GROCERY CHAINS Despite debt, Safeway refuses to give in to striking workers

The union leader says the executive's comments will strengthen strikers' resolve.
LOS ANGELES TIMES
Safeway Inc. chief executive Steven A. Burd vowed Thursday not to give in to demands by striking Southern California supermarket workers, declaring that the contract offer from the three big chains is as "as good as it gets."
Taking a hard-line stance "is an investment in our future," Burd said, adding that Safeway was prepared to take on debt to avoid giving strikers what they want. He predicted that expenses at the supermarket giant would go up by more than $130 million in three years if it didn't battle rising employee-related health-care costs now.
"It's nasty business, and we wish we didn't have it," he said in a conference call with analysts about Safeway's third-quarter profit, which was down sharply. But the cost of the strike, he said, is "a very small number compared to accepting business as usual."
Burd's comments were the first from a supermarket chief executive since the United Food and Commercial Workers union struck Safeway's Vons and Pavilions stores late Saturday. Hours later, Albertsons Inc. and Kroger Co.'s Ralphs, which bargain jointly with Safeway, locked out their workers.
Union leaders said Burd's tough comments were more likely to strengthen their members' resolve than weaken it.
"Now these men and women fighting for their futures realize the man at the top of their company does not care about them," said Greg Conger, president of UFCW Local 324 in Orange County.
Greg Denier, UFCW communications director, said the hard-line strategy could backfire in an industry so dependent on good relations with customers.
"What he's trying to sell Wall Street is that the short-term loss will result in long-term gain from lower wages and the elimination of benefits," Denier said. "But he's antagonizing the work force and alienating the customer base. If this goes on, they won't come back."
Benefits proposals
The strike was called over employer proposals to cut health care and pension benefits and to create a substantially lower tier of wages and benefits for new hires. The contract proposal -- which was rejected by 97 percent of voting union members -- also would allow stores to shift union work to outside vendors and to open nonunion stores.
Top wages for store employees range from $7.40 for baggers to $18.19 for meat cutters. Union officials say the average wage is about $12 an hour and that most workers work part time.
All employees now receive fully paid family health benefits. The grocery chains say workers must start shouldering some of these costs, citing escalating health-insurance expenses and competition from nonunion competitors. Under the proposal, workers would, among other things, have to contribute to premiums for the first time, paying at least $780 a year for family coverage.
Burd acknowledged that the strike may be "quite impactful" to the 1,702-store chain's bottom line but would not reveal sales declines at the 289 Safeway stores affected by the strike.