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SAFEWAY: DESPITE STRIKE, OPERATIONS NEAR NORMAL

TRACY, Calif. -- Summit Logistics here -- the third-party owner and operator of the distribution center that supplies 245 Safeway stores in northern California, Nevada and Hawaii -- and Safeway, Pleasanton, Calif., told SN last week operations at the facility are returning to normal. Operations were disrupted in the first days of a strike by Teamsters Local 439 the previous week.Despite these reassurances,

TRACY, Calif. -- Summit Logistics here -- the third-party owner and operator of the distribution center that supplies 245 Safeway stores in northern California, Nevada and Hawaii -- and Safeway, Pleasanton, Calif., told SN last week operations at the facility are returning to normal. Operations were disrupted in the first days of a strike by Teamsters Local 439 the previous week.

Despite these reassurances, an analyst who follows Safeway said the strike might hurt revenues and earnings slightly in the fourth quarter.

Meanwhile, the union released a study of California Highway Patrol data last week that, the union said, demonstrates that the warehouse policy of paying truck drivers on a per-delivery rather than hourly basis "is dangerous both to drivers and the general public."

Both union and management told SN that no negotiations are in progress or scheduled.

Danny Beagle, Local 439 spokesman, said, "Basically, there's no conversation going on."

Martin Street, Summit Logistics president, said, "The sides are way apart. The only person who could call us back is the federal mediator. He hasn't called us, and he will only call us if he sees significant movement from either side."

Street said operations at the warehouse facility were at approximately two-thirds of the pre-strike level by the middle of last week.

"We used to do 300 loads a day" before the strike, he told SN. "Monday, we did 180 loads. By the end of the week, we'll be doing 280 loads a day."

The warehouse is being staffed by 1,000 replacement workers and 250 replacement truck drivers, many of whom were hired by Summit before the strike and housed by the company in area hotels, according to Street.

Street added that worker violence in the opening days of the strike had put deliveries seriously behind schedule. "We had a near riot at our front door," he said, noting that on the strike's first full day the warehouse handled only 77 loads.

Deborah Lambert, a Safeway spokeswoman, told SN the effect of the strike at the store-level had been minimal. "For the most part, the vast majority of items are in stock," she said. "Shortages are sporadic, and production is improving every day at the Tracy facility."

Lambert also emphasized that Safeway is not seeking to intervene in the labor-management dispute. "We would like to see this thing end sooner rather than later," she said. "But we do not have a role. It is Summit's contract. It is their negotiations."

Deborah Weinsig, vice president, Bear Stearns, New York, told SN, "The strike could have a minor impact on Safeway's revenues and earnings for the fourth quarter. But I don't think it will have much effect on how investors feel about the company."

Despite the lack of negotiations, union and management are also agreed that there has been no repetition of the violence that broke out at the beginning of the strike.

Speaking at the middle of last week, Street said there were only about 40 union members picketing peacefully in front of the warehouse.

Beagle said, "It's calmed down a lot." He credited the union with telling its membership that violence would not be tolerated.

Beagle also said, "If you look at citations per truck, accidents per truck, Safeway is way off the chart. We knew the pay-per-delivery system was a threat to our guys, who hated it. Now, it turns out it's a threat to the public as well."

According to the union, "Summit/Safeway" trucks have been cited for 439 violations since January 1997. The union said Albertson's, which operates two and a half times as many vehicles, has only 155 violations, and Von's, with twice as many vehicles, has 207.

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