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SoCal Grocers and Union Locked in Standoff Ready for Strike

Talks between the United Food and Commercial Workers Local 770 and Albertsons, Ralphs and Vons fall apart after employers unify to lock out employees if any of the supermarket chains becomes a strike target.

April 11, 2007
Related Topics: Benefit Design and Communication, Labor Relations, Latest News

Just three years after a 4½-month-long strike and lockout, contract negotiations between the three major grocery chains in Southern California and their union workers have become confrontational again. And observers say that this time the employers’ tough stance may backfire.

On April 4, talks between the United Food and Commercial Workers Local 770 and Supervalu’s Albertsons, Kroger Co.’s Ralphs and Safeway’s Vons fell apart after the employers said they banded together to lock out employees if any of the supermarkets become a strike target.

The employers agreed to the alliance “as a defensive measure” after union employees voted to authorize a strike, says Adina Tessler, a spokeswoman for the supermarkets.

The grocery chains applied this same tactic in 2003 negotiations. After the strike and lockout, the union, which represents 59,000 grocery workers in Southern California, conceded to the creation of a second-tier compensation structure that led to lower wages and benefits for new hires.

The supermarket chains’ extreme approach demonstrates how many retailers in general are feeling competitive pressure from the likes of Wal-Mart, says David Gregory, a labor law professor at St. John’s University in New York.

“Wal-Mart is the silent entity in all of this,” he says. “Everyone sees an increasingly competitive work environment where they can’t look beyond the short term.”

Companies form such alliances to prevent unions from singling out the weakest employer, negotiate a good deal, then pressure the rest to follow, observers say.

In this case, the companies were concerned that the union was targeting Albertsons, Tessler says.

“The concern was that they were going to pressure Albertsons to agree to terms that would ultimately unfavorably affect the future of all three companies,” she says.

But it’s questionable whether the grocers were successful with taking such an aggressive tactic last time. First, there is a pending antitrust lawsuit filed by California Attorney General Jerry Brown over the companies’ use of this alliance in 2003.

“The reason employers don’t usually come together like this is because it affects prices; it could be antitrust,” says Mike Sullivan, a principal in the litigation and labor and employment group of Goldberg, Kohn in Chicago.

The lawsuit is scheduled to go to court early next year.

It’s also surprising that the grocers are trying the same tactic after losing billions of dollars last time, says Kent Wong, director of the Center for Labor Research and Education at UCLA.

“They lost $2 billion in sales because 59 percent of consumers honored the picket lines and they still haven’t recovered from the horrible press,” he says. “Also, due to turnover, you see lower quality in service because there are so many new hires.”

On top of that, last year Ralphs was forced to pay a $70 million fine to settle charges that the supermarket illegally hired locked-out employees during the labor dispute under fake names and Social Security numbers because it was having a hard time staffing its stores.

“This would not seem like a successful approach, but it’s still being pursued,” Wong says.

An agreement could still be reached, however. The grocery chains and union are scheduled to return to the table April 16, with the stipulation that either party can end negotiations and give 72 hours notice of a strike or lockout.

“We are still committed to this process,” UFCW spokeswoman Jill Cashen says. “Up until now we have extended the contract, but there will be no more negotiations after this.”

—Jessica Marquez


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