Talk of a looming retail apocalypse is once again seizing the Canadian corporate sector, nearly a decade after Wal-Mart first invaded the Great White North. This time the rumours come from Loblaws, the country's largest and most heavily unionized grocer. Back in December, the homegrown giant discreetly announced to the United Food and Commercial Workers (UFCW) brass that it plans to change all its Ontario locations to a Real Canadian SuperStore (RCSS) format similar to those found out west by 2008.
And it needed the union's cooperation, it said, to roll back wages and benefits so it could be leaner for the upcoming Wal-Mart battle. Without a new wage contract, Loblaws warned, the union would be out in the cold once the RCSS banners were hoisted.
But is this threat rooted in necessary market realities? Or is Loblaws, as some believe, just invoking the Wal-Mart spectre to ratchet back its current cream-of-the-crop collective agreement - to prep for a competition war that may not even be on the horizon?
The union, it seems, bought the Loblaws scenario hook, line and sinker. Earlier this month, the wage-cutting plan was tossed at well over a thousand stunned Loblaws (as well as Zehrs and Fortinos) workers at a last-minute union meeting, as UFCW staff handed out summaries of the amended contract, already signed, sealed and now delivered. A glossy presentation ignored the fact that no one had asked the members for their input, let alone allowed them the standard ratification vote. That, too, it seems, was snuffed out in the backroom deal.
"It was a difficult decision," says UFCW local 1000A president Kevin Corporon, whose union represents 12,000 workers at 76 Ontario Loblaws stores. "It's always a bitter pill for the union, for the members, for everybody when the company wants to bring in a new banner and lower wages, because it puts pressure on everyone.
"The new Loblaws superstore agreement is still far better than what Wal-Mart pays," adds Corporon.
Perhaps, but by how much? In their department store goods section, slated to take up over a third of RCSS floor space, wages are capped at $10 an hour - no higher than Wal-Mart on a good day. And gone are Christmas bonuses, sick days and Sunday premiums.
Corporon maintains that the move was necessary to save the jobs of tomorrow, especially with Wal-Mart expanding aggressively into food sales. (The American firm, Loblaws told the UFCW, is bringing its Costco-style part-food, part-goods sister store, Sam's Club, to town this fall - not to mention a possible incursion from Wal-Mart Superstores.)
But a chorus of disgruntled UFCW members and professional onlookers have started wondering why the union bothered to negotiate a contract that anticipates competition when the competition isn't even here yet and the rumoured scale of the invasion is hotly disputed. "What the hell were they thinking?," prods labour studies prof Jan Kainer. "I think the union just buckled under the pressure."
CAW president Buzz Hargrove, whose union represents 7,500 grocery workers in chains like No Frills (another Loblaw Co. creation) and A&P, says, "Companies always try to lower wages. I don't know of any company that wouldn't ask for the same agreement. The question is whether or not you give it to them."
Words like these are being exchanged in hushed tones in Loblaws produce and freezer aisles throughout the province. Many long-time employees seem to have lost confidence both in their employer for turning to what one anonymous worker calls "Wal-Mart-style ideas" and in the union for failing to stand up for them.
Just last week, bakery manager Ben Blasdell filed a complaint with the Labour Board, asserting that the union failed in its duty to its members by refusing their right to vote on the deal. "It's really ridiculous to think that we all pay dues to a collective and then at the time when we need representation the most, they enter into secret negotiations with the company and don't listen to us," says Blasdell, who's been with Loblaws for 15 years.
Kainer agrees that not holding a vote violated standard union practice and certainly inflamed tempers. "It raises a lot of questions about union democracy and the democracy of the UFCW," says the academic.
"We've never bargained an agreement yet that doesn't meet the test of our members ratifying it," says the CAW's Hargrove. Of course, Hargrove has yet to face similar grocery store demands, since CAW contracts at both No Frills stores and A&P are weaker than the Loblaws chain's. The UFCW seems to guiltily concede that its golden deal could use some trimming, repeating again and again that it's had the Cadillac of grocery-biz agreements, as if that somehow justifies the cuts.
Grocery industry analyst David Schroeder attests that profit margins are so slim in the business that a strong union contract could, in fact, make a region unprofitable. But the point hardly applies to Loblaw Co., whose profits have been climbing for years, skyrocketing 22 per cent in the last quarter alone.
"Loblaws is the most profitable supermarket chain in Ontario and can afford to pay its workers a good wage," say Kainer.
But just as Loblaws announced its astonishing gains, the company informed the press that it would be looking at many ways to keep rolling back costs. Ironically, the joyous proclamation came one week after union leaders signed the razored-back contract and less than a day after workers got word of their fiscal fate.
Though the news unsettled some employees who question the legitimacy of their imminent pay cut, Corporon is hardly ruffled by it. "We knew they were very profitable," he says. "They want to remain that way in order to compete."
That kind of sympathetic commentary has Blasdell wondering whose side the union is on, while more conservative grocery analysts like Schroeder praise the union for its understanding. "Unions are becoming better in North America at realizing that they can't hold these companies to ransom," says Schroeder. "Competition is so tight and wages are such a big component of costs that it makes the difference between having the jobs and not having the jobs.
"If we keep seeing wage inflation at the union level, that can create a big enough opportunity for Wal-Mart," adds the analyst.
Maybe, but even Schroeder concedes that the Wal-Mart food threat is hardly here. "They would have big distribution problems here. Getting into perishables means setting up a distribution centre. That's a big investment." He adds that Canada's lower food prices and stiff competition also seem to have slowed Wal-Mart's entrance into the Canuck food market.
Wal-Mart's director of corporate affairs, Andrew Pelletier, insists that it has no plans to bring its now mythical super-centres to Canada - just four Sam's Clubs in the outer burbs that are designed to stare down Costco, not Loblaws. "There has been enormous speculation over the past few years that Wal-Mart was going to bring that (super-centre) program to Canada," says Pelletier. "We're still building standard Wal-Mart stores in new markets that we don't serve yet."
"Even if there's no immediate threat, if they wait until there is it's too late," says Corporon. His response sounds like Loblaws' line had company reps returned NOW's two weeks of phone calls.
In the meantime, Hargrove worries about the impact this kind of deal is going to have on unions nationwide.
"Once one company gets an agreement like this, it starts a downward spiral," says Hargrove. "It's going to be very difficult for us to fight."