National labor leaders threw their financial and strategic muscle behind striking and locked-out supermarket workers in California and four other states Thursday, casting the dispute as a defining battle.
AFL-CIO President John Sweeney announced the creation of a multi-union fund to back the United Food and Commercial Workers, which has 85,000 members on picket lines, most in Southern and Central California.
Sweeney said he was just beginning to solicit contributions and would not put a dollar amount on the fund. But UFCW President Doug Dority suggested it would be sizable.
“We fully intend to pay strike benefits as long as we have to pay them,” Dority said. “We will not allow the employer to starve our members back to work.”
The AFL-CIO also tried to undermine Wall Street’s support for the supermarkets’ hard-line position, staging a conference call with more than 150 institutional shareholders and analysts during which union officials depicted the companies’ strategy as foolhardy.
Analysts met the overture with skepticism. Lisa F. Cartwright of Citigroup Smith Barney said she continued to view the strike as “a necessary expense in order to lower the cost structure in a market where Wal-Mart is moving in” to the grocery business in California.
With the strike in its 20th full day today, Cartwright estimated the dispute could shave $20 million to $40 million from each company’s quarterly earnings. If the strike should exceed 40 days, the financial hit would double, she said.
However, Cartwright said the conference call did impress upon her the huge amount of union support for the strike. “It made me think we could be in for a bit longer battle,” she said.
Supermarkets have said they are prepared for that. “This doesn’t change anything,” said Brian Dowling, a spokesman for Safeway Inc., which owns Vons and Pavilions stores and has been singled out by the unions for the most criticism. “There’s no way to predict how long [the strike] will go on, but we are in it for as long as it takes.”
Of the unions’ conference call with analysts, Dowling said, “We would frame this as one desperate last-ditch attempt to put a little hurt on one of the companies.”
The message from both the supermarkets and the UFCW on Thursday was that neither was prepared to back down in the clash involving 70,000 workers and 859 stores. Although many issues are in dispute, health-care benefits are at the heart of the conflict.
“The bottom line is we’ve got a massive strike, the biggest one in the history of our union,” said Dority at a Washington news conference with Sweeney and other union presidents, including Andrew Stern of the Service Employees International Union and Thomas Buffenbarger of the International Assn. of Machinists.
Strike benefits are draining more than $10 million a week from national and local UFCW funds. As a backstop, the national union has taken out a line of credit using its Washington headquarters as collateral.
Sweeney said he would ask unions affiliated with the AFL-CIO as well as state and county labor councils around the country to contribute to the new national strike fund.
“They’re taking on every one of us up here,” Sweeney said. “They’re taking on everybody who cares about America’s families getting the health care they need at a price they can afford. These workers are not alone and have the full support of the entire union movement and our allies.”
Several analysts expressed impatience with the strike.
“Has somebody on either side of the table said, ‘OK, let’s talk?’ ” wondered Jeff Tryka of Delafield Hambrecht Inc. “When are you guys going to go back to the table and try to resolve this?”
Sarah Palmer Amos, the UFCW director of collective bargaining, gave what has become a stock answer for both sides: “We are ready and willing to talk at any time. But until there’s a substantial change, quite frankly, it doesn’t make a lot of sense.”
Stacia Levenfeld, a spokeswoman for Albertsons Inc., said that it was the union that broke off negotiations -- and that the union must make the first step to reopen talks.
“Before the strike began, the companies put forth a very good offer that the union leadership rejected,” Levenfeld said. “Since then, the unions have misrepresented our proposal and appear determined to continue down the strike path.”
Ralphs, a unit of Kroger Co., did not return calls for comment.
The union launched the strike against Safeway stores Oct. 11 after talks on a new contract broke down. Ralphs and Albertsons locked out their union workers the next day.
The union made its appeal to analysts before the market close Thursday. Safeway shares fell 14 cents to $21.11. Albertsons shares rose 20 cents to $20.08 and Kroger shares dropped 6 cents to $17.30. All trade on the New York Stock Exchange.
At the end of trading Oct. 10, the day before the strike began, Safeway was at $23.83, Albertsons stood at $20.97 and Kroger closed at $19.22.
The conference call ended with some tough questions from analysts, some of whom portrayed union expectations as unrealistic, particularly in light of the plans by Wal-Mart Stores Inc. to expand into the grocery business in California. Wal-Mart’s labor costs are far lower than the supermarkets’.
The union has won premier health benefits through years of bargaining, sometimes at the expense of wage hikes or other benefits. Members currently pay no premiums for full family health coverage. Union leaders have said they are willing to compromise but that the markets’ proposals were too extreme. They have said the proposals amounted to a 50% cut in benefits over the three-year contract.
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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)
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