Top California Grocers Hobbled by Strike

October 12, 2003
By Kevin Krolicki

LOS ANGELES (Reuters) - The union representing some 70,000 Southern California grocery workers called a strike against Safeway Inc.'s SWY.N Vons and two rival supermarket chains responded on Sunday by locking out union workers.

Picket lines organized by the United Food and Commercial Workers Union formed at stores from Los Angeles to San Diego, the first grocery strike in 25 years in the area, one of the nation's most populous and a key market for the chains.

In response to the Vons strike, Albertsons Inc. ABS.N and Kroger Co.'s KR.N Ralphs, which are covered by the same master contract, locked out union workers from the first shift on Sunday.

All three chains kept stores open with replacement workers who had been hired in preparation for the possible strike, said Sandra Calderon, a spokeswoman for Vons.

A four-year-old contract between the United Food and Commercial Workers Union, the AFL-CIO affiliate that represents about 1.4 million workers, and the region's three dominant supermarket chains expired on Oct. 5.

The labor dispute, which hinges on health-care costs, comes as unionized grocery workers across the United States have contracts up for a difficult renegotiation as their employers look to cut costs to offset weaker sales growth.

Union workers in Southern California on Friday voted 97 percent in favor of rejecting a contract offer from the grocery chains and authorizing a strike.

The union charges that the chains, using the competitive threat of Wal-Mart Stores Inc. as a stalking horse, are trying to shift hundreds of millions of dollars in health-care costs to workers.

"They have as yet failed to substantiate the need for these concessions," said union spokeswoman Ellen Anreder.

The supermarket chains say they are asking workers to help pay insurance premiums in response to spiraling health-care costs and growing threats to their business. Under the rejected proposal, union workers would contribute $5 per week for their own insurance and up to $15 per week for family coverage.

Dave Simpson, president of Albertsons Southern California division, in a statement issued late Saturday called the union's action "misguided and frustrating" and blamed the union for not offering a "meaningful or reasonable response to the companies' comprehensive proposal."

Contract talks broke off on Saturday and there is no plan to reconvene, both sides said. A federal mediator brought the parties together for the last round of talks last week in Anaheim as the strike vote loomed.

At one Vons in northeast Los Angeles on Sunday, a handful of shoppers crossed a picket line formed by about a dozen union workers carrying signs in English and Spanish, but as many turned around when strikers urged them to shop at a nonunion grocery down the street.

Grocery store baggers covered by the UFCW start at $6 per hour while the most experienced workers who oversee departments make about $17.90, Andreder said. The average wage is between $12 and $14 per hour, she said.

Wal-Mart, besides being the world's largest company, has expanded to become the biggest player in the fiercely competitive $680 billion U.S. grocery industry it joined only a decade ago. Wal-Mart is a nonunion shop.

Wal-Mart's massive scale has let it extract better terms from suppliers, widening the cost advantage between itself and traditional outlets like Kroger, Albertsons and Safeway.

Although Wal-Mart does not have grocery operations in Southern California, the company has announced plans to open about 40 hybrid grocery and general merchandise Supercenters in the next several years.

Even after that expansion, Wal-Mart would control only about 1 percent of the region's grocery market, Anreder said. The three dominant chains, taken together, have seen profits increase 91 percent over the past five years, she said.

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