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Supermarkets, Clerks Gird for Possible Strike

Workers hope to hold on to wage and benefit gains. The chains say they must lower labor costs to be competitive.

September 29, 2003|Nancy Cleeland and Melinda Fulmer | Times Staff Writers

Three major supermarket chains and 71,000 Southern California food clerks are locked in high-stakes contract negotiations that both sides say could lead to a regionwide strike next month.

At stake are the wages and benefits won through decades of hard bargaining and strikes by the United Food and Commercial Workers union. Cashiers earn as much as $17.90 hourly, are guaranteed a pension and pay no premiums for family health insurance.

The chains say they must lower labor costs to remain healthy -- citing slumping sales, rising health-care costs and, above all, competition from Wal-Mart Stores Inc. and other nonunion retailers that are moving into grocery sales. Stock analysts have hammered at the companies -- Safeway Inc., which owns Vons and Pavilions; Kroger Co., which owns Ralphs; and Albertson's Inc. -- to bring employee costs down.

The region's last supermarket strike was 25 years ago, when members of the UFCW throughout Southern California walked off the job for five days to win wage increases. In the previous three decades, area clerks staged three strikes lasting as long as a month to win pensions, health insurance and sick days.

Both labor and management have been preparing for a strike. The union has urged its members, who would collect about $200 a week in strike benefits, to set aside money. Supermarkets, meanwhile, have begun advertising for strike replacement workers in newspapers and have posted signs in stores soliciting applications.

Store managers also have been trained and licensed to drive large delivery trucks in the event that Teamsters drivers refuse to cross picket lines, union officials said. Proposals on the table call for employees to pay $1,300 a year for family insurance premiums, and to accept large increases in deductibles and co-pays for doctor visits and prescription drugs, the union said.

The markets want to slash premium pay for Sunday and night shifts and reintroduce split shifts. They also want the ability to move any jobs outside "core" areas of produce, meat and groceries to nonunion subcontractors, union negotiators said.

Wage levels would be frozen for existing employees, while new hires would take a lower rate, with a top wage of $14.90 after eight years of employment. Employees currently reach top scale in two years.

Representatives for the markets would not comment on specific proposals but confirmed they were seeking concessions.

"For us to survive in the long run, the playing field has to be leveled somewhat," said Terry O'Neal, spokesman for Ralphs Grocery Co., a unit of Cincinnati-based Kroger, citing rising health-care and other costs that bring the total compensation package for an average clerk to about $23 an hour. "It has affected our ability to compete."

Profits are down at both Kroger and Safeway. For the first two quarters of this year, Kroger reported net income totaling $542 million on sales of $28.6 billion, a slight decrease from the $569 million it earned on sales of $27.6 billion in the same period last year.

Safeway saw its net income drop 50% in the first half of this year, to $323.6 million, from $641.1 million for the same period in 2002.

Albertson's had combined net income of $334 million for its first and second quarters this year, a big increase from the $92 million it earned for the same period in 2002. But the profit largely was driven by closing stores and exiting unprofitable markets.

In its latest quarter, Albertson's reported a 1.3% drop in sales at stores open at least a year, compared with the same period a year earlier. Kroger's same-store sales were down 0.1% for the latest quarter, while Safeway's dipped 2.2%.

Along with pressure to post stronger numbers, the supermarkets are feeling the heat from Wal-Mart's expansion into groceries.

"The retail environment is changing, not just in Southern California but around the country," said Stacia Levenfeld, a spokeswoman for Boise, Idaho-based Albertson's. "We have to make sure that our labor contracts as well as our operating structure are competitive." She added, however, that "we are still optimistic that we can reach a settlement."

Vons, a unit of Pleasanton, Calif.-based Safeway, would not comment on the negotiations. But in a July newsletter to employees, the company warned: "Each new [nonunion] store or an expanded food offering has the potential to take away grocery business from our stores, which means fewer hours and jobs for our employees. To ignore or further widen the cost gap with these competitors would be irresponsible."

The union has asked to maintain benefits at current levels and has not made a wage proposal yet.

Negotiations have been held almost daily at an Anaheim hotel for three weeks and have intensified in recent days, union bargainers say. The contract will expire at midnight Sunday.

The UFCW expects to present a final offer to members that night and then hold elections over the next three days. Members will be asked to approve the contract or to strike.

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