Dale Kasler: Save Mart's labor deal puts heat on Raley's, Safeway

By Dale Kasler / dkasler@sacbee.comJuly 13, 2012 

By making a late-night deal with its union workers, Save Mart Supermarkets has turned up the heat on two of its chief rivals.

The tentative contract agreement with the United Food and Commercial Workers, announced late Tuesday, does more than simply avert a strike by 11,000 employees against Modesto-based Save Mart and its Lucky subsidiary. It also creates a kind of bargaining template that could force Raley's and Safeway Inc., the other two unionized grocers in Northern California, to adopt similar packages.

What's more, it weakens the ability of Safeway and Raley's to withstand a walkout, giving them less clout at the bargaining table.

"It definitely puts pressure on the other two companies," said Ken Jacobs, a labor-relations expert at the University of California, Berkeley.

Details haven't been released, but the UFCW acknowledged Wednesday it made concessions to help Save Mart "in its current economic challenges." Still, the union said it salvaged the core of a compensation package that's among the most generous in the industry.

All three grocery chains in the region have been seeking help from labor to deal with the rise of nonunion stores like Wal-Mart.

Save Mart's deal could accelerate the union's negotiations with Safeway and Raley's -- talks that have consumed the lives of some 60,000 workers, with increasing tension, for 10 months.

"When there's a breakthrough with one, it would usually facilitate a settlement with the others," said UCLA labor expert Kent Wong. "It's the starting point for the resolution of the other contracts."

Raley's and Safeway "are hung out for now," said Bob Reynolds, a supermarket consultant in Moraga. "They are the people that are still left unsettled, whereas Save Mart's got a deal."

Responding to their competitor's breakthrough, Safeway and Raley's said they will continue to negotiate. Safeway said it expects an agreement "in the near future."

Raley's could take longer to sign a contract, Jacobs said. The West Sacramento grocer hasn't met with the UFCW in more than a month, and tensions have risen to the point that union members voted to authorize a strike. Of the three companies, it seems to be the most aggressive about extracting savings from the union.

Deal may push others

Raley's said it has asked for a copy of the Save Mart contract but added, "Our business and our needs are very different from Save Mart and Safeway, so we don't expect our agreement with the union to be the same."

Yet Jacobs said the Save Mart deal would likely set the mold for the other companies. The UFCW would be unlikely to surrender more to Raley's or Safeway than it gave Save Mart, he said. The reverse is also true, of course; Jacobs said the union probably won't get a better deal from Raley's or Safeway than it got from Save Mart.

In any event, with Save Mart's contract settled, it becomes much more difficult -- if not impossible -- for the other companies to risk a strike. Pickets would simply direct shoppers to the nearest Save Mart or Lucky, giving labor-friendly consumers a union alternative.

"That increases the union's leverage," Jacobs said.

The agreement with Save Mart provides "temporary labor cost reductions," according to a joint statement from the leaders of the three UFCW locals in Roseville, San Francisco and San Jose.

At the same time, the deal "maintains the highest wages, the finest benefits and the most generous pension plans in the grocery industry," the union said. The highest paid workers currently earn around $21 an hour, plus around $6 in benefits, although most earn less.

Save Mart President Steve Junqueiro said in a press release the contract will make his company "more competitive in the retail food market while providing enhanced job security and additional hours to our valued team of associates."

Union officials wouldn't divulge more details until members are ready to vote, sometime in the coming weeks.

The deal "is complicated," said Ron Lind, president of Local 5 in San Jose, in a brief interview. "It's something completely different than anything we've done in the past."

The agreement came after a 12-hour bargaining session in San Francisco under the guidance of a federal mediator. The two sides had established a "hard deadline" of midnight Tuesday for making a deal, although it wasn't clear what would have happened if no agreement were reached.

The three union companies have been losing market share in recent years. Save Mart revenue grew 1.2 percent last year to $5.04 billion, according to Stores magazine. But that was still slightly below 2009 sales.

Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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