business news in context, analysis with attitude

Since several of the stories in this morning's MNB concern Wal-Mart (hey, don't shoot the messenger - we can't help it if the Bentonville Behemoth dominates the news some days), it only seems fitting that many of the day's emails also concern the company…especially its impact on Southern California and the grocery strike there.

MNB user Tom Brown wrote:

Probably this would be hard to verify now, but I strongly suspect that the wage and benefit concessions being sought would not by themselves sufficiently meet the Wal-Mart threat.

There most likely also need to be changes in assortment, work methods and pricing and maybe even store consolidations. Wal-Mart will get some market share when they arrive, but the right changes by the traditional chains would minimize the loss of market share and the loss of jobs.

I have always felt that there should be more analytical category management at the store level that considers local customers and competition. And people in those position should be well paid. And I do not believe Wal-Mart does this especially well.

Needless to say, negotiating for the three companies as a single entity could not specifically address the issues I have raised. Too bad.

We agree. And, to reiterate what Art Turock said in our lead story this morning, the moves have to be strategic, not just tactical.

Another MNB user had a different perspective on the Southern California labor negotiations and the ongoing discussion of it here on the site. Some of his reaction is to the MNB user who yesterday referred to union bargainers as "cretins":

I did have…fun reading the "debate" about health care issues inasmuch as I am a retired negotiator who negotiated hundreds of contracts with unions over many years while working for many companies. Whoever the contributor was who talked about "cretins" at the bargaining table is all wet. I was happy to see the professional union negotiators show up since it was a vast improvement over the guys who would threaten management's kneecaps when the issues got sticky.

The down side was that neither of them would be able to define a paradigm as anything but something that was a nickel short of a quarter. They weren't stupid, they were just mostly corrupt. The health and welfare trust funds, and the hundreds of millions of dollars that flow through them, in my experience, are really something that the unions will not change. There are far too many husbands, wives, sons, daughters, mistresses, cousins, etc making six figure salaries at these funds for them to be subject to serious reform.

Even though a few union bosses have gone to prison over the years, the Labor Department and Justice Department have for the most part been unwilling to deal with the massive corruption and waste in most of these funds.

Additionally, the structure of the benefits encourages overuse and abuse, which exacerbates the inflationary pressure on health care costs for everyone in the country, not just the relatively few union members who enjoy these benefits.

Whenever I discussed these issues with the union negotiators, they always took the position that if a company could not afford the union rates, then the company needed to go out of business. I saw scores of big chains do so over the years, and thousands of former union members are now working for far less at places like Wal-Mart. And lets face it, these people are not studying to be rocket scientists or brain surgeons, either. But that is the price a person pays for blind obedience to union bosses. So to expect the union to be willing to change is silly, when they are really looking out for their own interests and not their members, and to expect the unionized chains to be able to survive when people have a choice to buy cheaper groceries at a non-union chain is equally unsophisticated.

It is why unionized companies in the private sector represent fewer than 9 percent of total private employment, compared to nearly 30 percent when I negotiated my first contract. It is far easier to let "nature" take its course than to fight about it. It takes two sides to make an agreement, and the number of union negotiators I met over the years who could face the political reality of explaining the issues or even be willing to discuss them could fit into a telephone booth.

Yet another MNB user wrote:

I read MNB almost every morning. I find it to be interesting, balanced, broad ranging, humorous and every morning I leave it knowing something I didn't know before. Can't ask for much more than that.

Sometimes the odd piece or opinion annoys me, but never have I, "lit my hair on fire", over anything I have read on MNB. That is until yesterday!

I spent thirty plus years earning my living at the bargaining table. During that time, I have sat across from excellent negotiators, good negotiators, not-so good negotiators and even the odd terrible negotiator. I have, however, never sat across the bargaining table from a "cretin"!

Most negotiators have a 90 percent success rate at concluding collective agreements without any job action. I personally know several who have box scores in the 98 percent range. Hardly the work of, "cretins".

Sure, some of them I would never invite to my home for dinner, but some have become life-long friends.

Like everyone else, negotiators are doing a job. On occasion, it is a very difficult job. But, they are doing the very best job they can for those who pay them.

There are good employers and there are bad employers. There are good unions and there are bad unions. There is one common denominator, no one is perfect!

I know of one employer who has been unionized since 1898, has never had a strike, never had a lock out, never even had a grievance filed against the company. He is the third generation of his family to run the business. He also has a reputation as one of the toughest negotiators in his industry.

I have learned that all strike/lock outs end sooner or later. At the end of the day, the solutions may not make everyone happy, but there will be solutions.

As for the strike/lock out in the Southern California grocery industry. This is a very complex set of negotiations with issues that strike at the very hearts of all those involved. There will be no easy solutions in such a dispute. It will take time, but this too will come to an end.

MNB user Mike Julian added to the discussion:

I have followed the many comments from your readers as to what the cause and effect of high wages - low wages, fully paid benefits – partial paid benefits. Is “it” the fault of Wal-Mart, the unions, management or little green men from space?

All of the comments miss the mark, it is not how much you pay your employees, it is all about how much you get from your employees effort…and this has to do with far greater issues like respect and accountability.

For instance when the supermarket industry in CA has gone years not worrying about these issues because everyone (major competitors) were in the same boat, it is now easy to blame Wal-Mart or Costco or anyone but oneself for the problems.

As far as Wal-Mart driving down wages and health care for employees, let’s not be revisionist, the supermarket industry was moving to more part help at lower wages and no health care long before it ever knew about Wal-Mart and groceries.

Another MNB user wrote:

The comments made by a reader covering contract negotiations bear consideration. My husband at different points in his career in education sat on both sides of these tables. As an observer, it seems to me that a football mentality takes over where winning at all costs becomes the goal of either side. Listening to reason and reality flies out the window because it would mean that their side might not "win". Both sides are often guilty of "digging in their heels" when it is time to compromise. An outside mediator is necessary in those situations.

Having had some personal union experience, many times union leadership does not understand those they have been hired to represent. The talk from union officials is much like that of a locker room coach at half time. The person who suffers is the employee who is out wages because of the strike and that money is never totally recouped. The corporation in a sense suffers as well because of lost revenue. But, the person who does not have money for everyday expenses like groceries, utilities and gasoline truly suffers in comparison to a corporation bottom line that is flat or in the red. The little guy has much more to loose and he should not be used as a pawn in a game.

And MNB user Fred Mills wrote:

Thank you for your common sense reporting of the California grocery strike/lockout. I also applaud your grace under fire. There a few subjects that creates a polarized conversation as effectively as Union Vs. Management. Most of us forget that it was largely unions that created the standard of living we currently enjoy, and just as many of us fail to understand that capitalistic avarice creates the wealth that supports that same standard of living.

I believe that the fundamental problem was created when labor and management sought to negotiate long-term contracts that fixed costs for uncontrolled line items such as healthcare. It is unreasonable to expect any company or organization to risk its viability by contractually committing to a benefit where the cost cannot be controlled or predicted. It is also unreasonable to expect employees to give up important benefits without receiving something in exchange.

I wonder if it is not time for management and labor across all public and private organizations to focus on recalibrating contracts in order to do a better job of sharing predictable wealth. It is time, particularly in an election year, to shine a public light on unpredictable costs such as healthcare, insurance, and retirement benefits. This is an appropriate role for government and needs to be addressed across all segments of employment from the grocery worker to the schoolteacher.

Thanks again for your levelheaded presentation. I will continue to read and enjoy your morning wake up call.

Thanks. (It's a lot better than being called a cretin…)

We had a story yesterday about an outbreak of Wal-Mart neighborhood Markets in the Tampa area, which prompted one MNB user to write:

Has to have Winn-Dixie execs reaching for their antacid. The Tampa area was one of the few areas where "The Beef People" hadn't lost market share in recent years...until now.

And, writing about Wal-Mart's Supercenter and Neighborhood Market strategy, MNB user Alex Drew offered the following comments:

I am not sure if Wal-Mart had anticipated urban backlash for its Supercenter years back when the Neighborhood Markets were just being thought of, but should maybe consider them their "ace in the hole". Being much smaller floor plans these markets could be used to sneak under new city ordinances aimed at diverting larger formatted Supercenters in California and other urban areas.

Use the Neighborhood Markets to pull the consumer in and introducing them to the Wal-Mart way of life (low, low prices), while fighting these ordinances with the all star "Bentonville Behemoth" legal team.

Wal-Mart can build demand with these stores and possibly build public support for their Supercenters. Lets face that the public is going to want to lighten the burden on their wallets, and Wal-Mart has the capabilities to do that. After many urban areas see the savings that Wal-Mart can offer them, they will reconsider keeping out the Supercenters.

It might be a longer road than Wal-Mart anticipated into the California cities and other urban areas, but they will be making money and pulling in more of the flock than just fighting these ordinances in court. They might have their cake and eat it too.

And they'll pay for that cake than anyone else in the industry. Count on it.
KC's View: