Formal Talks Expected Soon With Mediator

Formal negotiations aimed at ending the long supermarket strike and lockout in California are expected to resume next week with a federal mediator, the union and the grocers said Thursday.

They would be the first formal talks in seven weeks. The development came one day after the stores rejected the union’s offer to submit the dispute to binding arbitration.

Sources familiar with the matter said the two sides had held recent, informal discussions that indicated progress might be made at the bargaining table, which was why they were set to resume formal talks. There is “a chance to accomplish something,” one source said.

They cautioned, however, that the upcoming discussions could falter just as they have before. At their last meeting Dec. 19 at an Orange County hotel, the union made a contract offer that it said contained major concessions. But negotiators for the Vons, Pavilions, Ralphs and Albertsons chains rejected it the same day, contending that it still would raise their labor costs above acceptable levels.

“The companies have taken a tough stance throughout the strike, and we believe this will continue,” analyst Lisa Cartwright of Smith Barney wrote in a note to clients Thursday.

The exact day of the renewed talks hasn’t been set, but the planned negotiations were confirmed by Ellen Anreder, a spokeswoman for five of the seven union locals involved, and by Safeway Inc. spokesman Brian Dowling.

Safeway, the parent of Vons and Pavilions, is bargaining jointly with Kroger Co.’s Ralphs and Albertsons Inc. in their talks with the United Food and Commercial Workers union.

Sources said the new bargaining session could be announced within the next day or two by Peter J. Hurtgen, the mediator trying to broker an end to the strike that’s nearly four months old.

The disclosure of the renewed talks came as national labor leaders held a rally on Wall Street to publicize the UFCW’s fight against the stores’ bid to lower labor costs. Union and political leaders told a gathering of about 250 people, mostly members of New York-area unions, that treating workers unfairly would hurt the sales and earnings of the companies.

“We will not let you destroy the men and women in Southern California,” said Linda Chavez-Thompson, executive vice president of the AFL-CIO. “The message for Wall Street is very simple: You have to support what is right for America’s workers.”

During the long absence of formal negotiations, the financial pain and the pressure to settle have grown sharply for both sides. Many of the 70,000 idled workers are facing severe personal hardship, and the stores are losing millions of dollars each day in sales.

The UFCW struck Vons and Pavilions on Oct. 11, and Ralphs and Albertsons locked out their union employees the next day. The dispute affects 852 supermarkets in Southern and Central California.

With so much at stake for both sides, the lack of progress “from the consumer’s point of view ... must be baffling,” said George Whalin, president of Retail Management Consultants in San Marcos, Calif. “Here are two reasonably intelligent sets of people who can’t figure out a solution to this dilemma.”

Why? The main cause is the huge chasm between what both sides want in wages and healthcare benefits. The stores want them vastly reduced; the union wants them left intact as much as possible. And each side views the outcome in Southern California as a critical juncture in its long-term future.

Safeway and the other chains are adamant about reducing their labor expenses, saying they need the savings to better compete with Wal-Mart Stores Inc. and other discount merchants that are expanding into the grocery business.

The chains propose having employees start paying for part of their healthcare benefits, and the stores want to install a two-tier wage and healthcare system that would provide new hires with much lower compensation than current workers.

The UFCW, noting that many of its members earn less than $25,000 a year, maintains that the stores’ demands would make healthcare coverage unaffordable for the workers. The union also vehemently objects to the two-tier system.

Other factors have exacerbated the dispute and contributed to the long stretch between formal bargaining, according to sources with knowledge of the parties’ behind-the-scenes maneuvering.

The longer the strike drags on, the more steeled each side becomes against making concessions. There’s a desire to give up less because the strike and lockout already have cost each side so much.

The sources say union leaders have complained that the supermarkets are simply intransigent -- unwilling to back off their demands for deep cuts in labor costs, and thus leaving no room for negotiation.

Union leaders also see the grocery negotiators as having little authority from the chains’ top management to actually bargain, making it difficult to propose new terms. “They are on a short rope,” one source said.

The union, in turn, has been chided for making proposals so vague that the stores can’t possibly entertain them, then publicly blaming the supermarkets for rejecting their overtures, the sources said. There is also occasional friction between some of the seven locals, and between the locals and the UFCW’s national body, which further complicates reaching a consensus, they said.

Taken together, all of these factors have left both sides at a stalemate. In an interview this week, Hurtgen said he wouldn’t bring both sides back to the bargaining table unless he had good cause, and noted that he doesn’t have the legal authority to force either side into negotiating.

“Otherwise,” he said, “sitting them at the table again would unjustifiably raise everyone’s expectations.”

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Times staff writer Walter Hamilton in New York contributed to this report.

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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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