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NEW COSTCO CONTRACT GETS UNION'S OK TEAMSTERS LAUD BARGAINING.

Byline: Nicholas Grudin Staff Writer

While Ralphs, Vons and Albertsons spent a 14th consecutive day Tuesday at the bargaining table with their workers' union, one of the grocers' biggest rivals, Costco, smoothly agreed to a new contract with 12,000 California employees.

The International Brotherhood of Teamsters ratified Costco's contract proposal on a 94 percent vote and Teamsters officials contrasted their bargaining process to the bitter stalemate that has kept 59,000 Southern California grocery clerks out of work for 137 days.

``This contract makes sure that Costco employees remain the highest paid workers in the grocery industry,'' said Teamsters President James P. Hoffa.

``Many of our brothers and sisters in the industry are struggling with an ongoing strike. This contract is an example of what can happen when the union and the company cooperate at the negotiating table.''

Labor experts said the Costco settlement is significant to the Southern California grocery strike because it demonstrates that a competitive industry does not necessarily entail poor labor relations.

``The fact that Costco is able to sign a contract like this at this moment is an important benchmark,'' said Harley Shaiken, a professor of labor relations at the University of California at Berkeley. ``The fact that you can get a settlement in this industry that gets a 94 percent ratification and involves Costco and the Teamsters is quite significant.''

However, supermarket officials contended that the Costco settlement ``has no bearing'' on the ongoing dispute.

``Each contract proposal that is negotiated is separate and has its own specific issues ... each is unique,'' said Ralphs spokesman Terry O'Neil.

Company officials for Ralphs, Vons and Albertsons have argued that increased competition from Wal-Mart and stores like Costco forced them to propose the contract that sparked the strike and lockout.

Since the strike and lockout began Oct. 11, the three grocery companies have not budged on the two major issues: proposed cuts in medical benefits and a two-tier wage system that would offer reduced compensation to newly hired employees.

However, a retail analyst for Merrill Lynch recently wrote that the big three grocers are overstating the threat of Wal-Mart in major metropolitan areas.

``Wal-Mart is hammering away at the whole industry but its growth is focused on smaller-town America and its impact is being greatly overestimated in big cities. Indeed, in big cities the likes of Kroger, Safeway and Albertsons are holding share and weaker chains are declining,'' Merrill Lynch Vice President Mark Husson wrote in a report last week.

Kroger Co. is the parent company of Ralphs and Safeway Inc. is the parent of Vons.

And according to Shaiken, the Costco settlement proves that amenable labor relations and cutting costs are not mutually exclusive.

``Costco has a reputation for having very good labor relations, high morale and a satisfied work force, and Costco also competes with Wal- Mart.''

The Costco contract cuts medical benefits, but includes increases in wages, bonuses, pensions and vacation time.

``During negotiations, the union and management recognized the mutual challenges,'' said Rome Aloise, an international union representative. ``In this contract, the workers agreed to pay a portion of their health care costs, but that was offset by the increased wages, bonuses and pensions.''

Away from the bargaining table, as well, Costco has been one of the big winners since the strike began.

The company has seen a 20 percent leap in membership, and hopes to retain a significant number of those consumers.

Nicholas Grudin, (661) 257-5255

nicholas.grudin(at)dailynews.com
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Date:Feb 25, 2004
Words:580
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