(The following story by Frank Green appeared on the San Diego Union-Tribune website on January 8.)
SAN DIEGO — Retail analysts say the 88-day-old Southern California grocery strike and lockout probably will end in the next month or so as mounting pressures on both sides of the dispute converge to force an agreement.
For one thing, analysts say, the three major supermarket chains continue to take big hits to their bottom lines as many shoppers patronize alternative stores such as Stater Bros. and Keil’s.
Safeway alone absorbed an estimated $496 million loss in sales in the fourth quarter at its Vons division due to the strike, according to a report Merrill Lynch released yesterday on the supermarket industry.
“We believe the strike will be over in a month or so,” the report said.
On the other side of the issue, health benefits for the 70,000 members of the United Food and Commercial Workers Union in the region could expire at the end of the month, which could induce some workers on the picket lines to break ranks.
Members of UFCW Local 135 in San Diego County already have seen their strike pay reduced from a maximum of $300 a week to $100.
“At some point soon, somebody’s got to blink and get this thing settled,” said George Whalin, president of Retail Management Consultants in San Marcos.
Whalin said he nevertheless expects any agreement to favor the chains, which want to cut health care costs and impose a two-tier pay and benefits system, although the companies may be compelled to budge from their hard-line negotiating position at the behest of disgruntled shareholders.
“These are publicly held companies, and they can take losses only so long,” Whalin said.
Shares of Albertsons, Kroger and Safeway climbed yesterday after the release of the Merrill Lynch report, which said it expects the chains to “shrug off” the continued short-term earnings damage from the strike and for their stocks to “bounce” on an agreement.
Albertsons shares closed at $23.48, up 26 cents, while Kroger shares were up by 30 cents to $18.78 and Safeway shares climbed to $22.19, up 11 cents.
Certainly, there was no sign yesterday that the dispute is any closer to a resolution than Dec. 19, the last time negotiators for the UFCW and the chains sat together at the bargaining table with federal mediator Peter Hurtgen.
That 12-hour session broke down after the supermarket chains rejected a new proposal from the union, including concessions the union said would have saved the chains more than $500 million in health care costs.
Union leaders subsequently characterized the proposal as a reasonable solution to grocers’ concerns of growing competition from discounters with lower labor costs. The companies, however, said the proposal offered nothing new.
Yesterday, Federal Mediation and Conciliation Service spokesman John Arnold said Hurtgen continues to maintain contact with both sides in the dispute, although no new talks are scheduled.
“It’s status quo from our perspective,” Arnold said.
Representatives of the UFCW and the companies likewise said they had no idea when bargaining might begin again, much less when a new contract would be signed.
“Nobody has a crystal ball, but it would be wonderful” if an agreement could be reached by the end of the month, UFCW spokeswoman Ellen Anreder said. “However, both sides have to be willing to sit down and negotiate meaningfully.”
Meanwhile, pickets remained on duty yesterday at Albertsons and Vons stores, apparently influencing some shoppers to stay away.
At the Vons outlet in the La Mesa Springs strip mall at lunchtime, for instance, there were nearly as many pickets outside ? about 15 ? as customers inside.
Several pickets characterized the morale of their comrades as “fair,” and said few workers have defected and gone back into the store to their old jobs. But analysts said that could begin to change if health benefits are cut off at the end of the month, when the trust fund administering payments could run out of money.
Grocery workers had been told last month that benefits probably would stop Dec. 31, but union leaders announced last week that there was enough money to extend payments through January.
The UFCW’s Anreder, who declined to predict how long health benefits might last, said union members have been notified that they can pay $365 out of their own pockets to maintain coverage through March.
She accused Albertsons, Kroger and Safeway of not paying into the fund since the dispute began in October, saying, “They have reneged on their legal and moral obligations.”
The latest Merrill Lynch report, written by retail analyst Mark Husson, said the supermarkets and the UFCW have to find a way to work together because both face threats from the coming incursion of nonunion grocers such as Wal-Mart and Target.
Wal-Mart is expected to open at least 40 of its hybrid Supercenters in the state in the next few years.
Thus, it’s unlikely that the chains would move to permanently hire temporary workers, or to ultimately try to decertify the UFCW, the report stated.
Besides Safeway, the two other chains in the dispute also have seen sales slip by hundreds of millions of dollars in the past three months.
Albertsons, for one, has said it lost $132 million in sales in the first 19 days of the labor battle. If that figure is extrapolated over the course of the entire strike and lockout, the company’s drop in sales could be more than $600 million.
Kroger’s losses are tougher to calculate, although the chain has said it lost $135 million in sales during the first 29 days of the dispute. The UFCW removed pickets from Kroger’s Ralphs stores at the end of October in a divide-and-conquer strategy, and sales have since been comparatively good at its outlets.
“Over the holidays, we experienced very heavy sales volumes,” Ralphs spokesman Terry O’Neil said.
Meanwhile, the UFCW continues to pick up support for its cause from community and religious groups.
The Pacific Area Reform Rabbis, which represents several hundred rabbis in the region, unanimously passed a resolution is support of striking and locked-out grocery workers at its convention yesterday in Palm Springs.
Under the resolution, “we won’t break the picket lines or shop at the stores. We’ll provide meals to strikers, offer prayer vigils and adopt some stores,” said Rabbi Laurie Coskey, director of the Interfaith Committee for Worker Justice in San Diego County.