A dark cloud hangs over the supermarket industry, a cloud with ominous potential for disaster.
I’m referring to the proposed merger between Albertsons Companies Inc., owner of Albertsons, Pavilions, Safeway and Vons stores here in Southern California, and the Kroger Family of Companies, which operates Food 4 Less and Ralphs.
It’s hard to overstate the consequences of this $24.6 billion merger if federal regulators allow it to go through. Kroger is the largest supermarket operator in the United States and Albertsons is the second largest.
Both companies deny that employees and customers would be harmed, but experience informs us otherwise.
We remember all too well what happened when Albertsons acquired Safeway back in 2014. To appease the regulators, the merged company sold 146 Albertsons, Pavilions, Safeway and Albertsons stores to a small Northwestern chain called Haggen. While Haggen was a well-meaning union employer, it botched the expansion and was forced to declare bankruptcy within a year, causing thousands of workers to lose their good union jobs.
Meanwhile, it stands to reason that reduced competition could mean even higher prices for consumers than they’re already paying.
In Local 1167’s jurisdiction, a merger would essentially leave Kroger and Stater Bros. as the major chains, but it’s doubtful that Stater Bros., a locally based operator with a good union record, would be able to compete equally with a huge conglomerate over the long term. Then we have to take into account the prospects of Gelson’s, Super A Foods and other smaller union employers.
Smaller shopping centers also face dim prospects. Many stores would close, especially where Kroger and Albertsons outlets are situated close together, meaning these centers would lose “anchor” tenants that are crucial to their bottom line.
And there are the pension implications. Every three years or so, we negotiate with the union employers to get sufficient contributions made to our pension fund for those who receive their pensions now or will receive them in the future. We want to make sure that the fund remains solvent so that when you retire, there will be funds there to provide you a pension.
Many take it for granted, but it’s a fact that for every hour worked, your employer makes contributions to the health benefits and pension funds based on your straight-time worked. When there are fewer union workers earning these contributions, the funds will have fewer resources to sustain their current levels of benefits.
The UFCW fights back
In conjunction with other UFCW unions in California, Local 1167 urged government regulators and the courts to stop a $4 billion payout by Albertsons to its shareholders. Unfortunately, the courts allowed this cash grab by wealthy institutional investors to proceed.
Albertsons’ management insists the company still has the resources to pay its obligations to the union pension funds if the merger is blocked by regulators, but we’re not so sure. Albertsons is in no position to pay the cash dividend. The company owes $4.9 billion in pension funds nationally and $7.58 billion to creditors.
I’m not saying these things to scare our members, but I cannot stress enough that everyone should be concerned. The impending merger between Kroger and Albertsons will undoubtedly have ripple effects across the industry.
The UFCW refuses to stand by as the rest of this story unfolds. We are urging the Federal Trade Commission, as well as state and federal legislative bodies, to take action to block the merger altogether. In this regard, it’s incredibly important to elect legislators who have working peoples’ values at heart.
We are fighting this tooth and nail. We will fight to make sure pension funds remain solvent. We will attend hearings in Washington, D.C. and in Sacramento. And if you should need to be there as well, we may call on you to testify and share your stories.
Come help this fight!
We’re doing all we can, but our members in the supermarkets deserve to know the facts about the dark clouds descending on their industry.