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UFCW Local 777: Part 1

From Biz Union to Biz Partner

The business unions aren't cutting it in the service industry and the mainstream of labour doesn't want to talk about it. We're out to change that. In our recent series about the Swiss Chalet workers, we explored what is arguably mainstream labour's biggest missed opportunity to make inroads into the restaurant industry. Today, we begin a new series about another service industry letdown - this one in the heavily unionized retail food business.

A New Concept in Retailing

The Canadian retail food sector is of particular interest to those of us who want to understand mainstream labour's failure in the service industry so that we can better understand what will be needed for unions to succeed there. Retail food differs substantially from the rest of the service industry in two key aspects:

  1. The sector, which employs hundreds of thousands of workers, is extensively unionized and has been that way for decades.

    As an example, it is believed that approximately 85% of industry leader Loblaw's workforce of 83,000 are union members. Many of these workers are members of huge bargaining units (10,000 members or more) that span wide geographic areas, in some cases, entire provinces.

  2. The industry is dominated by a handful of big and very profitable corporations operating in a highly uncompetitive environment.

    Nationwide, the retail food market is divided up among only six retail chains. Of these, two (Loblaws and Sobey's) control over half the market. In this highly uncompetitive market, the big players do well for themselves. Loblaws reported an increase in net earnings per share of 22% in the third quarter of 2001. According to industry analysts the future looks bright: sales are growing and, despite persistent hand wringing about looming competition from international retailing empires like Wal-Mart, the industry is about as insulated from foreign competition as any industry can be.

Both of these factors should provide unions with distinct advantages at the bargaining table. With the majority of workers in the big chains already organized, the unions have considerable bargaining power. Soaring profits and little competition give the employers little reason to credibly cry poor. But despite these advantages, the sector resembles the non-union service industry in the wages and working conditions to which its workers are subject. It hasn't always been this way. At one time, workers in unionized supermarkets were paid reasonable wages and held full time secure jobs. Over the past two decades, however, wages have been ratcheted down, two and sometimes three tier wage scales are commonplace and secure jobs have all but disappeared. While the handful of corporations who are the major players in the industry got bigger and more profitable, collective agreements were gutted and workers rights and entitlements stripped away on a scale that rivals anything experienced in manufacturing and other traditional union strongholds.

The performance of the mainstream business unions who represent the majority of workers in the retail food sector is beyond bad - it's disturbing and casts doubt on their ability and their capability to represent the interests of workers in this industry. Given the extent to which the employers now call the shots and the reasons why the unions allow them to do so, it can be said that we are witnessing the evolution of an entirely new phenomenon: the business-partner union. Union reformers need to know what happened, what's going on now and what their options for good representation in the future really are.

It used to be a good place to work...

Unlike most of the service industry, larger retail food stores have a long history of unionization. Organizing began in the 1940's as food retailers moved from full-service shops to the self-serve supermarket format we know today. By the 1950's much of the industry was unionized. Accretion clauses in collective agreements folded new members into existing bargaining units as the businesses expanded their operations. The Retail Clerks and Amalgamated Meatcutters Unions represented the vast majority of workers in the retail food businesses. The Retail Wholesale and Department Store Union had some retail stores in Ontario and the prairies, but they never became powerhouses on the scale of the Meatcutters and Clerks.

Up until the 1970's the unions were able to negotiate reasonably good wages and benefits and secure employment for their members. . A process of pattern bargaining established a fair degree of consistency in wages and benefits across the industry. The union had only to ensure that whatever the "trendsetter" employer agreed to in wages and benefits, its competitors would sign off on as well. This strategy worked well. It kept wage costs consistent among the major players while allowing them to maintain an advantage, due to their economies of scale, over the smaller players. In BC, the Safeway agreement came to be known as, "The Master Agreement." Safeway bargained and the industry followed. By the 1980's, however, the retail food industry was changing.

How the unions responded to that change had an enormous impact on their members and on the ability of the big corporate players to grow and prosper. For UFCW, created in 1979 through the merger of the Meatcutters and Retails Clerks Unions, it led to an evolution: from biz unionism to business partnerism.

Bigger, meaner and franchised...

In the late 1970's and early 1980's, the big food chains were in transition. The big players had become competitive. In the early '80s the major chains, like Safeway, Loblaws and A&P, made two major strategic changes. They moved away from the small neighborhood grocery stores of 15,000 to 20,000 square feet to much larger "food barn" stores (Safeway opened the Food Barns and Westfair Foods opened Extra Foods stores) twice or three times that size and they began to franchise to independent owner-operators. The larger format stores meant an end to neighborhood competition. As the big boxes came on stream, smaller conventional stores were permanently closed, their leases tied up by the majors so that no competitor could move in. Department stores closed their grocery floors and the majors started to franchise out stores and open new format stores under new banners (names). For the businesses, these strategic changes meant greater economies of scale, reduced overhead and greater profits. For consumers there would be fewer choices and, before long, higher prices. For workers there would be worse.

In the early 1980s, Westfair Foods ran with the Superstore concept and the first store just about bankrupted the company. The first Real Canadian Superstore running under a conventional UFCW collective agreement lost almost $1 million, nearly wiping out Westfair Foods net profit for that year. It was apparent to the corporations that the coveted new concept required the movement of large inventories. Price chopping was needed to bring the customers in and keep them coming back. Wage chopping was needed to facilitate the lower prices. Serge Darkazanli, the Westfair V.P. who championed the Superstore concept rescued Westfair's project by getting the UFCW to agree to a Superstore collective agreement. It was similar to a conventional agreement but with enough changes to make a go of the new Superstores.

The Worker - just another SKU

These stores did huge volume. Considerable savings could be realized, not only by reducing workers' wage rates, but also by deskilling their jobs. You could have a guy hauling cardboard and compacting it for an entire shift. The bakeries did such huge volume that they used flour silos filled by pumper trucks rather than bagged flour on pallets. Westfair split work into what were called "brainer" and "no-brainer" jobs. The "brainer" jobs were done by "specialists" and the "no-brainer" jobs were done by "departmental assistants." In grocery, the specialists were paid the same general rate as those in conventional agreements, but the grocery area was loaded with about 25% to 30% departmental assistants doing jobs like spotting groceries in isles for the specialists (stockers/clerks) or straightening general merchandise or hauling and compacting cardboard. As well, there was a lower specialist rate for employees who worked in the general merchandise departments. Bernie Christophe, President of Manitoba UFCW Local 832, tried to ensure that the new Superstore deal didn't get out of hand, but his work was cut out for him. When Superstore moved into Alberta, it was the beginning of the end for decent retail grocery agreements. The de-skilled jobs and reduced hours of work in the retail food industry would spread and soon become the norm.

These large-scale strategic changes by the industry leaders had significant implications for unions and their roles. In the past, the union's job had been to keep the other employers in line. Henceforth, the union's job would be to keep its members in line. What happened to so drastically change the unions' role?

Chopping prices and chopping up collective agreements

The change in direction on the part of the industry leaders left the unions reeling. Already suffering from the decline in North American membership, the leanness and meanness of the grocery retailers brought an abrupt end to an era of orderly, gentlemanly labour-managment relations. Where one contract had existed for an entire province, now dozens of contracts were created by the newly franchised stores. The master agreements and pattern bargaining processes were history as the big corporations took the position that their franchised stores were independent employers for which collective agreements had to be bargained separately. Legal battles were fought before the various LRB's about the degree of independence of the owner-operators with widely differing results. When Dominion and Kelly Douglas started to franchise, the UFCW tried at different times to get a common employer declarations from the BC and Ontario labour boards. In BC, they failed and in Ontario they were reasonably successful.

Whatever the labour boards' findings, the fact was that the franchisees were held in a vice-like grip by the franchiser companies who held their leases, financed their stock and equipment and told them what to buy, where to buy it and how to market their wares. They were prepared to cut a good deal to those prospective entrepreneurs who could be trusted to tow the corporate line. Some of the supposedly independent operators bought $2 million stores for about $1,200 down. The "independents" were anything but independent. They were firmly under the thumb of the majors. The majors made their money at wholesale, so they had deals with the independents: if they bought everything from the major, they would get a royalty rebate from the major. The royalty rebate usually amounted to whatever loss the independent suffered in his fiscal year.

A number of OLRB decisions involving both the UFCW and the RWDSU issued in the early and mid-1980's set out these arrangements in considerable detail. The Ontario LRB was sympathetic to the unions' arguments about the fictitious independence of the supermarket franchisees. By the mid-1980's, a series of decisions found the "independents" to be exactly what they were: "employers under common control and direction" - a finding that could enable the union to have them incorporated into one big bargaining unit. (Dominion didn't understand how Kelly Douglas did their deals. Kelly Douglas and IGA won in BC because it was simply understood between the franchisee and the parent company that the company line was to be towed. In Ontario, the parent companies put their expectations in writing and this is what crept back to haunt them in the LRB proceedings.) But the unions never pursued the opportunities to regain their power that these decisions provided. Instead, they fought among themselves for control of the workers and opened themselves up wide to exploitation by the employers.

In fact the Unions didn't enforce the language they did have in their agreements. In one instance, Local 832 won a seniority grievance for members employed at an Extra Foods in Thunder Bay, Ontario. The contract language was standard in Real Canadian Superstore agreements across Western Canada. Arbitrator Arjun P. Aggarwal ruled that top-down seniority ruled in scheduling employees, contrary to the bottom-up and categorized system the company was using. Even though the union won the arbitration and the language was identical in all other Superstore agreements, the union left the company to its bottom-up and categorized system of scheduling. It wasn't until a couple of years later when the issue was grieved in BC that any further changes came about. At the arbitration, the company invited the local union president outside for a confidential chat. When the chat was through, the union agreed to sign a letter changing the language to how the employer wanted to operate. In return, the company gave the local union language changes it had just negotiated in Alberta. Those changes would not be implemented until the next round of bargaining. When asked after the arbitration when the changes might be implemented, the president said words to the effect: "If we give this stuff to them now, we won't have anything to give them at bargaining." That was because the president had signed a "secret agreement" with the company, which automatically set the terms of a new agreement that would extend the current one by an additional four years.

In general the retail unions had grown complacent and, confronted with a crisis of major proportions, were ill equipped to respond in any effective way. In the case of the UFCW, by now the largest union in the industry, changes within the organization itself were making it less of a union and more of a business. The employers recognized this shift in orientation and took full advantage.

In the past, the industry heavyweights owned the retail grocery industry, and there wasn't any real competition. The UFCW, had accretion clauses in just most of its agreements so, as new stores came on stream, their workers automatically became union members. When it came time to negotiate, the UFCW would negotiate one round of bargaining followed by a bunch of "me-too" signings. Any independents that existed were fairly small and the UFCW didn't try to organize them unless they approached the UFCW first. The dues revenue was in the big stores, those with 75 to 100 workers.

With the coming of the franchised stores, the loss of the automatic "me too" contracts was disastrous for the union. It walked away from some units that wouldn't strike for the Master Agreement. Some "independent" operators started to put final offers, containing substantially lesser provisions than the Master, to their workers and in some cases, the workers voted to accept these. The master agreements were destroyed by the fragmentation of bargaining units. The trendsetters like Safeway, were not amused that the unions were no longer able to control the other employers. Some of these employers got significant concessions out of the unions.

A new concept in biz-unionism

The majors had the UFCW over a barrel or, at least, the UFCW's leadership thought that they did. The ultimatum was clear: Either the UFCW started cooperating by showing more flexibility at the bargaining table or more "independents" might emerge. And just in case the UFCW thought Loblaws was kidding, it invited another union, the Textile Processors International Union, to compete for union members. This put the UFCW elite in a flap, but newly crowned UFCW Canadian Director, Cliff Evans saw a silver lining in this new dark cloud.

Evans was an old biz-unionist from a long way back. A wheeler-dealer by nature, the former produce clerk had clawed his way up to the Presidency of the Retail Clerks' Canadian organization in the 1960's. When the Clerks merged with the Amalgamated Meat Cutters in 1979, Evans became a Co-Director of the Canadian UFCW alongside former Meat Cutters Canadian President, Frank Benn. The merger of the Meatcutters and Clerks had been hailed as the dawn of a new age of unionism in the retail and meat packing industries but there was much mistrust and deep divisions between the two organizations and the initial post-merger years were tense. Although both unions had a business unionist orientation, almost inevitable for US-based unions, the Meatcutters had a history of militancy that had established good wages and working conditions in the brutal meat packing industry. The Clerks had ridden a tide of labour-management cooperation. Bill Wynn, the new UFCW International President and former head of the Clerks Union, was quick to consolidate power. He surrounded himself with loyal retail clerks officials with whose help he made one disastrous strategic decision after another.

In Canada the divisions and political sensitivities between the two unions were evident by the International's appointment of two Canadian leaders on the understanding that, when one retired or otherwise departed from the scene, an election for a single Canadian Director would be held.

Evans and Benn coexisted in an uneasy alliance until the final months of Benn's enormous campaign to organize workers at Ontario Swiss Chalet Restaurants. Evans entered that picture just before its abrupt end in a backroom deal with HERE and, most likely, the employer, and Benn retired abruptly just after the deal was done. Whatever his involvement Evan emerged from the Swiss Chalet deal without a competitor of any stature for the Canadian Directorship, which he won hands-down in 1988.

The next few years were a turbulent time within the Canadian UFCW A large group of members from the east coast fishery industry broke away and joined the CAW. . Accusations of vote rigging in local elections, ham fisted rule and a general absence of democracy within the union bubbled to the surface, some even making their way into the local media. Within some locals, business agents joined unions of their own. But Evans came through it OK, never straying from a simple mantra: the employers were bad, the industry was in upheaval and the UFCW, a strong and democratic union, was about all that stood between the members and the wolf at the door. In truth, the union had taken a beating from membership losses in both the retail and meat packing sectors. A resilient and enterprising kind of guy, Evans saw an opportunity to make up for those losses and vastly expand his own turf at the same time. Whether he came by the strategy on his own or simply decided to follow the lead of the big industry players with whom he'd rubbed elbows for much of his career, he embarked on a course that looked very similar to theirs. With Evans at the helm, the UFCW appears to have adopted a strategy aimed at massive member acquisition. This was accomplished through mergers and acquisitions of smaller unions and through partnerships with corporations where existing union members' bargaining power was exchanged for automatic recognition of workers at new stores. So institutionalized did these practices become that it can be said that during the Evans era, the UFCW morphed from a biz-union to a biz-partner union - an altogether different kind of organization.

Whatever can be said for their effectiveness, the traditional biz-unions did use their bargaining power to bargain (economic) gains for their members. The biz-partner union bargained away its power to gain new members. The biz-unions had some sense of shared mission that involved improving the conditions of their members. The biz-partners formed allegiances when it suited them and fought bitterly among themselves to protect their property. Their allegiances were not limited to other unions. They would partner up with the corporations just as readily and often did. The corporations recognized the opportunity this presented and took full advantage.

A local of their very own

The UFCW has been at war with the Retail Wholesale and Department Store Union (RWDSU) in Canada. The UFCW wanted Canada to itself. A lawyer for a Loblaws subsidiary approached the Textile Processors to ask if the Textile Processors would be interested in setting up a Local Union in Saskatchewan to raid RWDSU supposedly with the covert assistance of the UFCW. The offer was never acted on by the Textile Processors because of logistics and political considerations. As well, there's no evidence that the UFCW was involved, UFCW was, at that time, pursuing merger discussions with the RWDSU in the US, a move that was hotly resisted by the Canadian RW. Today, a portion of the RWDSU belongs to the UFCW and the Textile Processors are now a part of the UFCW as well. What the lawyer's proposition shows is that the company saw a benefit in having the UFCW in control of the retail grocery business in Canada. However, as strange as it seems, the employers also used other unions such as the Textile Processors, Teamsters and CLAC to control the UFCW. Whenever, the UFCW balked at a corporate initiative, a couple of stores would be given to a more cooperative union with the threat that all future stores would go to the newcomer. That ploy always provided a good dose of reality to the UFCW elite. The reality was that the monopoly that the UFCW enjoyed was purely at the pleasure of the employers.

Now that the UFCW seemed to be entirely dependent upon the employers' goodwill, its officials became even more willing to please. In exchange for a steady stream of new members, which would allow it to maintain its dominant position, the UFCW allowed itself to be squeezed further and further. By the fall of 1988, when Westfair Foods officials demanded the creation of a separate local and cut-rate collective agreement in exchange for thousands of voluntary rec workers of their Extra Foods and Real Canadian Superstores soon to be opened in BC, Evans agreed. UFCW Local 777 would be chartered in early 1989. The biz-unionists and their corporate partners created a local of their very own.

Sources:

Gender, Corporate Restructuring and Concession Bargaining in Ontario's Food Retail Sector, Jan Kainer

Not Quite What They Bargained For, Jan Kainer, in Women Working the NAFTA Foodchain, Deborah Barndt (ed.), Second Story Press, 1999

UFCW Action Magazine, 1983

Loblaws, Wal-Mart, could face-off in retail showdown, Ryerson report says

Grocery Trade Review

Loblaw Companies Limited - Report to Shareholders, Canada News Wire, November 14, 2001

UFCW Canada says Loblaw comments "unacceptable", Canada News Wire, May 3, 2001

USDA Foreign Agricultural Service, Canada Retail Food Sector Report

Eastern Market
Western Market

Looking Ahead, Retail Council of Canada

Labor leader retires amid bitter dispute, Toronto Star, September 14, 1992

Supermarket plotted with Teamsters group, Toronto Star, February 18, 1988

Food workers' vote rigged against him, candidate charges, Toronto Star, November 10, 1988

Interview with Cliff Evans, Canadian Union Movement in the 1980's: Perspectives from Union Leaders, Kumar, P. & Ryan D. (eds.), Queen's University, 1988

Other information from confidential sources with direct knowledge of the events described.

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