Union predicts changes by Feb. 12 By Jim McLain, jmclain@VenturaCountyStar.com For
going on four months now, six words have been repeated almost like a mantra
around United Food and Commercial Workers Local 1036's Camarillo headquarters:
"One day longer, one day stronger."
Coined by long-ago labor leaders to be catchy, easily remembered and motivating,
the slogan is seen and heard almost constantly. It is posted on the walls,
printed on almost every handout, recorded almost daily for callers to the
UFCW's "Strike Update Hot Line" and recited often at rallies and on picket
lines.
But as the Southern California supermarket strike-lockout, which has
turned into the roughest and longest fight in the UFCW's history, enters
its 99th day and 13th week today, the line might be ringing hollow for
some. Consider:
Long and rough
Idling about 70,000 grocery workers from Bishop to San Diego, including
about 3,500 in Ventura County, since Oct. 11, this labor dispute is one
of the longest in recent U.S. history and the roughest Southern California
has seen in many decades, said Kent Wong, director of the UCLA Center
for Labor Research and Education.
It pits members of seven UFCW locals against Safeway Inc.'s Vons and
Pavilions, Kroger Co.'s Ralphs and Albertsons Inc., all huge companies
with stores throughout the United States and Canada that generate annual
revenues that top $30 billion each. With about 1.4 million members, the
UFCW is North America's largest private-sector trade union, a formidable
opponent, but perhaps not powerful enough.
Contract talks began in July, but so far the UFCW has been unable to
pressure the companies into even one concession. Its picket lines failed
to shut down any of the 859 affected stores. When the union withdrew pickets
from Ralphs stores as a goodwill gesture to shoppers Oct. 31, all three
companies began sharing the increased sales revenue. The union contends
the arrangement violates antitrust laws, and the Attorney General's Office
is investigating. But the revenues are going up, according to Ralphs,
and the companies are still sharing.
Even when members of the powerful International Brotherhood of Teamsters
refused to cross UFCW picket lines at the companies' distribution centers
during four weeks of the all-important holiday season, some supplies got
to stores. Some say the union might be running out of options.
"I don't know if they have any more cards to play now. I believe the
pain is growing on both sides, but more so on the union side with the
expiration of health benefits coming up and continued uncertainty on whether
workers will ever return to work," said David M. Smith, an associate professor
of economics at Pepperdine University in Malibu. "The union's position
hasn't strengthened certainly. Over time, it's more likely weakened."
Union leaders said they knew from the outset they were in for a tough
fight and prepared early. As the companies recruited replacement workers,
worked out a revenue-sharing arrangement and lined up independent truckers
to move supplies, UFCW members were assessed $2 a week for nearly a year
to build a strike fund, were advised to pay down debt and save all they
could.
Pay for union representatives and the UFCW's hourly employees was cut
20 percent while attorneys, accountants and other contractors voluntarily
reduced their fees by one-third. Hartwell and the local's three other
top leaders have been paid the wages of picket captains -- $225 a week
-- since the action began.
Hartwell, who is paid $137,000 a year to head the 12,000-member local,
said he took payment for accrued leave until late December. The union
was ready for a fight, he said, but not for management's intransigence.
"Nobody was really prepared for this strike. We were prepared for 30
days, 60 days, but now I've gone through $12 million," said Hartwell,
Local 1036's president since 1992. He said the local has distributed about
$400,000 contributed by the AFL-CIO and the UFCW International Union's
hardship funds to help members with survival costs, such as rent, mortgage
payments, utility bills and car repairs.
Picket-line tension
Tensions have run high since the walkout began. Union members report
frequent verbal abuse, but so do some customers and replacement workers.
Customers complain that pickets photograph them and block their way, while
some replacement workers allege pickets have keyed their cars or put spikes
beneath tires. Often there isn't much police can do.
"If it's nothing significant, if no crime occurred and we're not concerned
about someone's safety, then typically we're not going to file any kind
of police report," said Ventura Police Lt. Bryan Roberts. "If a car is
keyed, though, that's vandalism. ... It's a crime that's occurred and
we will take a report ... but unless it's witnessed by someone, there's
not going to be an arrest made."
From the start, the dispute has focused on spiraling health care costs
and pension benefits. The companies say they cannot compete with nonunion
food sellers such as Wal-Mart Stores Inc. without significant labor cost
reductions. The union contends the grocers' proposed cuts are too deep.
Management wants a two-tiered plan in which wages and benefits for new
hires would be well below those for current employees. The reduced employer
contributions for new workers eventually would not cover skyrocketing
health costs, the union contends.
In late December, the UFCW proposed health-care co-payment increases
that it claimed would save the companies at least $500 million over the
life of a new three-year contract. Analyst Husson of Merrill Lynch estimated
the plan would cover 30 percent to 50 percent of the cuts the companies
want, but management negotiators immediately rejected the offer and broke
off talks. UCLA's Wong said the proposal should have at least triggered
some hard bargaining.
"Under normal circumstances, that would have been seen as a big change
in the posture of the negotiations, but for management to just flat-out
reject it shows that they are really, to be honest, out for blood," Wong
said.
"The union is in a very difficult position. Management seems pretty intent
on extracting drastic concessions from the workers and has pretty much
decided that they're going to try to stick it out as long as they can
to break the backs of the workers, to make sure that their savings are
dried up, that their health care benefits have expired. It's a pretty
brutal way of proceeding."
Another strike settled
The UFCW settled a nine-week strike against Kroger Co. involving 44 stores
in West Virginia, Ohio and Kentucky in mid-December that also focused
on health care costs. Spokesmen for the union and Kroger said that dispute
is not comparable with Southern California's because it involved only
about 3,300 workers in an area with a much lower cost of living.
Part-time workers there do not get health care coverage. The union agreed
to cap annual health care contribution increases for other workers at
just 2 percent. The big difference, though, Wong said, was that Vons and
Pavilions owner Safeway Inc. was not involved. That company has taken
a lead role in the Southern California fight, aggressively demanding union
concessions.
Safeway CEO Steve Burd has reportedly said he would try to sell the Vons
and Pavilions chains if a new contract fails to reduce costs adequately.
"Safeway is the one that's really driving this, and Steve Burd in particular
is the one who has developed this pretty much scorched-earth policy,"
Wong said. "He wants to make sure the workers are brought crawling back
to the table. That's his plan."
Pinning hopes on reports
The UFCW, Hartwell said, is pinning its hopes on earnings reports the
companies should begin releasing later this month that are expected to
show huge 2003 losses caused by the strike-lockout. In a tersely worded
mid-November statement, Albertsons, the country's No. 2 food and drug
retailer, withdrew its forecast for a 2003 annual profit of $1.70 to $1.75
per share of common stock, saying it could make no forecast "due to the
magnitude and uncertain duration of the current labor dispute."
In a news release issued Thursday, the Los Angeles County Employees Retirement
Association, which owns stock in all three companies, said its board estimates
total losses will be about $1 billion. UFCW leaders said they believe
shareholders will be demanding action no later than Feb. 12, the deadline
for filing adjusted year-end financial reports.
"The things that we're looking at now are the things that make these
companies' CEOs move," said Hartwell. "I really think once those numbers
come out and the stockholders see exactly what has happened here and how
much money and profit they have lost, that stock will take a tumble, and
I think you'll see the CEOs taking a second look at this situation."
Analyst Jeff Tryka of the Delafield Hambrecht Inc. brokerage in Seattle
doubts big near-term losses will make many investors nervous. He sent
his clients a "hold" recommendation on Safeway's stock last month and
a "buy" on Albertsons. He does not cover Kroger.
Stores in better shape
"All of these companies are of a size that, even with the strike ...
they can weather this sort of a storm. ... This situation obviously is
not good for the companies, but it presents no real danger to them," Tryka
said. "The stores are probably in a better financial position than the
union or their workers are. ... You're talking about a $30 billion business
versus either workers or the union."
Management, Tryka said, is right to be concerned about Wal-Mart's plan
to open 40 so-called Supercenter outlets in California by 2009. Full-line
grocery departments would be combined with Wal-Mart's traditional retail
stores. The big-box behemoths already are in 43 states and have turned
the No. 1 retailer into the leading food seller as well. California's
first Supercenter is scheduled to open March 3 in La Quinta, near Palm
Springs, Wal-Mart spokesman Peter Kanelos said.
"It's sort of like when you hear a warning of an upcoming storm, but
it's sunny out. Wal-Mart's coming to California, and before you know it
they're going to have 40 Supercenters," said Tryka, who does not own stock
in Wal-Mart or any of the grocery companies, and whose firm does not do
investment banking for them.
"Right now you don't see anything so it's easy to say there's really
no threat ... but in reality, based on every other market where Wal-Mart's
come in to the supermarket segment, there's been a very significant impact
on the competitors ... an impact on wages and ... overall pricing at retail.
It's something that the management of the supermarket chains cannot ignore."
Representatives for the chains readily admit they will have to work to
get thousands of customers who have been shopping elsewhere back.
Steve Portigal, who runs a Bay area consulting
firm that studies consumer behavior, said the dispute will leave a bad
taste in many customers' mouths, but he believes most will return eventually.
Probably supermarket management will try to be more welcoming, he said,
with more greeters at the doors and managers on the floor to talk with
shoppers.
What they really need to do, he said, is offer deeply discounted prices
for a few weeks. That will bring customers in, and they will stay because
for most people the big markets are easier, more convenient and usually
less expensive. To most customers, that's what is important.
"Grocery stores like to pretend that they have kind of a lifestyle relationship
with their customers, but the fact is it's kind of a faceless place to
grab what you need, to go do what you have to do," Portigal said.
'Not a boutique'
"It's not a boutique. If these were boutiques, like my favorite jewelry
store or hair salon where I have a much more personal relationship, when
you make it difficult for me to do business with you, I'm going to go
elsewhere, but when it's a convenience factor, I think that's what's going
to overwhelm ... they're going to do what's best for them."
Still, managers of uninvolved stores who have seen their business boom
over the past 13 weeks believe many of their new customers will stay with
them. Business doubled at the independent Trade Winds Market in Oxnard
in the first few weeks of the strike, Manager Joe Silva said, and is still
about 30 percent above normal.
He's stocking items such as goat's milk and several unusual varieties
of cheeses and cereal brands that he did not carry before the walkout.
He is confident he will continue seeing many of those new faces.
"Customers are kind of disgusted with everything that's happened. Regardless
of who's right or wrong, they're going to blame the store itself," Silva
said, "so I think we will keep a lot of the customers." Copyright 2004, Ventura County Star. All Rights Reserved. |