Safeway, Union Also in Generous Mood

By DAVID GREENBERG

Staff Reporter

Both sides in the nearly three-month long supermarket strike and lockout have been making campaign contributions to state officials, including Gov. Arnold Schwarzenegger, who they have deemed sympathetic to their respective views.

Safeway Inc., which is leading the drive to cut health and pension benefits of 70,000 UFCW workers, donated $21,200 the maximum amount allowed by law to Californians For Schwarzenegger, the governor’s campaign committee, according to campaign finance reports filed with the California Secretary of State.

That includes $16,200 by the company itself on Nov. 14 and $5,000 by Chief Executive Steven Burd on Oct. 10. Burd has been acknowledged as the architect of the supermarkets’ hard-line strategy to extract numerous concessions.

Safeway also donated $15,000 on Nov. 19 to the Total Recall Committee, which urged voters to recall former Gov. Gray Davis.

Meanwhile, the United Food and Commercial Workers have contributed thousands of dollars in campaign contributions to California Attorney General Bill Lockyer. He has appeared at several labor rallies and picket lines, and last week launched an investigation into possible California antitrust violations on the part of the three major grocery chains.

Lockyer received at least $6,000 toward his Lockyer 2006 campaign fund in June and at least $37,300 from the UFCW in 2002 and 2001, according to campaign finance reports filed with the California Secretary of State.

The International Brotherhood of Teamsters, which became involved in the dispute last month when 8,000 of its workers walked off the job at the supermarkets’ nine food distribution centers across Southern California, gave Lockyer $58,000 in 2002 and 2001.

Both sides deny that their patronage is tied to any specific request for action.

“Just like any other political contribution toward any candidate in any election, we look at a candidate who shows interest in the issues affecting our industry,” said Safeway spokesman Brian Dowling. “The business climate comes into play with regards to any candidate.”

He called the timing of the contributions in relation to the strike and lockout “coincidental.” The Pleasanton-based company operates more supermarkets in California than any other chain.

Neither Albertsons Inc. nor Kroger Co., which owns the Ralphs chain, donated to Schwarzenegger’s gubernatorial or recall campaigns. Both corporations are based out of state.

Kathy Finn, director of collective bargaining research and education for the UFCW’s L.A.-based Local 770, acknowledged that, “money helps people get elected.”

“We want candidates in office that are going to support issues that are going make the lives of our members better,” she said.

Down payment

The contributions to both Schwarzenegger and Lockyer are modest compared with the amount at stake in the walkout, which has been under way since Oct. 11.

Analysts estimate that Safeway, which operates Vons and Pavilions supermarkets; Kroger Co. and Albertsons Inc. may each lose more than $200 million in earnings before interest, taxes, depreciation and amortization before the impasse is resolved.

If the grocers prevail in their demands for benefits cuts, a two-tier pay scale and new work rules, their gains over a period of years would likely outstrip that amount.

For Safeway alone, the savings from proposed benefit cuts, a two-tier pay scale and new work rules would add up to $18 million annually in Southern California, according Mark Hugh Sam, an equity analyst for Chicago-based Morningstar Inc. The other chains would save less because they have a smaller presence.

The impact could be multiplied, however, if the precedent set in Southern California were extended to other regions of the country.

Last week, Lockyer subpoenaed the three grocery chains for a copy of the mutual aid agreement put together before the strike began. The attorney general is investigating whether anti-trust laws were violated in a secret revenue-sharing agreement that was first reported in the Business Journal on Nov. 17.

Lockyer, who many believe will be a Democratic candidate for governor in 2006, has a long history of siding with consumer groups over pricing and safety issues.

In the wake of record prices for gasoline last spring, he released a report blasting oil companies for charging motorists “exorbitant” prices. The report stated that oil refineries marked up their prices by 152 percent during the first three months of the year, more than twice the national average.

Lockyer spokesman Tom Dresslar strongly denied that the attorney general’s pro-labor stance or the investigation itself were influenced by campaign contributions.

“It’s no secret that Atty. Gen. Lockyer sympathizes with the workers,” Dresslar said. “He’s always been a pro-union guy. But that view does not prevent him from impartially enforcing the laws of the state.”

Other major Democratic leaders have shown support for the union, including Rep. Richard Gephardt. The presidential candidate from Missouri attended a grocery worker rally last week (photo).

Lockyer’s investigation will center on whether Albertsons, Vons and Pavilions stores were able to keep prices artificially inflated due to the revenue-sharing agreement with Ralphs. The union removed its picket lines from Ralphs on Oct. 31 to place more pressure on Safeway and Albertsons and keep shoppers from becoming exasperated as the strike wore on.

Without the agreement, Dresslar said, prices at Ralphs’ competitors might have dropped to entice shoppers to cross the picket lines. “The potential antitrust violation is an unlawful restraint of trade,” he said.

But labor experts and industry analysts said the case for an antitrust violation is a stretch. A labor exemption in the federal law allows for revenue sharing a strategy that airline companies used during strikes in the 1970s. “(Revenue sharing) is based on prior practices,” Hugh Sam said. “These are things that other industries have done in other places.”

Political element

Still, the role of elected officials in labor disputes cannot be discounted. When Ronald Reagan locked out federal air traffic controllers in the early 1980s, it set the stage for two decades of weakening negotiating muscle on the part of labor.

To date, Schwarzenegger has not taken an active role in grocery store negotiations and was instead immersed in a budget-related $15 billion bond measure planned for the March ballot. “He’s not taken a public stance on it,” said a Schwarzenegger spokesman.

Daniel Mitchell, a UCLA professor of management and public policy, doubted whether the campaign contributions would have much of an impact. “What will make a difference are the economic impacts on both sides,” he said.

Both sides returned to the bargaining table on Dec. 2, under the watch of federal mediator Peter Hurtgen, who has imposed a news blackout on the participants. We’re just taking it a day at a time here,” John Arnold, spokesman for the Federal Mediation & Conciliation Service, said last Thursday.

While Safeway spokesman Dowling denies any link between the contributions and the strike, neither Safeway nor Burd contributed to other recall candidates’ campaigns. They also waited until the winner became clear before making the donations to Schwarzenegger.

Burd’s contribution was processed on Oct. 10, but the check was likely written before the Oct. 7 election. The rest of the money was donated after Schwarzenegger’s victory and will be used to help retire his $2 million campaign debt.

UFCW officials took the Safeway contributions in stride.

“Steve Burd is the one who designed this strategy to break the union,” said Finn. “He thinks it’s going to make his stock price go up. I don’t think Schwarzenegger was ever inclined to help us out anyway.”