Grocers Reject Union Offer; Talks Halted

Negotiations to end the strike won't resume this year. Teamsters decide to return to work.

By Nancy Cleeland
Times Staff Writer

December 20, 2003

Talks aimed at ending the Southland supermarket strike abruptly broke off late Friday after the union offered what it called substantial concessions on health benefits. The proposal was rejected and both sides called off negotiations until after the New Year, a union leader said.

In a second blow to the United Food and Commercial Workers, the Teamsters said its members would return to work Monday at warehouses owned by the three grocery chains in the dispute.

Nearly 8,000 Teamsters began honoring UFCW picket lines at the warehouses Nov. 24 in a move that both unions had hoped would force the supermarkets to back down from demands for cuts in benefits and a lower wage scale for newly hired employees.

That didn't happen. And with the holidays approaching, and the union and its 70,000 members under increasing financial strain, the UFCW presented its new offer.

Under the proposal, the supermarkets would save at least $350 million in health-care costs over the term of the three-year contract, according to Rick Icaza, president of UFCW Local 770 in Los Angeles.

The supermarkets have been seeking $1 billion in health-care savings, union officials have said.

The union's latest proposal represented "substantial movement, in the hundreds of millions of dollars," said another union official, who asked not to be named. Icaza said union leaders "agonized all day" Thursday before deciding to go ahead.

The union presented the offer Friday morning and both parties then broke for lunch. Icaza said the supermarket negotiators returned to reject the offer after 8 p.m.

"All we can do now is hang tough," he said.

Representatives of the three supermarket chains could not be reached late Friday, and did not respond to calls for comment earlier in the day.

Union workers struck Safeway Inc.'s Vons and Pavilions stores Oct. 11. Albertsons Inc. and Kroger Co.'s Ralphs locked out their workers the next day.

The three grocery chains have described their offers as generous in light of growing competition from low-cost, nonunion operators such as Wal-Mart Stores Inc.

Peter J. Hurtgen, director of the Federal Mediation and Conciliation Service, had called both parties back to the table Friday after talks had last broken off Dec. 7. The new union offer retained one feature of its last contract that the markets have sought to change. Under what is known as "maintenance of benefits," both parties agree on a medical plan and co-payment amounts, and the supermarkets absorb any unexpected cost increases. The chains want to change that to a "capped contribution" plan, under which cost increases would be paid by employees.

The chains' original offer, which was rejected by 97% of voting UFCW members, called for a wage freeze the first two years and a 30-cent raise in the third year, a substantially lower pay and benefit scale for new hires and changes to the health-care plan that union leaders said would lead to drastic cuts by the final year.

On Dec. 2, the markets made a new offer that would further reduce their health-care contributions, by about 15% in the third year. The markets gave ground in other areas, however, including dropping a proposal that would have allowed them to open some nonunion stores.

Over the decades, the UFCW has won strong contracts with relatively high wages and pensions and a premier health plan. Those gains have eroded in recent years as cheaper, nonunion grocery stores proliferated in the area. UFCW workers, the majority of whom are part-time, now earn an average of $13 an hour.

The Teamsters' decision to return to work followed a week of rumors and conflicting statements from union leaders. UFCW officials had said they could not expect the Teamsters to stay out indefinitely for a contract involving other workers.

The UFCW issued a statement Friday describing the removal of picket lines at warehouses and the Teamsters' return to work as good-faith gestures intended to create a better atmosphere for negotiations. UFCW International President Doug Dority thanked the Teamsters for their support, saying, "We have never seen such solidarity amongst workers in the supermarket industry."

But privately, UFCW officials acknowledged they hadn't expected the strike to last this long. The Teamsters union was spending more than $1 million a week in strike benefits, and some members were beginning to cross the picket lines after nearly a month off work. Also, the tactic grew less effective over time, as the chains found replacement drivers and warehouse workers.

"Say we were out for another two months. What is it doing? How is it helping?," said Jim Santangelo, president of Teamsters Joint Council 42.

Last month, when Santangelo announced that the Teamsters would honor the picket lines, he said his union's support would be a "silver bullet" to end the strike.

"At that time, I thought it was," the Teamsters leader said Friday. "It was a big move, but the one with the most money is usually the winner."

The strike and lockout have idled union workers at 852 markets in Southern and Central California. Workers on the picket lines get strike pay, but at a fraction of their usual salaries. In addition, company-paid medical coverage will soon lapse for the workers and their dependents unless a deal is struck to continue the benefits.
 
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