Grupo Gigante, the large non-union Mexican supermarket chain that has been dogged by labor protests, is close to finally recognizing the grocery workers’ union in an effort to end the U.S. labor troubles that have hindered its expansion in the L.A. area.

The Mexico City-based chain opened its first U.S. Gigante store in Pico Rivera in 1999 to the protests of the United Food and Commercial Workers and has only opened two more U.S. stores since then.

However, the Business Journal has learned that the chain and the union have nearly worked out an agreement that would set the terms for a union organizing campaign, potentially leading to a collective bargaining settlement.

The pact would remove what has become a major stumbling block towards the chain’s penetration of the second largest Mexican market in the world outside of Mexico City.

“I think they were not considering the union a big obstacle. Big retailers are not unionized in Mexico,” said Gaspar Rivera-Salgado, a professor of sociology, American studies and ethnicity at USC. “I think they are finding they have to deal with the unions here.”

Justo Frias, president of Grupo Gigante’s U.S. subsidiary, based in Santa Ana, declined to comment, but implied he would do so once any agreement is finalized.

“I can’t talk about it,” Frias said.

Officials with the grocery union also would not comment, saying they have pledged to refrain from public statements pending finalization of any accord.

However, Chris Leo, chief of staff for Assemblyman Lou Correa, D-Santa Ana, who has closely involved himself in the conflict, said the two sides nearly have an accord.

“They are very close to resolving their issues,” Leo said. “The union and Gigante had to find a comfort level with each other before they could proceed with a resolution of this dispute. They had to figure out how to be married to each other. It was just a little rocky.”

A source familiar with the agreement characterized it as a generous one in which the company would agree to honor union cards signed by store workers and not demand a union election under the auspices of the National Labor Relations Board.

Should the union successfully organize the workers, the company would then accept the union as the bargaining agent and the two sides would start negotiation on a company-wide contract, the source said.

Grupo Gigante, which operates over 200 supermarkets in Mexico, is one of several, large Mexican companies that have ventured north of the border since passage of the landmark North American Free Trade Agreement.

The company talked about opening 20 stores, which carry specialized Latino fare, throughout Southern California when it first announced its U.S. expansion plans in the late 1990s.

But the opening of its first store in Pico Rivera was met by union pickets and protests over the use of non-union workers who were being paid below the prevailing union wage, now $9.78 to $17.10 for clerks. Since then, stores have only opened in Arleta and Covina.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said a chain such as Gigante could not be satisfied with its progress thus far.

“This is a super-competitive market. What you need to do to make any money is go to get as many stores opened as soon as you can,” Kyser said. “The union campaign against them has not helped.”

Daniel Mitchell, a professor of management and public policy at UCLA, said the campaign had the advantage of targeting a retailer, a type of business that is particularly sensitive to labor disruptions.

“If you are a retailer, it’s the last thing you need,” he said. “If (shoppers) are faced at one store with angry pickets out front and there is a competitor down the street without that, you know what (those shoppers) are going to do.”

Alec Levenson, an economist at the Milken Institute, said any gains by the grocery workers would be reflective of the burgeoning strength of the union movement in Los Angeles and other urban cores where minority workers are now organizing targets.

“There have been some very highly publicized gains by unions,” said Levenson, citing the recent Justice for Janitors campaign. “If labor is going to be successful in reasserting itself (nationwide) as a significant presence in the private sector, it’s going to be through organizing drives like this.”