Grocers, Union Agree to Contract

Times Staff Writer

Three big grocery-store chains reached a tentative union contract with 8,900 employees in Northern California, averting a work stoppage.

The peaceful climax to contract talks -- a contrast to the stalemate that kept more than 50,000 grocery workers off their jobs in Southern and Central California for 4 1/2 months starting late last year -- could provide a blueprint for ending negotiations that are continuing between stores and about 30,000 union members in the San Francisco area.

The United Food and Commercial Workers Local 588 in Northern California said the proposed contract reached late Sunday with Safeway Inc., Albertsons Inc. and Kroger Co.’s Ralphs chain didn’t include a “two-tier” wage and benefits system.


Under a two-tier system like the one in the contract that finally ended the Southern and Central California dispute, new hires are paid less and receive fewer benefits than employees who started working under earlier contracts.

Union officials here fiercely opposed the two-tier idea, but the supermarkets prevailed when 59,000 union members ratified the new contract. The supermarkets insisted they had to slash their operating costs to compete with nonunion discount chains, such as Wal-Mart Stores Inc., that are expanding in the grocery business.

Still, the chains paid dearly, suffering more than $1.5 billion in lost sales during the strike and lockout. And they’ve said the costs of luring back pre-strike customers are continuing to hurt their profits.

That probably influenced the chains’ willingness to agree to a Northern California contract without the two-tier program, union officials and industry analysts said.

“It’s a major concession on the part of the employers,” said Rick Icaza, president of UFCW Local 770 in Los Angeles. “If any good came out of our strike, it’s that the employers are now going to be gun-shy” about withstanding another strike.

Safeway, based in Pleasanton, Calif., said it was “pleased” with the tentative contract in Northern California but didn’t elaborate. Albertsons declined to comment, and Ralphs didn’t return calls seeking comment.


The UFCW made some concessions in Northern California, such as stretching out the time it would take for new hires to reach top scales in wages and benefits, said UFCW Local 588 President Jack Loveall.

UFCW Local 588 represents workers at nearly 170 stores run by Safeway, Albertsons and Ralphs in a region that stretches from the Oregon border down through the Sacramento Valley and as far south as Modesto.

The Northern California contract could provide an “encouraging precedent” for settling the Bay Area talks before the current, extended contract expires Jan. 15, said Jonathan Ziegler, a principal with PUPS Investment Management, a Santa Barbara firm that focuses on the retail industry.

But he noted that several UFCW locals were jointly bargaining in the Bay Area and stressed that no two sets of negotiations were the same.

“It’s not a done deal that this one will apply to the Bay Area,” Ziegler said.

On Friday, UFCW Local 588 also reached a tentative contract with similar terms for 6,500 Raley’s Inc. employees. The privately held company runs about 100 Raley’s, Bel Air Markets and Nob Hill Foods stores in Northern California.

Most details of the contracts weren’t disclosed. Workers are expected to vote on the three-year pacts by mail this month.


The UFCW’s Loveall said, however, that the proposed pacts included wage hikes and wouldn’t require that workers pay premiums for health insurance. New hires would start with a less generous healthcare plan but could work their way up to the plan covering veteran employees, he added.

Also, the contributions that supermarkets would make to employees’ healthcare plans would be capped at a certain dollar amount, so that the stores would have a fixed payment that wouldn’t escalate with inflation, Loveall said.

Safeway also owns Vons and Pavilions in Southern and Central California. The UFCW’s strike against those two chains in October 2003 prompted Albertsons and Ralphs, which were bargaining jointly with Safeway in contract talks, to lock out their UFCW workers.