Cobb: Shut 'em Down

October 16, 2003

Shut 'em Down

It's about to get ugly. The Teamsters are about to support the supermarket strike. That means that the distribution centers are going to be picketed and the trucks are going to stop rolling. That means that the union is going to the scortched earth policy. They want to shut them down. Classic confrontation.

Behind all of this is the spectre of Wal-Mart who is considering a move to California. If and when they do, they will steamroll over Ralph's, Vons & Albertson's market share. Wal-Mart pays the prevailing wage in retail, but here in Southern California, the unionized workforce in the supermarket industry are making good money and extraordinarily nice benefits. Wal-Mart employees, by comparison, have miserable healthcare and most rely on public health. If and when Wal-Mart comes to SoCal, there will be hell to pay in the labor market.

Today there are 70,000 folks on the street because of this strike. The eyes of the industry are all here.

I haven't spoken to many folks about this, but of course most of my pals are management. But what is amazing to me is that these stock clerks are demanding continuance of their pension plan. Pensions!? Since when did supermarket employees get pensions? What the hell is up with that? The local talk radio meme I'm hearing is that sentiment may be turning against the strikers, especially among people who used to work for supermarkets.

My personal experience with working with the Kroger organization was less than savory, and it is my professional understanding that Wal-Mart and HEB are the leaders in retailing. They are well-managed and smart and employ information technology (my domain) as a strategic advantage. So it doesn't come as much of a surprise that Ralph's, Von's and Albertson's are wetting their pants over the potential advance of Wal-Mart. One of them will probably bite the dirt within 5 years if Wal-Mart is a success. The other two will have to go upmarket and sell service and quality. It won't be easy.

I don't understand the fundamentals of why American healthcare is so expensive. But I suspect that the geniuses at Wal-Mart are not about to be pressured to up their benefit package per-employee expenditures. Consumers want low prices, period. And in a razor thin margin industry like supermarkets that means unionized workers will have hell to pay.

What remains to be seen is how paranoid the three chains are. None are likely to throw in the towel in anticipation of the Wal-Mart entry, but now that matters have escalated they may very well go to the wall.

Also, I have heard that union workers who cross the pickets are making $6, losing strike pay and paying a fine to the union. Scabs are making $20.

Posted by mbowen at October 16, 2003 01:22 PM

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Comments

Cobb,

I would say that the folk who get on talk radio are hardly a fair picture of SoCal demographics. From what I see in my unscientific study (a Pavillions is basically across the street from my apt.) there have been even fewer cars in the lot now than a week ago. Seems to me that even more people are supporting the strikers.

But what is amazing to me is that these stock clerks are demanding continuance of their pension plan. Pensions!? Since when did supermarket employees get pensions? What the hell is up with that?

Because the have a union. The wife and I don't usually shop at those stores but living here for several years I know the people who work there. they are hardly the High School kid working his summer job (bagging groceries was my first jib when I was 16), they are working people with famalies. They also provide a service to you and I that is essential. But unlike you and I, most of them didn't go to college or get advanced degrees, thus they work as grocery clerks. Like all socioligical groups, they band together to get better benefits from their employers. More power to them. Management certainly would not have given it to them out of the goodness of their hearts. I wonder if these companies high level executives are giving up any of their benefits to help the store through tough times? I doubt it.

Posted by: walter at October 18, 2003 10:54 AM

We shall see if those unions will be the undoing of these employees. The longer the strike lasts, the more leverage management will have in justifying cuts. It's just a sorry situation.

Posted by: Cobb at October 18, 2003 02:06 PM

A room without books is like a body without a soul.

Posted by: Ottowitz Sue at October 1, 2004 01:15 PM