By Leah Nylen | Bloomberg
Labor relations took center stage at the US Federal Trade Commission’s case to block Kroger Co.’s acquisition of Albertsons Cos. Wednesday as Kroger’s lead labor negotiator took the stand hours after the local union in Oregon went on strike, shuttering 28 stores in the Portland area until after the Labor Day holiday.
The strike is only the company’s third in the past 12 years, said Jon McPherson, Kroger’s vice president of labor relations. McPherson said that the local union is seeking an “astronomical” increase in wages and the same terms and conditions at stores in the Seattle region, despite differences in the cost of living.
Related: Employees speak out against proposed Kroger/Albertsons merger
McPherson testified Wednesday morning at a federal court hearing on the FTC’s request to block the deal, followed by Daniel Clay, president of Portland’s UFCW 555 that went on strike the same day. Both sides said they planned to return to negotiations in the afternoon after appearing in court.
Also see: Albertsons unveils list of 63 California stores to be sold ahead of trial
Workers in the US won some record-breaking wage hikes last year thanks to strategic strikes and stunning contract wins. Unions across the country secured their members 6.6% raises on average in 2023 — the biggest bump in more than three decades, according to an analysis by Bloomberg Law. The United Auto Workers emerged from a punishing six-week strike with wage increases of 25%, or as much as 33% to account for cost-of-living adjustments.
US unions have also scored landmark first-time organizing wins in the past few years at companies including Starbucks Corp., Apple Inc., Chipotle Mexican Grill Inc., Microsoft Corp., Volkswagen AG, Wells Fargo & Co. and Amazon.com Inc., though they’ve struggled to secure collective bargaining agreements at many of those newly-unionized workplaces.
Kroger operates one of the largest private-sector unionized workforces in the US with about 300,000 workers. The FTC and state attorneys general have alleged the proposed deal would harm labor competition between Kroger and Albertsons, which also operates unionized grocery stores.
McPherson, who has helmed Kroger’s labor relations for the past decade, rejected the contention that the merger would harm workers, saying the company has pledged to invest $1 billion a year in improving wages. Kroger looks to dozens of companies in a given area to help determine local wages, he said, from fast food including McDonald’s Corp. and KFC to retailers like Home Depot Inc. and Macy’s Inc.
More from the trial: Kroger egg pricing turns merger trial into inflation fight
He also rebuffed the idea that the unions try to play Kroger and Albertsons against each other, using a technique known as a “whipsaw” by reaching an agreement with one company and then threatening to strike if the other doesn’t adopt those terms.
“I see it used very little,” McPherson said.
But UFCW 555’s Clay testified that the union often leverages Kroger and Albertsons against each other. In December 2021, 30 stores in Oregon went on strike for a day as the union was negotiating to raise wages in Bend. Kroger employees urged customers to shop at Albertsons and Safeway during the strike, Clay said.
Kroger eventually agreed to raise starting wages by $6 an hour and improve the money paid into the pension plan, he said.
Related: Kroger-Albertsons merger could upend 164,000 workers in Southern California
“The only way customers can respect the strike is if there’s an alternative,” said Zinder, who has worked in labor unions for 40 years including when Kroger’s union in Southern California went on strike for 141 days in 2003 and 2004.
The Albertsons logo is displayed at an Albertsons supermarket on Aug. 26, 2024 in Los Angeles, California. A federal judge in Oregon is hearing arguments today after the Federal Trade Commission and several states sued to block the planned merger between grocery chains Kroger and Albertsons. (Photo by Mario Tama/Getty Images)
The Southern California unions have opposed the acquisition since it was announced because of what they say were terrible experiences from the 2015 Albertsons-Safeway merger.
Clay and the Portland union originally opposed the Kroger and Albertsons deal, but changed tack in February, announcing support after meeting with C&S Wholesale Grocers, the company that is set to buy nearly 600 stores if the acquisition is completed. In August, the union switched positions again and said it once again opposes the deal.
Clay said the recent switch came about after the union learned more about which stores would be divested to C&S and because of discussions from the current labor negotiations where Kroger has refused to agree to wage hikes.
“Based on the conversations, candidly we just don’t believe it’s something they’re going to do,” he said of Kroger’s promise to invest in wages.
Both Clay and Zinder said the unions are concerned about C&S’s likelihood of success given its lack of experience in operating retail supermarkets and pharmacies. The California union plans to recommend that its members exercise their “bumping rights,” Zinder said, so that more senior employees can switch stores to remain with Kroger if the merger goes through. That means C&S would also end up with less experienced employees at its divested stores, she said.
“It’s hard to imagine how they are going to successfully compete,” Zinder said of C&S.
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