February 26, 2007
Only Eight Negotiating Days Left Till March 5th
Yes, Yogi, it is “like
deja vu all over again.”
Today is February 26 and in eight days (March 5), the current labor contract between 59,000 grocery store employees represented by the United Food and Commercial Workers (UFCW) union and Albertsons, Ralphs and Vons/Pavilions will expire.
Three years ago, the negotiations between the parties went nowhere. An eventual lockout and strike resulted in lost wages for striking and locked out employees; lost revenues for the chains; and a windfall for companies such as Stater Bros. (itself a union shop) and Trader Joe’s (not).
Ultimately, things turned out even worse for Ralphs, which wound up having to set up a $50 million restitution fund and pay $20 million in fines after being found guilty of secretly rehiring hundreds of locked-out workers using false Social Security numbers and names. The company was put on three years probation, as well.
Recently, both Stater Bros. and Gelson’s have arrived independently at deals with the UFCW. The two chains represent about 15 percent of the grocery market in Southern California. What makes the deals signed by Stater Bros. and Gelson’s so significant is the elimination of the two-tier wage and benefits structure that was heralded by the other chains as a key achievement in the current contract.
Those who have found fault with the system contend it has driven up the already high turnover that stores have to deal with.
The San Diego Union-Tribune cited Larree Renda, executive vice president and chief strategist and administrative officer for Safeway, as describing turnover before the strike as being close to nonexistent.
Today, said Ms. Renda, “It is not the highest. It’s not lowest.”
Adena Tessler, of the Rogers Group, a public relations firm hired by the three major chains to speak about the contract talks, said, “Like all retail, we have high turnover at the entry level. However, because of the quality benefits, leadership training and career opportunities, our overall employee retention is far greater than the overall retail industry.”
According to the UFCW, turnover is way up at the chains since the lockout and strike. Only 23 percent of clerks and 15 percent of clerk helpers remain on the job within the first year of being hired, according to the union.
Neither the chains nor the union expect that a deal will be completed by March 5.
Greg Conger, president of UFCW Local 324 in Buena Park, said that so far the union has only had a couple of days negotiating with Albertsons. “There’s still a lot of issues,” he told the Orange County Register. “By this time next week, we had better be in some pretty hard, brutal negotiations so we can finish this off before this contract expires.”
Both sides, as would be expected, blame the other for the lack of progress.
Pete Van Helden, president of the retail west region for Supervalu, the parent company of Albertsons, said the date should not be made into a major issue. “It’s very common that negotiations go beyond contract expiration dates,” he said. “We could agree to have a contract extension. Frankly, it’s looking like that’s what will happen here as we approach that contract expiration date.”
Mr. Conger said the union might be amenable to that if it appeared as though progress could be made on eliminating the two-tier system.
“If the employers dig in their heels on two-tier, then we’ll ask them to give us a final proposal and take it to the members for a vote,” he said.
Steve Burd, chairman, CEO and president of Safeway, said one of the biggest issues complicating the road to getting a deal done was the UFCW’s refusal to negotiate with the three chains collectively. In response, the Los Angeles Times has reported, the chains have refused to negotiate with the seven UFCW locals representing the grocery workers.
Burd talked about the negotiations in a Thursday conference call about the company’s earnings. He reported that Safeway’s fourth-quarter profit surged 77 percent to $308 million, its best performance in recent years.
He called this round of talks “a slow process” that has been complicated by the UFCW refusing to bargain with the employers as a group.
In response, the employers have refused to negotiate with all seven UFCW locals in the region as a group, which has created 27 separate sets of negotiations.
Discussion Questions: Has the two-tier wage and benefits system been a success or failure since it was implemented after the lockout and strike? Can the big three chains “afford” to have their workers feel as though they lost again in this round of negotiations when a new contract is signed, sealed and delivered?
BrainTrust
Recent Discussions
Discussion Questions
Poll
I don’t think that either side has figured out how to work together. As was stated in some of the other comments, the real competition to both the union and the chains that they have contracts with are the non-union competition and a few supermarket chains that have been able to carve out a niche where they feel they can afford a much higher wage base.
Until the unions really do their job of not only representing the workers but making sure that the workers are as productive as they can be, management is going to have to keep fighting wage and benefit increases.
On the comment about turnover and the two tiered structure – I have been told by many union officials that they like to have turnover of the new workers. This way, these new workers end up contributing to pension plans and supporting other benefits – and then leave and never get anything for the money they paid.
A strike will not be in anyone’s favor and, in the long run, will weaken both the union and the companies they work for.
When the last strike was underway, Ralphs and Vons stores were disasters. Out of stocks were high, meat and deli counters anemic and produce sections were nearly bare.
Customers needed only one visit to find that their shopping experience was greatly compromised and that they’d most certainly need to go somewhere else to complete their shopping lists.
In a strike, everyone loses–the unions, the grocers and, most importantly, the customer without whom the unions and grocers will perish.
Sadly, modern unions are not about quality, good customer service and ensuring the long-term health of the companies, whose employees are their very survival.
Therefore, there’s no doubt we’ll continue to live out this very slow train wreck of dying unions that will undoubtedly take many once-great companies down with them in the process….
I agree with Mark. The unions are too focused on only half their battle.
Few could effectively argue supermarket employees are making “too much.” The union focus should be on raising pay at the non-union shops, not continually battling it out with its current partners.
I think the entire labor model is outdated and no longer applies to the supermarket industry. Those big three chains are never going succeed when the high end competition or employee owned stores skim off the best workers and at the low end, all Wal-Mart needs is warm bodies. The problems go deeper that a two tier wage and benefit system. There will be no winners among the big three or their workers. Stater Bros., Gelson’s, Whole Foods, Trader Joe’s, Wal-Mart, and Tesco, etc….those will be the winners.
There are so many issues in play here: the legacy of the last strike, the two-tier system, turnover, profits…the list goes on. However, I would like to take a broader perspective. News stories about executives being forced to leave companies with million dollar golden parachute clauses, record profits by oil and insurance companies and the rising differential between executive and worker pay have been prominent in the news. At the same time, the median housing price in California has risen so that most people with a moderate salary can’t afford them. As a result, the contentiousness is not surprising and probably won’t blow over easily.
The California UFCW and the unionized supermarket employers are setting themselves up for continued failure. The underlying issue isn’t being addressed. Nonunion food retailers (Target, Wal-Mart, Sam’s Club, etc.) will continue to take market share from the union stores. No one can prosper with labor costs that are 150% of the competition. The unionized employers should incentivize the UFCW to raise the nonunion store’s costs by (1) organizing them and (2) lobbying the government to require employer medical plan spending. The latter was done in Suffolk County, New York.
The UFCW needn’t organize every Wal-Mart. A journey starts with the first step. How about starting with just one nonunion location? Great fortunes can be made via cooperation. Conflict can eliminate great fortunes.
More Discussions
Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?Should IKEA Be Flattening Management?
Should IKEA be trimming down its management headcount?Is Legislation the Answer on Visa, Mastercard Swipe Fees as ~$200 Billion Record Is Set?
Is lawmaking the way forward on swipe fees?
I don’t think that either side has figured out how to work together. As was stated in some of the other comments, the real competition to both the union and the chains that they have contracts with are the non-union competition and a few supermarket chains that have been able to carve out a niche where they feel they can afford a much higher wage base.
Until the unions really do their job of not only representing the workers but making sure that the workers are as productive as they can be, management is going to have to keep fighting wage and benefit increases.
On the comment about turnover and the two tiered structure – I have been told by many union officials that they like to have turnover of the new workers. This way, these new workers end up contributing to pension plans and supporting other benefits – and then leave and never get anything for the money they paid.
A strike will not be in anyone’s favor and, in the long run, will weaken both the union and the companies they work for.
When the last strike was underway, Ralphs and Vons stores were disasters. Out of stocks were high, meat and deli counters anemic and produce sections were nearly bare.
Customers needed only one visit to find that their shopping experience was greatly compromised and that they’d most certainly need to go somewhere else to complete their shopping lists.
In a strike, everyone loses–the unions, the grocers and, most importantly, the customer without whom the unions and grocers will perish.
Sadly, modern unions are not about quality, good customer service and ensuring the long-term health of the companies, whose employees are their very survival.
Therefore, there’s no doubt we’ll continue to live out this very slow train wreck of dying unions that will undoubtedly take many once-great companies down with them in the process….
I agree with Mark. The unions are too focused on only half their battle.
Few could effectively argue supermarket employees are making “too much.” The union focus should be on raising pay at the non-union shops, not continually battling it out with its current partners.
I think the entire labor model is outdated and no longer applies to the supermarket industry. Those big three chains are never going succeed when the high end competition or employee owned stores skim off the best workers and at the low end, all Wal-Mart needs is warm bodies. The problems go deeper that a two tier wage and benefit system. There will be no winners among the big three or their workers. Stater Bros., Gelson’s, Whole Foods, Trader Joe’s, Wal-Mart, and Tesco, etc….those will be the winners.
There are so many issues in play here: the legacy of the last strike, the two-tier system, turnover, profits…the list goes on. However, I would like to take a broader perspective. News stories about executives being forced to leave companies with million dollar golden parachute clauses, record profits by oil and insurance companies and the rising differential between executive and worker pay have been prominent in the news. At the same time, the median housing price in California has risen so that most people with a moderate salary can’t afford them. As a result, the contentiousness is not surprising and probably won’t blow over easily.
The California UFCW and the unionized supermarket employers are setting themselves up for continued failure. The underlying issue isn’t being addressed. Nonunion food retailers (Target, Wal-Mart, Sam’s Club, etc.) will continue to take market share from the union stores. No one can prosper with labor costs that are 150% of the competition. The unionized employers should incentivize the UFCW to raise the nonunion store’s costs by (1) organizing them and (2) lobbying the government to require employer medical plan spending. The latter was done in Suffolk County, New York.
The UFCW needn’t organize every Wal-Mart. A journey starts with the first step. How about starting with just one nonunion location? Great fortunes can be made via cooperation. Conflict can eliminate great fortunes.