High stakes for supermarkets, unions
As Calif. workers threaten to bring pickets to Baltimore, labor dispute underscores Wal-Mart's influence on industry
Warren Miller, a dairy clerk at a Kroger store in West Virginia, pickets outside a Safeway in Laurel. (Sun file photo by Andre F. Chung / November 25, 2003)
Negotiations to end a months-old strike against two grocery store chains owned by Safeway Inc., Vons and Pavilion are at an impasse. Meanwhile, contracts for workers in other regions -- including Baltimore -- are set to expire early next year.
If, in the end, grocery store clerks prevail on the retailers to continue to pay for health-insurance coverage, union negotiators in other areas will have an advantage.
But if Safeway -- which is based in Pleasanton, Calif., and has about 6,000 workers in Maryland -- is able to successfully shift most of the costs to workers, "it's going to be like raw meat for the chains here," said Bill Barry, director of labor studies at Baltimore County Community College.
At the center of the dispute with the United Food and Commercial Workers Union is the growing influence of Wal-Mart Stores Inc., the world's largest retailer. Based in Bentonville, Ark., Wal-Mart is squeezing retailers' profit margins on products ranging from toys to groceries.
The company, the parent of the Sam's Club wholesale grocery chain, plans to open food stores in California next year.
And as supermarkets prepare to battle Wal-Mart, they are struggling to find ways to keep costs low without cutting payrolls. Self-checkout machines and weekly specials, however, can only go so far.
More broadly, the California labor struggle is considered a microcosm of the current state of the nation's economy and for that reason it is being watched by both union leaders and industry officials.
The latest round of talks with a federal mediator ended in impasse on Dec. 19. Workers have been on strike at the Safeway-owned stores since Oct. 11. In addition, Albertson's Inc., a grocery chain based in Boise, Idaho, and Ralphs, owned by Cincinnati-based Kroger Co., bargain with Safeway. They locked out their union workers the next day.
Kroger does not have stores in Maryland. Acme Markets Inc., an Albertson's subsidiary, has stores in Fallston, Chestertown, Stevensville, Elkton and Havre de Grace. The UFCW has 1.4 million members nationwide, including about 50,000 locally.
The strike "has profound implications for consumers that go beyond just having your supermarket picketed on a Saturday afternoon," said John Brouder, managing consultant with Boston Benefit Partners, an employee benefit consulting firm that works with employers and labor unions.
Baltimore area eyed
Locally, striking California workers have picketed some Safeway supermarkets in the Washington area to bring national attention to their cause. Contracts in the Baltimore-Washington region expire in March, and union leaders have told members to expect a strike if the California dispute is not resolved and management here wants workers to make similar concessions.
The Washington pickets have received a good response so far, and there are plans to expand the campaign to Baltimore soon, said Jill Cashen, a local UFCW spokeswoman. The union also represents employees at Giant Food Inc. and Super Fresh here.
"Every contract is different," said Craig Muckle, public affairs manager for Safeway's Eastern region. "I don't know what the issues are on the table, and what they might end up being here. It's difficult to speculate on what's going to occur in March."
While some stores are being picketed, "customers are still coming in," Muckle said.
At Giant, the Landover-based subsidiary of Dutch grocer Royal Ahold N.V., spokesman Barry Scher said officials are monitoring developments in California.
"As a matter of course, we always follow labor contract discussions involving the food industry, and other industries, too," he said. "It provides us with an opportunity to follow issues and how they are resolved."
The Teamsters union added its support to strike last month, stopping work at 10 distribution centers in Central and Southern California. The pressure on the companies is stepped up, said Brouder of Boston Benefit Partners.