As labor disputes go, last week's short-lived strike against the Washington division of Safeway Stores Inc. by Teamsters Union Local 639 was little more than a break in the routine of business. The outcome, nonetheless, is a major victory for Safeway, although more in terms of its relations with its chief competitor than in terms of its relations with the workers.
The brief strike by Safeway's truck drivers means the company will pay slightly more than Giant Food Inc. pays similar employes for comparable work. But the difference is a relatively small price to pay for what Safeway deems most critical in this market -- parity with Giant in terms of labor costs.
"They the truck drivers have security. We have parity," a Safeway official said of the compromise agreement that began to fall into place less than 48 hours after picket lines went up.
Parity is more than just a catchword or a motto at Safeway. It is the linchpin of competition, especially in an area such as metropolitan Washington where Safeway trails Giant in market share. It is tied to Safeway's labor strategy in all markets served by the nation's No. 1 food chain.
Safeway is concerned not only about the rapid growth of nonunion competition, but also "by the disparity that is allowed to exist between our labor costs and the costs of some of our union competitors in many markets," Chairman Peter McGowan noted at the company's annual meeting in April. Safeway finds it particularly galling and unfair, as McGowan indicated, that it has to pay "far more than some of our major union and nonunion competitors" in markets that include Baltimore, Washington and Richmond.
"We are determined to eliminate the disparities," McGowan vowed in remarks to stockholders at a meeting in Baltimore last spring. "If we cannot do so, we will, in all probability, be forced to abandon certain market areas."
Just how long Safeway was prepared to compete against Giant while disparities chipped away at profits is anybody's guess. A prolonged strike by Local 639, however, would have provided a crucial test of McGowan's resolve to eliminate a major disparity in operations of the Washington division (from southern Pennsylvania to Fredericksburg, Va.).
Trucks from Giant's distribution centers are unloaded at its supermarkets by store personnel who are paid less than truck drivers. Safeway wanted the same flexibility and demanded that its drivers follow a similar procedure in its Washington division. Members of Local 639 not only demanded that they continue to unload their trucks but also rejected Safeway's initial proposal calling for salaries to increase from $14 to $15.70 an hour over three years.
Money was not the issue, however. As it turned out, Safeway's drivers settled for about 13 cents an hour more than their counterparts at Giant. Besides objecting to the new unloading routine, Local 639 had protested a plan by Safeway to supply a Fredericksburg store from its distribution center in Richmond. "That store was the red flag," said a union official who contended that plans to service the Fredericksburg supermarket would mean the loss of more drivers' jobs.
When Safeway agreed to go to binding arbitration on the Fredericksburg store, "the dominoes started to fall" in the direction of a compromise, the union official said. Nonetheless, there remained a hang-up over rumors that management planned to implement a two-tier wage scale in which contract scales for new employes would be less than the scales applying to more senior workers.
Other unions had been expected to honor Local 639's picket lines if it came down to an all-out strike by truck drivers. But negotiators for management quickly knocked the wheels from under that bandwagon by assuring other unions that a two-tier proposal was not on the table and by stressing that parity is as important to employes as it is to management. The second tactic -- a direct appeal to workers' sense of well-being -- probably did more to calm the union's concerns about job security than anything.
The message that Safeway managed to get across was simple and direct: Settle the unloading issue with a guarantee of job security for drivers and, as one official put it, "Let Safeway and Giant fight it out in the marketplace rather than in labor negotiations."
It became apparent by the end of day two of the strike that Local 639 was ready to agree to a compromise. The settlement puts all drivers who were hired before January 1983 in a protected class during the life of the three-year contract. In return, drivers have agreed to drop off their loaded trailers without unloading them at Safeway's supermarkets as long as no member of the protected class is laid off. Twelve drivers currently laid off and in an unprotected class will replace any in the protected group if they retire, or leave for any other reason.
The compromise seems to indicate that the Teamsters, for the time being at least, share McGowan's logic to the extent that "we are all in this boat together." If Safeway is successful, McGowan promised last spring, "We will be creating job opportunities and our unions will grow as we grow. If we are unsuccessful, we will be closing our facilities, which cannot be in the long-term interest of our employes or the unions which represent them."