Gelson’s accord puts pressure on big chains
Gelson’s has become the second Southern California supermarket chain to reach an agreement with its workers union, removing the threat of a strike at another regional grocer as talks continue with the three national players.
The Gelson’s contract follows a deal last month between Stater Bros. of Colton and the United Food and Commercial Workers. Union officials say the contracts give them ammunition in negotiations with Supervalu Inc.'s Albertsons chain, Safeway Inc.'s Vons and Pavilions and Kroger Co.'s Ralphs, where they are pushing for higher wages for all members and improved healthcare coverage for recent hires.
For customers, the latest deal sets the table for picket-free shopping at another traditional grocery chain should negotiations between the union and the three majors once again disintegrate into a work stoppage.
The current contract is set to expire March 5.
Both Gelson’s and Stater Bros. avoided pickets and won new customers during the long industry strike and lockout three years ago by agreeing ahead of time to abide by the final settlement between the union and the three large chains.
Executives at Gelson’s declined to comment on the new agreement, but those familiar with the pact said it removed many of the issues that had riled employees since the current contract took effect in 2004.
“This proves that these companies can come up with a plan that solves the healthcare issues and pays decent wages,” said Rick Icaza, president of Local 770, the largest unit of the grocery workers union in Southern California.
Icaza declined to provide details of the tentative Gelson’s contract, pending the outcome of a vote by rank-and-file members to be scheduled this week.
Encino-based Gelson’s will employ at least 60% of its workers full time, plow more money into health benefits and eliminate a two-tier wage system implemented after the 4 1/2 -month work dispute that ended in February 2004, according to an individual familiar with the pact.
Gelson’s also will guarantee an hourly wage 5 cents higher than what the three national chains in Southern California will give their workers in the next contract, said the person, who asked not to be named because the agreement had not yet been approved.
One of the union’s top priorities is to unwind provisions in the current agreement that created a dual scale, which pays lower wages to new hires and mandates longer waiting periods to qualify for health insurance. About half of the nearly 66,000 workers at the major chains were hired after the work dispute and are subject to the lower pay and benefit scale.
In the negotiations three years ago, the major chains sought to drive down their labor expenses so they could better compete with discounters and warehouse chains such as Costco Wholesale Corp., Wal-Mart Stores Inc. and Target Corp., all of which have become major food retailers.
The traditional chains continue to face those competitors, as well as specialty grocers such as Trader Joe’s and Whole Foods Markets Inc. and a growing group of nonunion ethnic supermarkets.
In addition, giant British retailer Tesco will open stores in Southern California this year under its plan to spend $2 billion over five years to expand throughout the region and into Las Vegas and Phoenix.
Although the grocery workers union plans to refer to its agreements with Gelson’s, a unit of Arden Inc. of Compton, and Stater Bros. in talks with the large employers, it is unclear whether they will make any difference in the outcome.
“Like Stater Bros., Gelson’s is a small regional employer that has never been part of the negotiating process with the major grocery employers in Southern California,” said Adena Tessler of Rogers Group, a Century City public relations firm hired by the three major chains to speak about the contract talks.
Gelson’s, a high-end chain known for its gourmet prepared food and extensive selection of produce, opened its first market in Burbank in 1951. The chain has grown slowly to 18 stores, mostly in Los Angeles and Orange counties, and has about 1,700 employees in the grocery workers union. Stater Bros., with 162 stores and more than 13,000 union workers, is far larger and competes for the middle market with the three major chains.
Albertsons, by comparison, has 249 stores and 22,000 union employees. Ralphs operates 262 stores with almost 20,000 union workers. And Vons and Pavilions have a combined 274 stores and nearly 24,000 employees.
Negotiations between the major employers and the seven union locals are still in their initial stages, according to people familiar with the talks.
“We have presented them with an array of proposals and have had some good dialogue,” said Greg Conger, president of Local 324 in Buena Park.
Conger declined to provide details. Others, however, said the two sides had yet to hold substantive discussions about wages and healthcare benefits.
“Unless things get started in the right direction, I can see a strike authorization vote,” Icaza said. “So far, we have just been playing musical chairs.”