Friday, September 3, 2004

Union for 8,500 Kroger
workers pitches contract

Concessions sought
to combat low-wage competition

By Randy Tucker
Enquirer staff writer

Carol Maynard, a meat clerk at the Mitchell Avenue Kroger, stocks cases.
(Meggan Booker/The Enquirer)
Hoping to avoid a strike or lockout this fall, the union representing about 8,500 Kroger workers in Cincinnati, Northern Kentucky and Southeast Indiana said it would present company officials with a formal proposal today for renewing its soon-to-expire contract.

The two sides are set to return to the bargaining table after earlier talks Tuesday in which negotiators discussed their positions and market conditions affecting the approximately 70 stores covered by the current contract, which expires Oct. 9.

"There has been a lot of meaningful dialogue," said Art Wulfeck, a spokesman for Kroger's Cincinnati-Dayton division, which is heading the contract negotiations. "We were encouraged."

John Marrone, a spokesman for the United Food & Commercial Workers Local 1099, echoed Wulfeck's sentiment, but said it's too soon to say where the negotiations are headed.


• Kroger began negotiations with United Food & Commercial Workers Local 1099 on Aug. 12.

• The union represents about 8,500 Kroger employees at 70 stores in Greater Cincinnati, Northern Kentucky and Southeastern Indiana.

• Contract issues include health care costs, wages and pension benefits.

• Since April, Kroger has reached labor agreements covering more than 60,000 employees in eight major markets.

Source: Kroger Co.

"It's not like we're at the bargaining table throwing spears at each other, but it's still early," said Marrone, who declined to discuss the details of the union's proposal. "We'll make our proposal Friday and wait for (Kroger) to come back with a counter offer. We've just begun the give-and-take."

At issue is the company's desire to cut costs to compete with low-cost operators such as Wal-Mart, which plans to open 10 food-selling supercenters in Greater Cincinnati and Northern Kentucky over the next year and a half, putting heavy pressure on Kroger's market share.

Wal-Mart's vast, non-unionized work force earns wages and benefits that can be less than half of what Cincinnati-based Kroger and other unionized competitors pay their workers.

Kroger, which still covers the full cost of health care for most of its full-time employees, says its costs are so out of line with competitors that it must seek concessions.

Health care costs alone totaled $1 billion last year, compared with profits of $314.6 million, the company said.

But union officials say the clerks and meat workers affected by the talks are prepared to do whatever it takes to maintain competitive wages, quality health care and secure pensions.

Still, both sides acknowledge that the latest round of contract talks will be tempered by the aftermath of two lengthy strikes that cost the company $246 million in profits last year.

A 41/2-month strike and lockout in southern California that ended in February and affected about 19,000 UFCW employees at Kroger's Ralphs division accounted for the lion's share of lost profits. The losses were compounded by an earlier 2-month strike involving Kroger workers in West Virginia, eastern Kentucky and Southeastern Ohio.

The strikes also put Kroger at a competitive disadvantage as once loyal shoppers turned to other stores.

"What happened in California was sobering, and those thoughts are in the back of everybody's mind," Marrone said.

Added Wulfeck: "Everyone agrees that both sides need to work together to find a balanced solution, and everyone recognizes that a work stoppage is not going to benefit anyone."

But separating the raw emotions of the contract talks from the practical issues is easier to say than to do for some Kroger employees.

Despite the posturing on both sides, many industry analysts say they doubt the negotiations in Cincinnati and Northern Kentucky will lead to a strike.

They point out that since the southern California dispute ended, Kroger and its unions have reached contract agreements in at least eight major markets without work stoppages.

Ongoing talks in other parts of the country appear headed for settlement.

"The bottom line is that neither side wants a strike," said Sheila McNeely, an industry analyst who follows Kroger for Fitch Ratings credit-rating service in Chicago.

"Both sides have too much to lose with the incursion of Wal-Mart into the marketplace," she said. "They can't afford to give up ground by shutting down operations."


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