What happens when two implacable and powerful foes holding diametrically opposing views duke it out? Well, at minimum, quite a bit of unpleasantness is sure to ensue, as world events illustrate all too well.
But since SN is a journal devoted to the business of food distribution, let's pick our example from that arena. What comes to light, then, is the protracted labor discord in Southern California. As has been pointed out in this space and elsewhere in SN lately, events there represent no less than a defining juncture for the two chief antagonists, Safeway and the United Food and Commercial Workers Union. More than that, the situation is a proxy for what's to come for both labor and management.
In sum, Safeway is seeking to reduce its labor costs and intends to go to the mat to do so, for reasons that were spelled out in this space Oct. 20. In any event, if Safeway succeeds in its quest, the hand of management will be strengthened across the nation and across many styles of business. Should Safeway fail, the reverse will happen.
So, this labor dispute is like none other in memory. This time it has taken a uniquely personal tone. Take a look at the advertisement to the left and you'll see the most recent manifestation of that. That ad, also described on Page 4, was placed by the UFCW in the Oct. 31 issue of the Wall Street Journal. It is a biting and personal chastisement of Steve Burd, Safeway's chief executive officer and three-chain management point man. The ad accuses Burd of "mismanagement" and of squandering Safeway's treasure in "a single merger deal in 1998." The latter is a reference to Safeway's costly and ill-fated acquisition of Dominick's Finer Foods, Chicago.
To be sure, there were earlier antecedents to antagonism, such as the situations in Canada, but it's at Dominick's that much of the explanation for the personal nature of the current labor dispute is to be found. A year ago, in Chicago, Safeway took -- or was driven to -- its now-familiar uncompromising tack by telling labor to accept proffered contract terms or to watch Safeway liquidate Dominick's. Said Burd at the time, "What's unique here is that, unless [the UFCW] accept[s] the contract, the assets are worth more liquidated than as operating assets, so we get good results either way." (SN, Nov. 18, 2002.) Sure enough, Safeway wrote down Dominick's and vowed it would be sold. It didn't happen, as you'll see on Page 1. And that unexpected turn of events raises a host of issues too.