Up Against The Wal Mart

Labor, antisprawl activists, and grocery rivals link hands to battle the retail giant

It's no secret that nonunion discounter Wal-Mart Stores Inc. and organized labor are sworn enemies. So when the world's largest retailer marched into the food business in recent years, with its giant supercenters and grocery-like Neighborhood Markets, it might as well have been waving a red cape before a bull. No wonder the United Food & Commercial Workers union (UFCW) is charging--to protect the jobs of the 1 million of its 1.4 million members who work in supermarkets. And after more than a decade of sparring, with little result, the union is suddenly scoring some surprising victories.

On Feb. 17, the UFCW won the first union election in a U.S. Wal-Mart store. Although the vote involved just 11 meat-department workers in a Jacksonville (Tex.) supercenter, the win gives the union a big psychological boost. "These employees took on the giant and showed other Wal-Mart workers across the country it can be done," crows UFCW organizer Brad L. Edwards. Already, workers at 100 other Wal-Mart outlets have called to ask about holding elections, say UFCW officials. The next test may come soon among meat-department workers at a Palestine (Tex.) store. The company is challenging the election results in Jacksonville. What's more, on Feb. 28 it revealed plans to buy prepackaged meat for its U.S. stores and eliminate most of its meat counter jobs around the country. Company officials insist the move is unrelated to the union-organizing drive.

HEAVY BLOWS. These latest skirmishes are all part of labor's campaign against Wal-Mart, the country's largest private employer, with 885,000 U.S. workers. Even before the Texas victory, the UFCW had landed heavier blows in the political arena. By teaming up with urban-sprawl opponents and unionized supermarket rivals, the union last fall persuaded the city of Tucson, the state of California, and Clark County, Nev. (where Las Vegas is located), to pass "anti-big-box" laws aimed at banning supercenter stores (table, page 78). These mammoth structures are typically 180,000 square feet, 80% larger than a regular Wal-Mart, and combine general merchandise and groceries.

While Wal-Mart has faced plenty of zoning battles before from antisprawl activists, these are the first laws to limit specifically the grocery sales of big-box stores. They are also more of a threat to Wal-Mart's expansion, because they cordon off entire geographic areas from big-store development. Losses in the past were case by case, leaving the company free to try again in an adjoining town or even the same one.

Now the UFCW is strengthening its links to local antisprawl activists to spread similar laws across the country. Wal-Mart has challenged the legality of the Tucson and Clark County rules. And a veto by California Governor Gray Davis, who blasted his state's bill as "anticonsumer," saved Wal-Mart in that bellwether state. But both union and retail leaders say the bill is likely to return with some modifications this session. Activists in Washington State, led by a part-time UFCW organizer, are pushing a ballot measure that would limit stores to 90,000 square feet unless they win approval from local voters. Wal-Mart officials concede that these laws, which have been quietly backed by unionized supermarket-chain rivals, pose a threat. "We clearly need to do a better job of telling our story to policymakers," says Jay Allen, Wal-Mart's vice-president for corporate affairs.

The stakes are high for both sides. Wal-Mart already has 720 supercenters, which account for some 27% of its $165 billion in revenues, analysts estimate. It's expected to open 300 more by 2002. After that, the Bentonville (Ark.) company will have to start moving into unionized urban areas, says A.G. Edwards & Sons Inc. analyst Robert F. Buchanan. "I don't think the real battle [with labor] has begun," he says.

Indeed, the UFCW could take it on the chin if Wal-Mart puts up supercenters in union strongholds such as California. A move into Southern California alone could depress industry wages and benefits by up to $1.4 billion a year, concluded a study prepared last year for the Orange County Business Council. The reason: Wal-Mart's pay averages $9.63 an hour, 47% less than at unionized grocery chains. Vows UFCW President Douglas H. Dority: "We'll fight [Wal-Mart] everywhere we can."

LEGAL WRIT. Keeping the company at bay might seem like a harder job than signing up new union members, but the UFCW has never had much luck with organizing until the recent Texas win. For years, organizers at other unions have privately criticized the UFCW for failing to devote substantial resources to a Wal-Mart recruitment effort. Dority concedes that organizing the No. 1 retailer is "difficult," but he blames ineffective laws that govern organizing and "a violently antiunion company."

Certainly, Wal-Mart has thwarted the union at every turn until now. Last year, the UFCW launched a recruitment effort among the company's meat-department workers. Just as the union began passing out literature at Wal-Mart, the retailer approached a friendly judge in Bentonville who slapped the union with a highly unusual national temporary restraining order, prohibiting the UFCW from soliciting Wal-Mart workers inside its stores. The order remains in effect even though the judge later recused himself--after the union discovered he owned Wal-Mart stock and had withdrawn from a prior case involving the company. Wal-Mart says it took legal action because union members were entering private store areas and potentially endangering public health.

The union may have more luck with its zoning strategy. In places such as Tucson, it has skillfully piggybacked onto neighborhood opposition to giant stores, which residents fear will create noise and congestion. Chris Tanz, head of The Union of Citizens to Save Our Neighborhood (TUCSON), says that her group arose out of a shared concern over a proposed Wal-Mart and Home Depot that threatened to disrupt their historic Tucson neighborhood. While the group didn't work directly with the union to craft Tucson's new ordinance, Tanz says that "we give each other moral support." Wal-Mart has collected 15,000 signatures for a referendum in September to try to get the law rescinded.

Wal-Mart officials admit the convergence of neighborhood and union interests puts the company in a delicate spot. "If there are legitimate environmental concerns--traffic concerns--we should do all we can to address those," says Allen. "The challenge is to see if an environmental cause is being used by a union to shield its real agenda, which is to keep Wal-Mart out."

LOSS LEADER. The union makes no bones about its plans to do just that. In Nevada, Clark County Commissioner Erin L. Kenny says she introduced the ordinance there after "the unions talked to me about big-box stores." She argues that Wal-Mart undercuts local supermarkets by using food as a "loss leader" and makes up the lost profits on the general merchandise side of the store, a charge Wal-Mart denies. "This is not a union issue. This is an economic issue," she insists.

That's the same message pushed surreptitiously by supermarket chain Vons Cos., part of Safeway Inc., to help campaign for the new ordinance. The headline of one ad that Vons helped pay for: "Here's how multi-

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