Supermarkets Brace for Strike

Southern California supermarkets and their union workers girded for a strike that seemed increasingly likely Monday after talks on a new labor contract broke down.

Union leaders said 70,000 members could be picketing outside Ralphs, Vons, Pavilions and Albertsons stores as early as Saturday.

The three national chains that are facing the strike threat blamed union representatives for breaking off negotiations at midnight Sunday, when the regional contract expired.

“At the point of break-off there was no meaningful progress,” said Sandra Calderon, a spokeswoman for Vons, which with Pavilions is owned by Safeway Inc. of Pleasanton, Calif.

Leaders of the United Food and Commercial Workers union said they had warned for two months that they would not extend the talks. The contract covers grocery workers in seven locals from San Diego in the south to Mono County in the north.

Both sides said they remained far apart on key issues, including an employer proposal to cut health and pension benefits and to introduce a lower pay scale for new hires.

“We’ve offered to take a scalpel to our benefit package,” said Greg Conger, president of UFCW Local 324 in Orange County. “The employer decided to take a chainsaw to it.”

With the threat of a walkout looming, grocery workers appealed to customers for support.

Meanwhile, supermarket management took its case directly to workers, who will vote Wednesday and Thursday whether to accept the latest contract proposal or authorize the region’s first supermarket strike in 25 years.

“A strike of one day, one month or even one year will not cause the offer to improve,” Larree Renda, a vice president with Safeway, said in a video message shown to Vons employees. “Any way you look at it, a strike is a bad idea, not only because of what you lose but because of what you will not gain.”

Just in case, Safeway, Kroger Co. and Albertson’s Inc. moved forward with contingency plans by readying replacement workers, arranging for out-of-town employees to fill in and training managers to drive delivery trucks.

“The plan is to keep all of our stores open and operational for our customers,” said Terry O’Neil, a spokesman for Ralphs supermarkets, owned by Cincinnati-based Kroger.

At least two-thirds of the members of the seven UFCW locals involved in the contract talks would have to approve a strike for the walkout to go forward. Union leaders expressed confidence Monday that their members were prepared to strike.

“We haven’t had to do a lot of talking,” said Connie Leyva, president of Local 1428 in the west San Gabriel Valley. “All we have to do is show them what’s on the table. The cuts are so drastic, and the members can see that.”

Two other large unionized grocery chains in the region, Stater Bros. and Arden Group Inc.’s Gelson’s, have signed interim agreements and would not be picketed.

Jack H. Brown, chairman and chief executive of Colton-based Stater Bros. Holdings Inc., said it was unclear how shoppers would react to the rare sight of pickets outside supermarkets.

“It’s like there’s a whole new generation out there that has never seen a picket line at a supermarket,” he said. “It will be interesting to see how they make up their mind. We’re just going to play it by ear.”

Several union members said they would appeal to regular customers, many of whom they know by name, to shop elsewhere. At a Ralphs store in Venice Beach, some shoppers on Monday said they would honor such requests.

“I think that it’s important that people earn what they deserve,” said Bernard Kolb, 70. “If there’s a strike, I won’t shop here.”

Denielle Fisher, a 33-year-old bartender at the Casa del Mar Hotel in Santa Monica, said she believed the workers should not be asked to give up benefits.

“These people aren’t high rollers, and health care is already expensive,” she said. “I wouldn’t even mind paying higher prices if it meant that more of these people could keep their jobs and their benefits.”

Union leaders said the market’s proposal would cut $1 billion in employee benefits during the three-year life of the contract.

The proposal asks employees to contribute to insurance premiums for the first time, would add a $750 deductible and would greatly increase co-payments for prescriptions, doctor visits and hospital stays.

Experienced clerks earn up to $17.90 an hour with fully paid family health insurance and guaranteed pensions.

Executives with Kroger, Safeway and Boise, Idaho-based Albertson’s say significant cuts are necessary.

“As responsible companies, we are seeking nothing more than a fair contract that will help us to remain competitive in the face of soaring health care and benefit costs and increased competition from lower-cost operators,” John Burgon, president of Ralphs, said in a statement. “In an industry in which the typical net profit margin is just two pennies on the dollar, the ability to manage costs is crucial to the long-term future of our businesses.”

Indeed, much has changed for the three supermarket chains since the last union contract for Southern California was negotiated in 1998.

A weak economy has had shoppers paring back expenditures, while competition has mounted from warehouse stores such as those operated by Costco Wholesale Corp. and a growing number of dollar stores and other retailers that are selling food.

In the last year, all three major chains reported declines in identical-store sales, or sales at stores open a year or more.

California had been the most profitable market for the major supermarket chains, because of the limited number of discounters here, said Deutsche Bank analyst Edouard Aubin.

But with Wal-Mart Stores Inc. entering the grocery business here, and Costco slated to open many more stores in California in the next few years, that profitability is going to be affected.

“They now understand that food prices are going to come down in California over the next few years,” Aubin said of the chains. “They are trying to lower their cost base.”

Moreover, he said, the chains realize that these negotiations could set the tone for other union contract negotiations in the years ahead.

Supermarket workers, however, say they are just as committed to retaining their benefits as the markets are to making cuts.

“Sometimes, you have to stand up for yourself,” said Josie Hernandez, 60, a union worker at a Ralphs in Venice. At the same time, she noted that a strike would mean sacrifice.

“I’ve got rent to pay, car payments, food,” said Hernandez, who earns $20 an hour. “I have a little money put away.”

--- UNPUBLISHED NOTE ---

On February 12, 2004 the United Food and Commercial Workers Union, which had stated repeatedly that 70,000 workers were involved in the supermarket labor dispute in Central and Southern California, said that the number of people on strike or locked out was actually 59,000. A union spokeswoman, Barbara Maynard, said that 70,000 UFCW members were, in fact, covered by the labor contract with supermarkets that expired last year. But 11,000 of them worked for Stater Bros. Holdings Inc., Arden Group Inc.’s Gelson’s and other regional grocery companies and were still on the job. (See: “UFCW Revises Number of Workers in Labor Dispute,” Los Angeles Times, February 13, 2004, Business C-11)

--- END NOTE ---