reduced to this level of uncertainty. “How do you stop thinking about it? How do you get away from it? There ain’t enough Maalox.”

The men--who were interviewed on the condition that their real names not be published--are waiting to see whether Alpha Beta’s parent corporation, American Stores, which bought Lucky in mid-1988, overcomes legal objections to the merger.

Cost Huge

The cost of waiting is huge. American Stores says that it costs $1.5 million in duplicative operating expenses for each week of delay.

But that’s a story they tell at the top of the heap. This is the story about the bottom.

It is a story about trickle-down anxiety, about four workers who by their own admission aren’t cut out to do anything but warehouse work and who never thought they’d have to.

In the post-industrial age of frenetic corporate restructuring and “downsizing,” when millions of workers have been laid off or had their hours and benefits trimmed, Bill, Jim, Carlos and Dave thought that they were the survivors, the lucky ones.

They were the ones who joined Alpha Beta in their teens or 20s and rode blue-collar jobs into the middle class. They were the ones with wives and kids and mortgages in places like Whittier, Pico Rivera and La Habra.

They were the ones with two decades worth of possessions in their company lockers and a comfortable, homey feeling about walking in the front door of the chain’s main delicatessen warehouse before dawn every morning.

Earned Seniority

They were the ones who’d built enough seniority to claim day shifts and weekends off. They were the ones with $30,000-a-year jobs that, thanks to union-negotiated pensions, were going to let them retire by their late 50s.

“When I hired in, I was 18 and my dad said, ‘You got a job until you die,’ ” said Dave, who is 34 and has a wife and four children at home. “Now, a supervisor says that some of us will have jobs and some won’t, and then two weeks later, they’re saying that everybody will have a job.

“But the whole point of a merger is to squeeze out the little guy. I don’t know nothing, but I know that.

“I’ve put out feelers. My brother-in-law’s a welder; I have a friend who’s a mechanic. But basically, we gotta ride the ship out here and see what happens. We’ve been here too long,” he said.

Mergers and acquisitions are easy to count. On average, 11 occurred every business day last year in businesses ranging from large banks to small transportation companies. The number has mushroomed as U.S. corporations rush to consolidate assets in the belief that it affords more efficient production and distribution and greater profits.

What is not easy to count is how mergers affect jobs. Businesses are reluctant to advertise layoffs before a merger, and government has trouble determining cause and effect afterward.

Small Segment

Organized labor, whose predictions have at times been overstated, says that in just the relatively small segment of the work force that is unionized, 90,000 layoffs occurred in the 1980s because of mergers, takeovers and leveraged buyouts. Even more workers suffered wage and benefit cuts. But there is no overall count that takes into consideration non-union jobs as well, according to congressional staff members who monitor the subject.

Labor expert Shaiken said the absence of hard numbers is one of the reasons that relatively little public attention has been paid to the human costs of mergers.

The Legislature took a small swing in that direction recently by passing a bill requiring union contracts to be honored when one company takes over another. But the bill was vetoed last week by Gov. George Deukmejian, who said it could force companies to pay the salaries of workers whose services were no longer needed.

For many workers caught in a merger, Shaiken said, the biggest concern is not job loss “but the way their job changes” as the merged companies furiously try to ensure profitability.

That’s one of the things that’s eating at Bill, Jim, Carlos and Dave, who are among about four-dozen people who staff the Alpha Beta deli warehouse in La Habra.

Newer Facility

They consider themselves particularly vulnerable because Lucky has a newer warehouse that they believe will make possible the elimination of Alpha Beta’s warehouse.

The men have been with Alpha Beta long enough to believe that they are likely to remain at work when their chain is integrated with Lucky, but what kind of work? Swing shift? Graveyard? Part-time? Loading and hauling a half-ton “cage” of products, rather than the less stressful sorting of incoming pallets that they now do by virtue of seniority?

Such musings are increasingly common among U.S. workers as the number of reconstituted corporations swells and the tradition of rewarding workers for long-term commitment shrinks, according to employee relations experts. Polls show a sharp decline in perceptions of company loyalty among workers and managers, leading to what Art Puccini, vice president of labor relations for General Electric, calls an evolving work force of “free agents.”

Because a string of mergers had swept California’s retail industry since 1986, American Stores’ purchase of Lucky Stores was not a shock. But the merger quickly went into limbo. In September, 1988, State Atty. Gen. John K. Van de Kamp filed an antitrust lawsuit to block the merger, contending that it would reduce competition and raise food prices.

Worker anxiety worsened, not only because time was dragging without resolution (the Supreme Court is expected to make a decision this month on whether to hear Van de Kamp’s suit) but because Alpha Beta and Lucky grew even more cautious about discussing the implications of the merger. Spokesmen for both companies refused to be interviewed for this story.

Supported Merger

Alpha Beta’s unions generally supported the merger because it would place Alpha Beta under Lucky’s more profitable influence. But they were unable to make any assurances to their members because the impact of mergers is generally outside the scope of collective bargaining.

Bill didn’t need these kind of headaches. He already had one. He was going through a messy divorce and was already taking a prescribed anti-depressant drug.

He began taking more pills--too many--to quell new questions: How would he pay his child support if he were laid off? Should he see a friend about a sales job? Would he wind up like that printer in Louisville, Ky., who went off the deep end last month and killed or wounded 21 co-workers with an AK-47 before killing himself?

“I got hooked,” he said.

The future played havoc with his relationship with a girlfriend.

“There was so much worry about layoffs, I could see her thinking, ‘Do I want to stay with this 42-year-old guy who’s gonna be a bum a year from now?’

“I thought I was here for life,” he said. “I don’t even know where the unemployment office is. I’ve had the same car for 15 years. It drives one mile to work and one mile home. I came out of Vietnam, and I came here. Twenty years.

Poses Question

“I ask myself if I should start a small business. I think about the classes I took in college--there was no pattern to them. I was a professional student.

“I’m into stocks, but all that catches your eye now are things like, ‘Northrop closes plant.’ My best friend’s getting laid off up north, and now when we write letters, we always seem to close them with something like, ‘Well, if I have a job. . . , ‘ “ he said.

Carlos, listening from across the table, nodded. At 44, he is the oldest of the four, with 15 years in the warehouse. He has two children. One of them is 10, and Carlos wants to set a good example, so in the last year, he’s gone back to a community college, taking business and marketing courses, trying to get a degree. But he’s also doing it in preparation for the worst.

“There’s always a certain amount of people who get left out in the cold,” he said. “I never expected to be doing this. I planned my life around this job.”

Sometimes the sheer size of a merger can make individual stories seem unimportant. After all, Alpha Beta has 212 supermarkets, Lucky has 335 and their parent, American Stores, is a $20-billion corporation, the largest supermarket operator in the country.

Hard to Believe

American Stores paid $2.5 billion for Lucky. Stacked up against that, it becomes difficult for workers to believe any promise a middle manager might make.

“Shoot,” said Jim, “there’s no guarantee that he’ll have a job either.”

“I believe their word about us keeping our jobs, but on the other hand, I don’t believe them,” Dave said. “Does that make sense?”

“Bottom line,” Carlos said, “wherever we go, we’re gonna end up at the bottom.”

“We just eat it,” Dave said. “We survive.”