Breaking down Portland's Fred Meyer strike and opposition to the Kroger-Albertsons merger

Now, let's pivot and talk about grocery stores. The Fred Meyer strike along with the federal lawsuit trying to block a huge merger involving Fred Meyer's owner Kroger and Albertson's which also own Safeway stores. Those two things are putting a blinding spotlight on the industry. Now, you may have seen this morning workers at the Hollywood Fred Meyer in northeast Portland have walked out as did others at 27 other Fred Meyer stores around the Portland area. Their union UFCW 555 and Fred Meyer have been in contract talks since late July. A union spokesman said this walkout was prompted by the company communicating directly with workers about retirement benefits when they should have instead presented that in their contract negotiations. Look, you cannot directly deal with members when it comes to retirement. We have not seen a proposal on retirement, the baring table yet and yet they're telling our members that we have a retirement proposal. It's not true. They don't. All right. And of course, that federal lawsuit regarding the Big Grocer merger is playing a role as well. The grocery union on strike is against the merger. But lawyers for Fred Meyer's parent company were quick to point out in court today that that union actually supported the me the merger earlier this year. The local union president Dan Clay said, uh yeah, that's right. Local 555 came out publicly in favor of the Kroger and Albertson's merger in February of 2024. Uh We did this because we liked that Kroger committed publicly to invest in their employees in our communities. It was appealing because retail workers have been behind for way too long. Uh We also like that, Kroger said that they would be investing in employees pensions and frankly, we liked CNS. We thought the CNS group was straightforward and we like their long term uh discussions. CNS that he mentioned there is a third company involved in the massive merger. They would buy 579 stores as part of this big deal. But Dan Clay, the local union president said he's now changed his mind and does not support the merger because he's now worried that it's going to be bad for workers. Our negotiations have brought new information to light that has caused us concern. First off Kroger's bargainers have said that the money to invest in their employees isn't available until after the merger. And they've said that and we asked why and they didn't give us any kind of a satisfactory answer or really an answer at all. We're also, we also, we're told that increasing wages to what the West coast standard is would cause store closures in Portland. And that caused us concern over the financial status of the company in the first place. Now, last night, Fred Meyer issued a statement saying they respected the worker's right to collectively bargain but did not touch on the issue of whether there was a violation in the bargaining laws. They also put out an interesting graphic that we want to share with you. It apparently shows where every dollar in sales goes nice that they chose a loaf of bread, don't you think? Anyway, 78 perc, 78 cents, they say goes to paying for the product, 13 cents goes to wages, health care, pension plans, that sort of thing. Three cents goes to variable expenses like utilities, bags, garbage collection, two cents goes to fixed expenses. That includes things like monthly rent for the stores and insurance. Another three cents goes to store expenses, taxes, interest that sort of thing. Leaving one cent profit which goes into building and remodeling stores or goes back to stockholders and other investments. So they're saying that out of every dollar of sales, they make one penny of profit, which probably seems low. It's probably the lowest in the for profit business. But that is the grocery business. They survive with volume and even if they're only making 1% profit, those numbers do add up to some big time money. In 2023 Kroger reported gross sales of 100 and $50 billion. So 100 and 50 billion of those loaves of bread that we just showed you, which includes many stores including Fred Meyer stores. So that means if we use that 1% profit number, it would still be a $1.5 billion in profit. And that's before any merger that may or may not happen. Now, Kroger wants to buy Albertson's. The Feds are trying to block that in part because of concerns that it will hurt union workers and also over worries that it's going to make your groceries more expensive. But in that recent release, Fred Meyer's president said if the merger is blocked, the only winners will be nonunion food red retailers such as Walmart, Costco and Amazon. So a nice twist there. We think he's arguing the merger is actually pro union for more context. I looked up the Kroger shareholders virtual meeting for 2024 posted online to see what they were saying about workers. The chairman of the CEO said the company is pro worker and pays an average wage of $19 an hour across the country or $25 an hour. When you consider benefits too, we make these historic wage and benefit investments because we respect and value our associates. We know that when our associates have a better experience, they provide a better experience for our customers. Our leaders are always listening deeply to their teams to understand how they can better support associates thriving careers. We strive to deliver a best in class experience. Ok. So the Kroger leader says workers are valued now, Fred Meyer is already owned by Kroger that happened back in 1999. So when the local grocery workers union goes on strike against the company, that's probably a little bit embarrassing for the corporation that is so proud of the way that it treats its workers. The grocery union says it will strike against Fred Meyer for a week to make sure the company knows how upset they are over the tactics for their local contract. At the same time, the massive battle between Fred Meyer's owner Kroger and the Federal government continues in Federal Court in Portland. It's expected to last well, over a week, maybe three weeks, we'll bring you as many updates as we can on that one.