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Safeway Chief at Center of Standoff

The stakes are high for Steven Burd, whose firm has more stores in the state than its peers and is under rising pressure.

October 19, 2003|James F. Peltz and Melinda Fulmer | Times Staff Writers

If there is one person at the heart of the Southern California supermarket strike, it might well be Steven A. Burd.

As Safeway Inc.'s chairman and chief executive, Burd is leading the industry's campaign to slash its labor expenses, making him the focal point for angry members of the United Food and Commercial Workers union.

Unwilling to make the concessions Burd and other supermarket executives want, the union launched a strike a week ago against Safeway's Vons and Pavilions stores, prompting Albertsons Inc. and Kroger Co.'s Ralphs stores to lock out their union workers.

The UFCW has railed against Burd's desire to pare workers' health-care and pension benefits, freeze existing salaries and institute a lower tier of wages for new hires. The union fears that would set a precedent for coming supermarket contract talks nationwide.

Los Angeles Times Saturday December 06, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 41 words Type of Material: Correction
Supermarket strike -- In its coverage of the supermarket strike and lockout that began Oct. 11, The Times has said repeatedly that the labor dispute affected 859 union grocery stores in Southern and Central California. In fact, 852 stores are affected.

It knows that Burd, 53, has a reputation for being tough with organized labor. There have been several strikes or other labor protests during his decade-long reign as CEO, including one last year in Ontario, Canada, that ended with Safeway shutting down the three stores involved, rather than agreeing to workers' demands.

"He has taken a very hostile approach," threatening employees "with store closure or job loss" if they didn't accept concessions, said Greg Denier, a spokesman at the UFCW's headquarters in Washington.

A calculating executive known for paying attention to the smallest details at his stores, Burd is unmoved by the union's complaints or the strike. He declined to be interviewed for this article but told analysts Thursday that he, Albertsons and Kroger were willing to accept a short-term loss of sales and profits for long-term cost savings.

"I'm not troubled by this," he said, referring to the losses the company is sustaining during the strike. "Does it drive me up the wall? The answer is no. We view this as an investment in our future, and I'm confident that my bargaining partners view it exactly the same."

After taking the helm at Safeway, Burd, a former management consultant, turned the once-struggling chain into a top performer. But now the 1,702-store chain is faltering again, as the supermarket industry is facing heightened competition from low-cost mass-merchandisers such as Wal-Mart Stores Inc. and Costco Wholesale Corp.

To meet that threat, Burd -- and many Wall Street analysts -- contend that Safeway and the other two grocery chains must cut their labor expenses if they hope to keep their prices competitive with those of nonunion rivals. Wal-Mart, for instance, is rolling out so-called Supercenters that sell a full line of groceries, and the first of 40 such stores in California is expected to open next year.

That makes the stakes higher for Burd than for his peers, because Pleasanton, Calif.-based Safeway has more stores in California than do Albertsons or Kroger.

The UFCW maintains that Safeway and the other supermarket chains are inflating the threat of competition, and that Safeway's problems stem in large part from Burd's own management missteps in recent years. Even the industry analysts pressing for Burd to win concessions blame him for part of Safeway's troubles. The result: a standoff, with 70,000 employees off the job at 859 stores in Southern and Central California, and the region's consumers grappling with its first supermarket strike in 25 years.

"What we have here is an irresistible force meeting an immovable object," said Gary Giblen, research director at investment firm CL King & Associates in New York. "This is the big showdown."

Tapped as Safeway's CEO in 1993, Burd became emblematic of a new wave of supermarket executives. Unlike most of his predecessors, who worked their way up through the grocery business, Burd was an outsider who had never held an hourly-wage job at a supermarket.

The son of a railroad manager in Minot, N.D., Burd has a master's in economics from the University of Wisconsin. He worked for management consulting firm Arthur D. Little in the 1980s and then handled various management assignments for Kohlberg Kravis Roberts & Co., a firm that specializes in buying companies via leveraged buyouts, or with mostly borrowed cash.

One of their properties was Safeway, and it was in trouble and buried under debt. Burd was brought aboard to restore order, and he did so in spectacular fashion.


Safeway Transformed

In a business notorious for skimpy profit margins, Burd launched a massive effort to cut costs and improve Safeway's service and efficiency.

His changes were major and mundane. He made Safeway more efficient in buying supplies, saving millions of dollars. He became legendary for being fastidious about the smallest details, such as the costs of Safeway's carry-out bags and the ribbon in its floral departments.

Burd also took a lead role in the supermarket industry's massive consolidation in the 1990s. Safeway's acquisitions included the Vons chain in Southern California in 1997 and Dominick's Supermarkets in the Chicago area in 1998.

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